Amadeus IT Group, S.A. (AMS.MC) Q3 2026 Earnings Call Transcript

Operator: Good day, ladies and gentlemen, and welcome to the Amadeus Q3 2026 Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Luis Maroto, President and CEO of Amadeus. Please go ahead.

Luis Camino: Good afternoon, and a very warm welcome to our quarter 3 results presentation. Thank you for attending today. I'm joined by Carol Borg, our CFO. So let's begin with the presentation. So if we turn to Slide 4 for our takeaways from the first 9 months. Despite the ongoing situation in the Middle East, we reported solid growth and profitability, demonstrating the strength and resilience of our diversified business. In the first 9 months at constant currency, Amadeus delivered 5% revenue growth, 6% adjusted EBIT growth and 9% adjusted diluted EPS expansion. We reported solid unitary revenue growth, while our Hospitality & Other Solutions segment continued to perform healthily. We maintain cost discipline to drive operating leverage and support profitability. Commercial momentum remained strong throughout the third quarter. We expanded our customer base and increased adoption of our solutions while maintaining a robust commercial pipeline across our businesses. We remain focused on delivering long-term growth, investing with conviction for the future. As a leader in travel technology, our goal is to be a neutral embedded orchestrator in an AI-enabled travel ecosystem. We continue to advance our AI road map, partnering with leading players. This quarter, we added our partnership with NVIDIA, Anthropic and continue to develop and enhance AI capabilities and solutions across our portfolio. We also continue executing on our strategy by supporting our customers in the retailing transformation through AI-powered next-generation solutions. We are pleased with our solid performance year-to-date. We maintain our outlook for '26 despite the current volatility in the macroeconomic environment and expect to deliver at the lower end of the guided ranges. We continue to focus on what we can control, with fixed cost growth moderating as a result. Our resilience and financial discipline ensure we are well positioned to navigate short-term uncertainties. Now let's turn to our strategy and how it translates into commercial wins. We are powering the largest ecosystem of connected open AI-enabled solutions in travel. We remain on track with our AI road map, and we are pleased to announce several strategic partnerships. Amadeus is deepening its collaboration with NVIDIA to explore how accelerated computing, travel-specific AI and infrastructure innovation can help shape the next generation of travel search. Together, we are exploring opportunities across flight search optimization, travel-specific foundation models and cloud and infrastructure efficiency. By combining NVIDIA's expertise in AI and accelerated computing with Amadeus' deep travel expertise, we aim to help prepare the travel ecosystem for the age of AI-powered travel. Amadeus is also collaborating with Anthropic to advance the use of AI agents in travel. We are exploring together how to make Amadeus capabilities easier to access by developers within Anthropic's Claude Code marketplaces as well as how to enable travel industry professionals to use Amadeus systems with AI-powered workflows through Claude Cowork. Additionally, Amadeus is integrating Salesforce Agentforce with Amadeus Max for Travelers. We continue to advance our partnerships with Microsoft and Google, and we continue to progress in co-developing the universal commerce protocol for lodging with Google. These collaborations reflect our commitment to exploring the technologies that will shape the future of the travel industry and reinforce the importance of partnerships in turning innovation into real business value. We also continue to expand the number of AI use cases that we have in production. Amadeus is uniquely placed to deliver agentic AI functionality into products and solutions, supporting our customers on their own journey and to serve as a neutral embedded orchestrator in an AI-enabled travel ecosystem. We are leading the airline industry in retailing transformation with Nevio, our AI-native next-generation airline IT platform. As you know, Lufthansa Group, British Airways, Air France-KLM, Saudia and Finnair are engaged in Nevio. This quarter, Finnair became the first airline to connect NDC directly to an Offer- and Order-based system. Amadeus Nevio bringing a solution mindset to the capabilities we have across the travel ecosystem. And we continue to grow the scope of solutions adopted by our customers. We also had strong commercial traction in airport IT, such as with Queensland Airports, Kansai Airports and Queen Alia International Airport, among others. In hospitality, we are becoming the IT provider of reference. The Amadeus Hospitality platform offers the most comprehensive AI-powered portfolio of core capabilities to the hotel industry, and it is the most broadly connected ecosystem of partners. We continue to progress with ACRS customer implementations for Marriott International, Accor and The Ascott Limited. Our commercial momentum remains strong, and our customers are increasing the adoption of our solutions, such as The Ascott Limited, which has expanded its use of Amadeus Advertising solutions. We also had new customer signatures across our Travel Intelligence, Advertising and Distribution portfolio. And in payments, American Airlines expanded its use of our Airport Payments solutions. We are growing leadership in airline distribution. We signed new NDC agreements, including with JetBlue, and expanded the low-cost carrier content we distribute through our Amadeus Travel Platform, adding Wizz Air among others. Saudia Airlines signed for our MetaConnect solution to distribute its content through Google Flights. We expanded our agreements with CTM, Etraveli Group and Trip.com and signed new agreements with travel sellers across multiple markets. Please turn to Slide 6 for our AI milestones. As you know, Amadeus plays a distinctive role within the travel industry. We operate as an embedded neutral execution layer at the core of the travel ecosystem. We are also the system of record that underpins how travel operates day-to-day. Our technology is deeply integrated into real operational processes, connecting travel suppliers, sellers and increasingly AI-enabled interfaces. This depth of integration is what allows AI to move beyond experimentation and operate reliably within real-world workflows. Just as importantly, we deliver this at global scale with high levels of reliability, integrity and trust. This combination of deep integration, scalability and operational discipline continues to differentiate Amadeus within the industry. This quarter, we continued to translate our AI strategy into tangible progress, strengthening the foundations that allow us to scale AI across Amadeus, deepening our collaboration with leading technology companies and bringing new AI capabilities to our customers. As I mentioned before, this quarter, we are advancing our AI road map with NVIDIA and Anthropic. Together with Microsoft and Google, these collaborations demonstrate how we are combining Amadeus' travel expertise with capabilities from leading AI technology companies. More importantly, we continue to bring AI into our products and customer operations. Amadeus Max for Travelers brings conversational real-time support across airline touch points, combining a traveler-facing AI assistant, agency orchestration capabilities, now including Salesforce Agentforce integration, and full connectivity with airline and Amadeus systems. Taken together, these developments show the continued execution of our AI strategy from the foundations needed to scale AI to collaboration with leading technology partners to concrete applications for our customers. We are increasingly moving AI from exploration into practical, scalable use across the travel ecosystem. And now I will pass on to Carol for our financial overview.

