Navan beats quarterly estimates, raises forecast; shares tumble on cost concerns

By Shivansh Tiwary and Aatreyee ‌Dasgupta

Sept 9 (Reuters) - Corporate ​travel ​and expense platform Navan beat second-quarter profit expectations and raised its full-year revenue forecast on Wednesday, but shares fell 17% in extended trading ‌after higher operating costs overshadowed robust revenue growth.

Operating expenses increased 46% to $200.2 ⁠million in the reported quarter, outpacing 35% revenue growth, while its operating loss widened to $25.6 million ‌from $12.3 million a year earlier.

On a ‌post-earnings call analysts questioned why stronger-than-expected revenue growth did not translate into a proportionately larger profit increase, with executives pointing to higher sales commissions and the ​ongoing investment in AI products.

Business travel, however, has remained resilient despite geopolitical uncertainty, with corporate investment in artificial intelligence prompting sales teams, engineers and executives to ⁠travel more frequently.

"Demand for corporate travel has been very, very strong," CFO Aurélien Nolf told Reuters in an interview.

"On ​average, every traveler is (taking) more trips year over year. And each of those trips is on average generating higher bookings than they ​were a year ago."

Navan raised its fiscal year ‌revenue forecast range to $927 million to $933 million from $907 million to $913 million earlier, and increased its adjusted operating income outlook to $82 million ⁠to 86 million from $76 million to $80 million.

The company forecast third-quarter revenue of $253 million to $255 million, above analysts' expectations of $248.27 million, according to LSEG data.

Adjusted profit was 5 cents per share for ⁠the second quarter, compared with analysts' expectations of 4 cents per share.

Revenue rose 35% to $232.8 million, ​beating analysts' estimates of $220.46 million.

Gross booking volume, a key measure of travel spend processed on its platform, increased 45% to $3 billion during the quarter, while payment volume rose 34% to $1.3 billion.

Navan, which ‌went public last year, also said it would acquire AI-powered event management platform BoomPop for an undisclosed amount. A person familiar ‌with the matter said the cash-and-stock deal was valued at up to $95 million.

During its earnings ⁠call, Nolf said the acquisition would ‌have a "very low single-digit" ​revenue impact in fiscal 2027 and an immaterial effect on results this year.

(Reporting by Shivansh Tiwary and Aatreyee Dasgupta in Bengaluru; Editing by ‌Shailesh Kuber)

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