Sabre Corp. Q1 FY2025 earnings call

• Brian Evans introduced the call, noting forward-looking statements and non-GAAP measures. Kurt Ekert mentioned solid business performance in Q1 despite a challenging macro environment, adjusted GDS industry growth assumption from flat to nominal to down 1%-2%, and reaffirmed full year double-digit distribution bookings growth. • Progress on growth strategies includes a modern technology stack strengthened by a partnership with Google, deployment of Gemini to improve productivity, rapid advancement of the GDS platform into a modern open marketplace with multi-source content aggregation, distribution expansion, hotel B2B distribution, and growth of the digital payments business. • Strategic priorities are generating free cash flow and delevering the balance sheet, and continuing to invest in innovation and growth. The agreement to sell Hospitality Solutions is a key milestone in this strategy.

In Travel Solutions, first quarter 2025 air distribution bookings were down 3% year-on-year, below the prior assumption of flat to nominal growth. Three-quarters of the 3-4 percentage points of air distribution bookings softness was due to lower group bookings in the APAC region, global travel weakness, and a pullback in U.S. Government and Military travel. Meanwhile, the hotel B2B distribution business saw strong bookings growth of 7% year-on-year. The Hospitality Solutions business is being sold, with a transaction value of $1.1 billion.

• Reaffirmed full year double-digit distribution bookings growth despite the market backdrop. • Adjusted full year 2025 GDS industry growth from flat to nominal to down 1%-2% due to recent airline traffic softness and planned capacity adjustments. • For Q2, expects year-on-year revenue growth in the low-single digits driven by low-single-digit air distribution bookings growth, and pro forma adjusted EBITDA of approximately $140 million. • Full year 2025, excluding the effects from the sale of Hospitality Solutions, expects high single-digit year-on-year revenue growth driven by double-digit air and hotel B2B distribution bookings growth. • Anticipates further acceleration in air distribution bookings growth in the second half of 2025, with growth of at least 20% year-on-year.

• Macro environment uncertainties, including sector dynamics that could impact the business despite Sabre's resilient model. • Potential execution risks related to the implementation of new agency business and the timing of realizing volumes from signed business. • Uncertainties in the airline traffic and capacity adjustments affecting GDS industry growth.

Q: Can you expound more on the macro environment and how it affects Sabre?

A: Sabre isn't immune to macro, but its revenue model tied to air distribution bookings rather than ticket prices provides some stability. Expect full year GDS industry growth to be down 1%-2% due to airline traffic softness and capacity adjustments, but Sabre expects double-digit air and hotel B2B distribution bookings growth despite this.

Q: How quickly can you use the cash proceeds of the sale to pay down debt to realize interest cost savings?

A: The proceeds will be used to pay down debt shortly after closing, in accordance with credit agreements, and will result in reducing interest expense by $65 million and improving the credit profile, allowing for more efficient financings in the future.

Q: How does the shape of air bookings through the year look and its impact on 2026?

A: Q1 air bookings were down, Q2 expected low-single-digit growth, with high-teens growth in Q3 and above 20% in Q4. The strong growth in the second half implies very strong carryover into 2026 with strong growth rates expected for next year.

Q: How does the gross margin of new agency volume differ from existing booking volume?

A: New air distribution bookings are expected to have slightly lower average booking fees and margins, driven by geographical mix (U.S. domestic air bookings having slightly lower average booking fee) and additional NDC and LCC volumes, but overall margins for the remaining quarters of the year are expected to be roughly in line with last year.