Caroline Borg: Thank you, Luis. Despite a volatile macroeconomic environment, we are pleased with our September year-to-date performance, showing strength and resilience supported by a diversified business. Revenue amounted to EUR 5,076 million, representing 5% constant currency growth. Reported growth was 4%. Adjusted EBIT increased to EUR 1,547 million, equal to 6% growth at constant currency, 5% reported growth. Adjusted diluted EPS expanded by 9% at constant currency. Free cash flow amounted to EUR 1,036 million, equal to 9% growth. Diluted EPS was EUR 2.54, 4% growth. We deployed R&D investment of EUR 1,030 million, equivalent to 20% of revenue. Leverage was at 1x net debt to EBITDA as at the end of September, and we distributed dividends and executed share repurchase programs for an aggregated amount of EUR 1.2 billion. In the first 9 months of the year, our group revenue grew 3.7% on a reported basis or by 5.2% at constant currency. Air IT Solutions delivered a solid performance, growing by 7.7%. Hospitality & Other Solutions continued to deliver faster growth, growing by 9.2%. And Air Distribution, the segment most affected by the Middle East situation, delivered 2.1% growth, all at constant currency. Despite stagnation of volumes, we continue to deliver good revenue growth. Our solid performance is supported by the resilience of our diversified business and our customer relevance. At constant currency, our adjusted EBIT grew 5.5% and adjusted EBIT margin marginally expanded to 30.1%. On a reported basis, adjusted EBIT grew 5.2%, driven by the revenue growth I described previously and a cost evolution consisting of the following: cost of revenue increased by 6.1%, fundamentally driven by an increase in transactions in hotel distribution bookings and in payments due to the B2B Wallet expansion as well as from customer and geographic mixes in Air Distribution and our Airport IT business expansion. Fixed costs increased by 0.5%, mostly resulting from resource decreases mainly in R&D following the completion of the migration of our systems to the cloud at the end of last year and cost containment measures in response to the Middle East geopolitical situation. This was offset by higher unitary personnel costs and transaction processing costs from prior year ramp-up of our migration to the cloud. Ordinary D&A expense increased by 5.2% as a result of higher amortization of internally developed software to continue to maintain our leadership position. So let's now review the performance of our operating segments, starting with our Air IT Solutions business. September year-to-date Air IT Solutions revenue increased by 7.7% at constant currency, driven by a 6.3% higher revenue per PB and Amadeus PBs increasing by 1.3%. Revenue per PB growth was primarily due to incremental revenues from our Amadeus Nevio portfolio, upselling and inflation, PB-linked performance from upselling of our solutions such as Altéa NDC, loyalty and disruption management, non-transactional revenue expansion in airline professional services and Airport IT and transactional non-PB-linked performance such as digital commerce, Amadeus Ticket Changer and direct distribution, partly due to an increase in transactions linked to the air traffic disruption caused by the situation in the Middle East, predominantly in Q1. Our Amadeus PB evolution in the 9-month period was supported by the Altéa migration of All Nippon Airways in Q2, albeit still moderated by the air traffic disruption experienced due to the geopolitical instability in the Middle East region. In the third quarter, our organic PBs returned to growth. Revenue per PB growth slowed down relative to prior quarter, mainly due to timing effects related to Airport IT contract execution. In October, our PB growth was slightly softer than Q3, driven by the traffic disruption caused by the incident at the Riyadh Airport. Excluding this impact, our volume performance was broadly in line with Q3. Moving to our business highlights. In Q3, we continued to partner with airlines and airports around the globe. Luis has already mentioned Finnair adopting Nevio NDC. Also, Uganda Airlines will be the first African carrier to deploy Amadeus SkyWORKS. Additionally, the oneworld airline alliance selected Amadeus Travel Ready to enhance digital check-in across its global network and 8 oneworld members have implemented it. In Airport IT, we continued to expand our presence across regions. In Asia Pacific, Queensland Airports Limited and Kansai Airports selected Amadeus to provide biometric-enabled passenger processing solutions. In the Middle East, Queen Alia International Airport will implement seamless bag drop units and kiosks, and Emirates will deploy new biometric boarding gates. In Europe, the U.K. Home Office and U.K. Border Force have started the rollout of a nationwide biometric border. September year-to-date Hospitality & Other Solutions revenue grew by 9.2% at constant currency. Revenue growth was driven across both Hospitality and Payments due to new customer implementations and increased transaction volumes, albeit impacted by the situation in the Middle East. Within Hospitality, the fastest-growing solutions were customer implementations of our central reservation system and hotel distribution, both growing by double digits versus last year. In Payments, both our merchant services and our payout services reported strong growth. In the third quarter, revenue growth accelerated, predominantly supported by Hotel IT as we are progressing with our ACRS customer implementation and distribution despite the ongoing headwind from the instability in the Middle East. Into Q4, we are further advancing our ACRS customer implementations, and our Distribution business continues to perform well despite the Middle East situation. To further elaborate on what Luis said, we