Sabre Corp. Q3 FY2024 earnings call

• Third quarter saw significant commercial, operational, and financial achievements, including steady year-on-year revenue growth, significant increase in Adjusted EBITDA, continued margin expansion, and positive free cash flow.
• Progress on key strategic priorities: generating positive free cash flow, delivering sustainable growth, driving innovation, and reducing cost base while repositioning resources towards growth.
• SabreMosaic: AI-powered technology platform designed to modernize travel retailing, with positive feedback from airlines, and commercial partnerships with Virgin Australia and Riyadh Air.
• Other growth strategies: multisource platform in production with early adopter program, NDC integrations with 23 airlines, distribution expansion with new business wins, hotel distribution growth, digital payments business with contract wins, and progress in IT Solutions including SabreMosaic implementation and agreements with Air Serbia.

Travel Solutions: Air Distribution bookings grew by greater than 3% year-on-year, outperforming the industry, with roughly half from share expansion and half from market growth; Hotel Distribution bookings had high-single-digit growth, and average booking fees increased. Hospitality Solutions: Revenue increased to $84 million, a 7% year-on-year improvement, representing the highest quarterly revenue in segment history; adjusted EBITDA improved by 67% to $11 million. Revenue contribution: Travel Solutions and Hospitality Solutions are key segments contributing to overall revenue.

• Third quarter Adjusted EBITDA was meaningfully higher year-on-year, and positive free cash flow was generated.
• Fourth quarter expected revenue: approximately $715 million, adjusted EBITDA: approximately $115 million, free cash flow: greater than $80 million.
• Full year 2024 expected revenue: approximately $3.03 billion, adjusted EBITDA: approximately $515 million.
• 2025 targets: greater than $700 million in adjusted EBITDA and greater than $200 million in free cash flow.

Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from statements made. More information on these risks and uncertainties is in the earnings release and SEC filings, including Form 10-Q for the quarter ended September 30, 2024.

Q: Dig in to revenue and small differences across several lines, and IT Solutions dynamics.

A: Mike Randolfi said revenue differences were aggregation of small differences, Air Distribution bookings fell short by 200,000 bookings on a $79 million base contributing to part of the difference; IT Solutions was roughly in $140 million to $145 million range as expected, with demigrations in prior year affecting year-on-year.

Q: Air Distribution building momentum into 2025, travel environment, and new wins impact on gross margins.

A: Mike Randolfi said confident of acceleration from share gains in Air Distribution bookings; Kurt Ekert said demand remains strong globally with no meaningful downward pressure, some supply constraints on air have very small impact; Mike Randolfi said new wins largely not in results yet, gross margin likely around 60% in longer-term.

Q: Color on Q4 guidance, Turkish and Frontier loss, revenue per booking, and 2025 outlook.

A: Kurt Ekert said Q4 trends consistent with Q3, disappointed with not reaching agreement with Turkish; Mike Randolfi said average booking fee expected to tick back over $6 in Q4, on track for 2025 adjusted EBITDA over $700 million with commercial wins included in strategic growth initiatives