In April, I wrote about the “grand-daddy of B2B platforms”, Sabre, and their then-pending IPO. See here and here. Recently one of their competitors, Travelport, followed suit and also filed for an IPO. It’s one of the few recent B2B software IPOs to file.
Rather than delve back into a detailed explanation of what travel GDS is, and how Sabre and Travelport differ, I thought it might be interesting to use this occasion to share a brief comparison of these two companies on some key metrics useful for comparing transactional software platforms–within an industry or across industries. These metrics are as follows:
|2012 Revenue||$3 Billion||$2 Billion||1.5|
|Travel Spend Processed||$100 Billion||$85 Billion||1.2|
|Billable Transactions||465 Million||347 Million||1.34|
|Adj. EBITDA %||26.70%||24.70%||1.08|
I highlighted a) the “gross yield” which is what the platform providers are extracting in fees from buyers and suppliers relative to the value of the underlying transactions processed and b) the revenue per transaction.
Many platforms I work with wonder what they can extract in value per transaction and per dollar processed. They tend to forget how many public examples there are to guide them (literally dozens)! The key for any platform is to compare their value proposition(s) to the public comparables to get a sense of how their value proposition compares and therefore what they might be able to charge.
(In this case, Sabre seems to handle more, albeit smaller, transactions than Travelport, but Sabre has a better yield on each transaction. Perhaps Sabre has a mix or price advantage over Travelport?) I’m sure it is more complicated than this, but my main point was to share key metrics by which industry platforms can be evaluated, rather than to compare boring GDS businesses!