continued our commercial success worldwide. The Ascott Limited, One King West Hotel & Residence and The Oberoi Sukoonvilas, Wadi Safar signed for Amadeus -- sorry -- signed for Advertising solutions. In addition, Strawberry expanded their adoption of Travel Intelligence solutions, deploying our solutions to all properties across its portfolio. Abu Dhabi's Department of Culture and Tourism also added Travel Intelligence alongside its existing use of Amadeus digital advertising capabilities. We also had several customers signing for our Distribution services, such as Rent A Car, for content distribution. And in Payments, American Airlines expanded its use of our Airport Payments solutions, and Volotea adopted Amadeus Xchange Payment Platform, our orchestration platform, which helps to manage payment flows across multiple providers. Voyzant, a global travel technology platform connecting travel sellers with travel suppliers worldwide, will integrate B2B Wallet into its distribution ecosystem. September year-to-date, despite continued contraction of volumes, Air Distribution revenue increased by 2.1% at constant currency, driven by revenue per booking growth of 5%, primarily resulting from positive pricing effects from renewals, new agreements and inflation. Amadeus bookings declined by 2.8%. Our booking performance up to February was strong. And since March, our booking evolution has been impacted by the Middle East geopolitical situation. This caused a reduction in air traffic as well as a deceleration in new bookings and an increase in booking cancellations globally. In the third quarter, as we predicted, we saw a notable improvement in our booking performance relative to the prior quarter, supported by a gradual normalization in the level of booking cancellations. Revenue returned to growth, driven by healthy revenue per booking growth. In October, our booking evolution was slightly softer than in Q3, driven by the incident at the Riyadh Airport. Excluding this impact, our booking performance improved compared to Q3. Moving to our business highlights, complementing Luis. We signed NDC content agreements, including with JetBlue, and broadened our airline content offering through the Amadeus Travel Platform with low-cost carriers, Wizz Air, Air Arabia and SalamAir. Also, Saudia Airlines will use Amadeus MetaConnect for accurate distribution of dynamic offers through Google Flights. We also broadened our agreements with travel sellers. CTM selected Amadeus as its preferred travel content provider, and Talma Travel Solutions selected Amadeus as their preferred technology and booking platform. In addition, Etraveli Group, Trip.com, Pacific Arena, Dwidayatour, Panorama JTB Tours, Smailing Tour and XL Travel, all expanded their agreements with Amadeus. Let's move on now to review our R&D investments. Our R&D investment amounted to EUR 1,030 million in the first 9 months, equivalent to 20% of our revenue. It decreased by 4.4% versus prior year following the completion of the migration of our systems to the public cloud at the end of last year. Given the challenging geopolitical situation, we are prioritizing our investments where it matters most for our future growth. We are executing our strategy within our capital allocation framework and financial commitments, and we're investing in the right place to maintain our leadership position whilst preserving spend in critical areas such as cybersecurity, reliability and stability. Half of our investment was dedicated to the expansion of our portfolio as well as the evolution of our solutions. In addition to continuing to evolve our offerings to drive our customer IT transformations, we are infusing AI and developing AI capabilities across our portfolio and are undertaking strategic developments, including Amadeus Nevio and Navitaire Stratos for airlines, our hospitality platform, NDC technology for airlines and travel sellers and solutions for airports and payment services. 1/3 was dedicated to customer implementations across our business, such as the Amadeus Central Reservation System for Marriott International, Accor and The Ascott Limited for ACRS, new Nevio customers and airline portfolio upselling, customers implementing NDC technology as well as efforts related to bespoke professional services provided to our customers. And finally, the remainder is investments in our IT infrastructure, including AI development and our partnerships such as with Microsoft, Google and Adobe, among others, as well as platform developments related to stability, security, data protection and cloud optimization. And finally, our free cash flow. We generated EUR 1,036 million of free cash flow, 8.5% ahead of last year as a result of our EBITDA expansion and lower capital expenditure and tax payments, partially offset by a higher change in working capital outflow and higher interest payments. Capital expenditure decreased by 16.9%, largely reflecting the completion of the migration of our systems to the cloud and cost containment measures as a large proportion of our employees develop solutions for our customers. This represented 9.9% of revenue. Net debt amounted to EUR 2,537 million at the end of September, EUR 395 million higher than at the end of December 2025, fundamentally due to the acquisition of treasury shares under our share repurchase program, the dividend payment and the acquisition of SkyLink, partially offset by our free cash flow generation. Our leverage was 1x net debt to EBITDA as at the end of September. We are pleased with our solid performance year-to-date. We maintain our outlook for 2026 despite the current volatility in the macroeconomic environment and expect to deliver at the lower end of the guided range. With this, we have finished the presentation. We can now open the call for any questions that you may have. Thank you.

Operator: [Operator Instructions] Your first question comes from George Webb from Morgan Stanley.

George Webb: I've got a few questions on the Distribution business from my side to kick off with, please. Firstly, maybe just one on the financials. You kind of called out the cost of revenue growth being a little over 14% in Q3. You mentioned, I think, Carol, a couple of factors around the customer and geographic mix on the Distribution side. And then separately, Hospitality and Payments volumes. On the Air Distribution side of that, could you add a bit of detail around what's driving that? And how are you seeing incentive cost per booking trend versus revenue per booking at the moment? Second question, you've added JetBlue into that list of NDC content agreements, you have, I think it's 80. How many of those airlines are now live with NDC content on the Amadeus Travel Platform today? And for the ones which are live, do you have any view on what share of the Amadeus bookings now come through NDC rather than EDIFACT? And then just one very last question. Could you give us any kind of clarity or rough idea on what percentage of your total bookings NDC volumes are today?

Caroline Borg: Okay. I can start with those because they tend to be a little bit financial in nature. So let's start with cost of revenue and the cost of revenue evolution. I mean, there's a couple of things I'd say on that. Firstly, gross margin evolution is inherently lumpy, yes. So by quarter is not really a good representation. We always suggest to focus on year-to-date performance as a more reliable measure of the performance. And typically, our average gross margin is around 75%. The second point I would add is that growth was impacted by a very high base last year. So our cost of revenue last year, same time last year, had a higher gross margin or a lower cost of revenue. So the growth rates are a little bit distorted. And then fundamentally to how you phrased the question, you're right, the composition of our business, and that is geographies when it comes to distribution in terms of weighting of different geographies and weighting of different business lines, has a different effect on how that is -- how that computes into our gross margin. So we are comfortable with our gross margin evolution. I think that I would encourage you to consider more the year-to-date perspective rather than the seasonal lumpiness that can happen in quarter, and that is impacted by the different composition of business lines. The second question you asked was around NDC. You're right. We mentioned that we have about 80 NDC contracts. About half of them are live at the moment. And the adoption rate, as you'd well know, is really dependent on the adoption of our customers, travel sellers in particular. The share of our NDC bookings, as a result of our bookable inventory, is still in the low teens, but it's progressing and growing very actively month-on-month, quarter-on-quarter. You can appreciate that as we onboard more NDC content, it affects the denominator. So it kind of hovers around this teens number for a little while there. We don't disclose the percentage of NDC, percentage of our total booking, well, other than it's in the teens. So we don't give a specific number on that. So I hope that's answered those questions.

Operator: Your next question comes from Sven Merkt from Barclays.

Sven Merkt: Maybe one on the lower guidance range. Does this also apply to the free cash flow, especially considering that CapEx is also running more towards the lower end what you have guided? And then, Carol, you mentioned that you continue to advance on the ACRS implementation. Can you expand a bit on this and what this means for Q4 and whether the full year guidance of low double-digit growth is still achievable?

Caroline Borg: Okay. Sven, no problems. So in terms of our outlook, I think, just to remind everybody that our outlook is maintained for all of our metrics and the outlook that we adjusted was really the Air Distribution revenue growth last time. So your specific question, then, on free cash flow remains the same. Our free cash flow guidance range is still EUR 1.35 billion to EUR 1.45 billion for the full year, and we expect to deliver within that. In terms of ACRS implementations, they're progressing really well. I think we can publicly say that Marriott have now got 3,000 properties online. So that's a significant milestone, and we're progressing to implement that quite well together. The Accor implementations have just started. And of course, we have The Ascott that is still to go. So we still expect to see some solid growth in our Hotel IT segment into Q4. And just to bear in mind that the Hospitality segment is not just Hotel IT. It includes other areas. We have our Hotel Distribution business, our Travel Intelligence business, our Media business and our Payments business as well. But we are on track to continue to deliver good growth in our Hospitality segment into Q4.

Sven Merkt: So is the right way to think about when you say you expect to deliver at the lower end of the guided ranges that this primarily applies to the revenue guidance?

Caroline Borg: No. That's all of our guidance.

Sven Merkt: So including the free cash flow?

Caroline Borg: Well, I mean, it's -- yes, I think it's difficult to say. Free cash flow is performing better because of CapEx.

Operator: Your next question comes from Michael Briest from UBS.

Michael Briest: Great. Just in terms of the midterm outlook through 2028, the high single-digit organic growth that you're anticipating. Do you think you can get back on track for that? Is there something which could cause you to catch up and actually deliver the number you were thinking about back in January, February when you set that target? And then, Luis, I mean, how do you address investors' sort of well-known concerns about personal agents executing search and purchase directly on airline websites through APIs or MCP service? I know Meta's Muse is not doing that. It's using an agent in the background, but it's obviously a concern that many investors have. Why is that direct sort of execution unlikely to happen in your view?

Luis Camino: I think I have explained why in my view, direct connects or direct links have many cons. I mean, in terms of complexity, I mean, of course, this can happen when you have -- and we have explained many times that. I mean, as you mentioned, this is not new. We really don't think with AI will be different. I mean we manage a huge amount of transactions, queries, search. I mean we are in the 3 billion per day of queries, of search. This is massive, and it requires a lot of knowledge, integration capabilities to do that in an efficient way. So the more you go to direct, the more you add in the complexity. Of course, you can do that with some specific carriers, but you want to handle in a global spectrum and in a global way, what travel means in terms of combining airlines, combining itineraries, combining options for shopping and finding that in the right economic way and with the right level of quality and speed in the answer, you need to really have a deep integration and knowledge. So yes, there may be some connectivity direct connects, but the need of somebody that can do that and at scale, in my view, is really needed. So we have always explained the cons of maintaining the direct connectivity because it's not just the connectivity, you can always connect via an API, as you mentioned, but then you need to deal with economics, you need to deal with the flow, with the transaction volumes that are going to increase. This is our assumption moving forward now with the AI, and all that needs to be managed in the proper way to be cost effective, but reliable, okay? So we feel that we will provide these alternatives, and we will provide these capabilities. There may be some direct connects. I think the direct connects that have happened in the past, as we mentioned, have already gone, many of that when it's very concentrated. And when we deal with the rest of the market, which is more complex, it's much more difficult to address that, okay? So we don't think this is going to accelerate. Again, it's proven in the figures, when you see the figures, and we keep delivering the results based on our belief, okay? And we will continue evolving our technology, evolving the capabilities to be reliable for the carriers and the travel agencies to really work with us.

Caroline Borg: The next question was on midterm guidance.

Luis Camino: Yes. Yes. Why don't you take. Okay. I will start because you covered the previous, Carol, but you can assist for the time being. We are not changing the guidance. I mean, again, it is still a bit difficult to really address more the short-term evolution than the medium term. But in terms of medium term, we expect the traffic to come back to healthy figures. And as we have delivered this year, we expect based on this traffic to be able to [ redeliver ] the outlook that we have provided to the market. Of course, as I mentioned to you, we feel more confident with the medium term than what may happen in the next month due to the volatility that we are having that hopefully, as the time moves on, we will have much more clarity and normality that we have had during 2026. But Carol, you would like to add something about the medium-term guidance?

Caroline Borg: No. Well, I think you've answered that we're holding our midterm guidance. We'll come out again in February with guidance for 2027. But I echo your point. I think the short term remains the most difficult to predict, but the fundamental long term -- the fundamentals of the business midterm are very, very strong.

Operator: Your next question comes from Charles Brennan from Jefferies.

Charles Brennan: Can I do 2 as well, please? Firstly, just on the forward-looking guidance, can I just maybe press you for some early observations on 2027? Obviously, you're not in a position of being able to predict market volumes, but the Q4 exit run rate is probably a little bit lower than we would like. You've had capacity cuts across the airlines that presumably depressed some trends in the early part of '27. I think one of your peers came out and said they're not expecting a particularly rapid recovery next year. You've got to take a view when you're thinking about your investments that you're doing now and the cost base for next year. Should we assume that you're already planning for something a little bit more modest than high single-digit revenue growth? And then separately, can you just touch and give us some context to the security headlines that we've seen and the leakage of a small number of bookings data and whether there are any remedial actions that we need to be thinking about for the cost development next year?

Luis Camino: Let me start a little bit with next year, even if -- Carol can elaborate a bit more. And look, there are some positives and some negatives, okay? What are the negatives? Yes, you're right, I mean with the price of oil, of course, some airlines have decided to leak up capacity. But to be honest, I mean, in the last days, there has been some decrease in the price. Still, if you look at the capacity for next year, it is positive. But again, this can be reduced or this can be adjusted if things become difficult. So quite difficult still to predict how 2027 may look like. At the same time, we had a bad '26 in terms of volumes. So there is a natural adjustment or rebound just due to the low base of '26. So look, we're putting everything into play. It is true, it is more difficult. We are working with some different scenarios. And of course, we'll provide you with our view of '27 as we present the full year results. But this is an ongoing work happening today in the company. Carol, would you like to add?

Caroline Borg: The only thing I would add to that as well is we're quite proud of our revenue growth despite a stagnated volume. So I think there is something in there, Charles, about the resilience of our business, the diversification of our business, sometimes the disconnect of -- correlation of volume and revenue disruption and things like that. So for us to at least reconfirm our midterm guidance indicates that we would have to recover something in the next couple of years to get to that guidance. That's the only thing I would add, that we're very pleased with how our revenue has grown despite the volume volatility.

Luis Camino: With regards to the second question, yes, what we can tell you is that we became aware of a vulnerability that was affecting a travel booking display environment, and certain booking display data was accessible through this vulnerability. I mean we continue the investigation, but we can confirm that there is no evidence that payment or financial data was accessed and that any of this vulnerability has been exploited for ransomware purposes. So we have fixed the vulnerability. We are enhancing our monitoring and detection capabilities. And of course, we are in direct dialogue with our customers and authorities. And we have also made a public announcement on the Amadeus website with more information.

Operator: Your next question comes from Laurent Daure from Kepler Cheuvreux.

Laurent Daure: I have two as well. The first is for you, Carol, to bounce back on the previous question on the free cash flow and possibly being in the low end of the range. That would call for a pretty soft Q4. So anything specific, maybe on cash tax that were weak in Q3 and may be higher in the fourth quarter? So any further explanation would be very useful. And my second question is on the Hospitality business. I understand that most of -- the 3 large implementation are going well. My question is more, if you compare the impact, positive impact on 2026 versus 2027, shall we expect a stronger tailwind? And would it mean that potentially next year, your Hotel business could be materially better than this year?

Caroline Borg: Okay. Laurent, I'll take them both. So yes, the free cash flow, we're quite pleased with its performance in Q3, but we don't expect that growth rate to continue into Q4. So there is some softening that is happening. This is timing effects. And then I guess you will choose where you want to fit within the guidance range that we have guided. But we don't expect the same level of growth in Q4 as we saw in Q3. And then in terms of Hospitality, you are right, as we increase our implementations and we ramp up, we will see a bigger proportion of growth in Hotel IT. We have guided on that as well in the low double-digit range for this year. And we continue with our Marriott implementations, that hit full run rate in 2028 -- 2027, beg your pardon, and Accor, hit full run rate in 2028. So yes, you can expect to see an improvement in growth within Hotel IT.

Operator: Your next question comes from Toby Ogg from JPMorgan.

Toby Ogg: Just on the October commentary, so air bookings and distribution ex the Riyadh Airport incident, the performance improved relative to Q3 on the booking side. But the October commentary for Air IT indicates that it was kind of more in line with Q3. So just wondering why you haven't seen an improvement in PBs ex the Riyadh Airport situation, just given that the bookings had improved quite significantly between Q2 and Q3. And then just one just on the Air IT revenue per PB. I know, Carol, you mentioned some timing effects there on Airport IT contract execution that drove the slight slowdown in growth. Could you give a little bit more detail on that? Were there any [indiscernible] if so, what drove the delays? And how do you expect that dynamic to evolve going forward?

Caroline Borg: Okay. Well, let's start with the revenue per PB, just to mix it up a little bit. Toby, as we mentioned in Q1, 1/3 of our growth was related to disruption-related services. So that artificially inflated our Q1 performance. Q2 reverted to a more normal rate, again, which we communicated in the half. And Q3 saw a bit of a softening, particularly in the non-transactional revenues, yes, services and Airport IT, which is really dependent on implementation time lines and can therefore be a bit lumpy again by nature. So we are seeing some timing delays in Airport IT due to the conflict in the Middle East. So this is kind of the evolution of our revenue per PB. Then in terms of the difference between bookings and PBs, there's always a difference between when bookings are made and when the flight is actually taken or the passenger actually boards the flight. What we're seeing in October -- what we're trying to do is articulate and give more information on actual information that we're seeing in October. As you correctly interpreted, October bookings not for the Riyadh impact would have been greater than Q3 and PBs would have been in line with Q3. But they're obviously comparing to the growth rates that they had in their original position. So we're not seeing any divergence or any areas of concern as a result of it. It's just a function of what the base is that we're comparing it to.

Operator: Your next question comes from Victor Cheng of Bank of America.

Hin Fung Cheng: Two from my side. I think, thinking about gross margins, you mentioned cost of sales roughly 75% over the year. But as I think about Hospitality growing faster and then endemic completion next year, among other things, should we expect higher cost of sales over the medium term? And then as you also develop more AI capabilities, how should we think about the impact to growth in EBIT margins? And then second question relates to Nevio announcements, which I guess, has been somewhat -- a bit lower than some people would have expected. And -- but we do know it will take many, many years for the industry to shift to Offer and Order. So is the progress actually slower than expected within the industry itself? And with AI as well, how does that impact your discussions with airlines where we anecdotally hear some of the airlines doing more work in-house with AI?

Luis Camino: Okay. Let me start with the last one. I mean, look, usually, these transformations, and again, that was pushed and led by the airlines themselves, the movement to Offer and Order, I mean, it takes time. And if you see the history of NDC, the history of e-ticketing, and it takes time because there are different priorities in the airlines. They have their own timing. So it takes time, definitely. Saying that, I mean, we have already 25% of our PBs contracted. We have a very strong pipeline of discussions with airlines. But yes, it will take years before we have the whole industry migrating and working under the Offer and Order scheme. That's a reality. However, we feel pleased with the airlines we are working. We are engaging programs with many of them. And hopefully, we will keep getting more customers into our platform as we move forward. In our discussions with the airlines, of course, we talk about AI. AI, of course, provide more capabilities. We don't think this is going to really change the way we deal with airlines. It may help development, yes, to all of us. But in general, this is not the only factor. I mean, having a better capabilities does not mean that people are going to develop more in-house or more themselves. That's not what we see today in our discussions with airlines, not at all. It's more how we can leverage AI, how you can help us with that. And of course, for the teams that they have internally, they will also apply that. But it's not just AI is an enabler, but then the complexity of the integration, the complexity of everything we do, we will keep doing that. So we don't see a change in the conversations or in the agreements that we are having with the airlines today. Of course, AI is part of the discussion, but our solutions are embedding AI capabilities in what we deliver to our customers.

Caroline Borg: And then with regards to effectively profitability in your question. You're right, the composition of mix, customer geographies, all that sort of stuff will impact how gross margins evolve over time. But what we prefer to do is actually guide on EBIT margin, right, in terms -- which is what we have done this time around, and we've also guided on EPS. So we are projecting in accordance with our midterm guidance for EBIT margin expansion, and that will come from the more efficient use of our cost base, our resources, our people, the redeployment of people, with productivity gains on pursuing our growth areas, the lapping of the cloud cost migration, all of that sort of stuff links into the equation where we are trying to drive expanded EBIT margins and EPS at low double-digit growth rate in the midterm. So that all points to improved profitability.

Hin Fung Cheng: And the impact on AI potentially in terms of compute costs and stuff?

Luis Camino: I mean, again, this is what I mentioned before. We are really working on seeing -- but again, this is not new. If you see the increase of transactions that are happening into the system in the last 30 years, there is an increase. We have been able to really manage well, the cost. And of course, we'll need to really see and keep working on that. This is why, I mean, our engagement with people like NVIDIA makes sense because we are trying to really see what is the best way to optimize that, assuming that the AI will generate new ways of -- inspiration of shopping and of course, with our knowledge, how we can do that in an efficient way. Saying that, we'll need to see, okay, how this increase of transactions, if there could be additional costs, if part of this cost, who is going to pay for that because, of course, we are also the IT provider of many carriers. So that will need to be seen. So there is a need to optimize the cost, of course, in the way we treat the transactions coming from AI. And on top of that, well, we need to see our contractual commitments, the intention of our customers and how this is going to evolve. Again, nothing new because if we think about, yes, the last 30 years, this has been a constant evolution in the way we do with shopping and bookings. And this is why having a lot of focus and a lot of investment and evolution of our technology is needed. So we don't expect AI to impact negatively in our margins in what you mentioned, which are the costs related to that. That's not our assumption moving forward.

Operator: Your next question comes from Nooshin Nejati from Deutsche Bank.

Nooshin Nejati: On CapEx and R&D, as NVIDIA, Anthropic and agentic travel are becoming increasingly important, should we expect R&D and CapEx intensity to remain around current level? Or does scaling AI require a new investment cycle? And the second one, as AI is expecting to increase the query volumes, how does that change the economics of distribution? Does higher AI-driven search intensity create incremental revenue for you or mainly additional infrastructure costs that maybe through this partnership with NVIDIA can help to offset it?

Caroline Borg: Okay. Well, I can take them, Nooshin. So CapEx and R&D, what we're very proud of is that we have incorporated our AI investments within our portfolio of CapEx spend and within our financial framework. So we continue to guide CapEx at 10% to 12% of revenue, and that incorporates all of the efforts that we're doing within AI. So we're not expecting -- perhaps what you're seeing with the hyperscalers a blowout of AI investments within Amadeus. And in terms of distribution, I mean, what we're seeing with AI is AI and the agentic world will be a new channel that comes in, but ultimately will still result in a booking, and that's not really changing the commercials at the moment. Who knows what will happen in the future. But at the moment, we're still working as -- our GDS business is still working as many to many relationship between travel airlines and travel sellers. So we don't see changes just purely because of AI changing that at the moment.

Operator: Your next question comes from Thomas Poutrieux from BNP Paribas.

Thomas Poutrieux: A couple of questions for me as well. Maybe coming back to the agentic debate, as I think Michael alluded to Muse. It's partnering with Duffel for airline content. What do you think are the main reasons for them choosing to partner with Duffel instead of Amadeus? And how do you think you could still help Muse in the future? That's the first one. And then secondly, on AI-related partnership. So as you said, you've announced these partnerships with Anthropic and NVIDIA, which sure are good to see, but they are not focused on the Distribution segment of your business. So what time frame do you have in mind for potential expansion of partnerships with LLMs to Distribution in particular in the future?

Luis Camino: I don't follow the last part. It was the question...

Caroline Borg: It was on NVIDIA. I can talk on the NVIDIA one if you want.

Luis Camino: Okay. Look, let me start with Salesforce. I mean, as you know, part of our strategy is working with different technology partners. It's not new that we work with Salesforce.

Caroline Borg: Sorry, the question was on Muse.

Luis Camino: I'm sorry, I thought it was about the partnership with Salesforce.

Caroline Borg: But maybe I can...

Luis Camino: But I misunderstood that.

Caroline Borg: So I mean, the partnership with Muse and Duffel really reinforces our belief that AI assistants will rely on existing platforms that aggregate airline content rather than build the infrastructure themselves. So as we understand it, Muse acts as the kind of front-end customer entry point, but it still needs to go to something like Duffel, which is the content aggregator, the merchant of record, the responsibility for the servicing and all that sort of stuff. So from that perspective, we don't think that it actually, this type of arrangement doesn't displace the GDS, it actually reinforces it, I think, in terms of, reinforces our belief that agents are still needing to come through a neutral, embedded execution layer to deal with that. So that's the Muse question. The other one was on NVIDIA and what are we doing and it's not really doing anything in Distribution. Well, I beg to differ, there are 3 things we're doing with NVIDIA. The first one is flight search optimization. I think Luis mentioned that in his address. We're assessing really what parts of flight search and pricing algorithms can run more effectively on GPUs rather than the traditional CPUs. Can they potentially -- more accurate, there's a cost differential, it's faster, things like that. So this is, I think this is quite revolutionary in terms of we're rethinking with world-class leaders about how we can do flight search differently. The second thing that Luis mentioned was we're working with them on potentially travel-specific foundation models. So not using a generic LLM, as you referenced, but using a more specific one to explore travel and transaction-related foundations, specifically for the travel ecosystem rather than a generalist model. And then the third thing that we're doing with NVIDIA is about cloud and infrastructure efficiency, so how about -- how do we use accelerated computing to improve the workload that we have. Luis mentioned an impressive level of volume that we do, 3 billion search transactions per day, 150,000 transactions per second, equivalent to the scale of someone like Google. And in terms of storage, 200 petabytes of storage, which is about 40% of Spotify's music catalog, right? So we've got lots and lots of data, and we're working with NVIDIA on how we can actually optimize in these 3 areas. So we're quite excited about this partnership.

Operator: Your next question comes from Carlos J. Treviño from Santander.

Carlos Javier Treviño Peinador: My question maybe a bit based on the short term, and you have been highlighting weakness in October because of the incident in Riyadh Airport. This is almost 1 month ago now. My question is, if over the last days, over the last week, you have seen a bit of normalization on this? Or do you still think that this could continue to impact your volumes during November and December?

Luis Camino: I mean really, it's impossible to talk about days because in days, I mean, we had elections in different parts of the world, you have always impact of holidays. So again, we have seen that this had an impact. Of course, as the airport recovers normality, which is not the case yet, this may improve. But I will say, look, this had an impact in October definitely because we had at the beginning of the month better performance than later in the month. But look, I would say normality is not the right word today as we are living in a moving conflict. So I will say, look, difficult to really tell you specific days.

Operator: There are no further questions at this time. I will now hand the call back over to Luis Maroto for closing remarks.

Luis Camino: So thank you very much again for attending and your questions, and we will talk to you with the full year results at the end of February, where we will also provide you, of course, with an updated guidance for 2027. Thank you very much.

Operator: The conference call has now ended. Thank you for participating. You may all disconnect your lines.