Sabre Corporation Q2 FY2025 earnings call

• Focused on strategic priorities: generating free cash flow, delevering balance sheet, and driving growth through innovation.
• Strengthened balance sheet by extending debt maturities (nearly 60% of debt maturing in 2029 and beyond) and paying down over $1 billion of total debt.
• Air distribution bookings were down 1% but growth strategies added 8 points of growth. Hotel distribution bookings grew 2% with attachment rate to air bookings improving 100 basis points to 34%. IT Solutions passengers boarded increased 1%.
• Made progress in multi-source content with 38 live NDC connections, distribution expansion (e.g., Christopherson Business Travel partnership), hotel B2B distribution with $20 billion annualized turnover (+4% YOY), and scaling digital payments business (Q2 gross spend $5B, +44% YOY).
• AI-powered offer management suite of IQ products saw strong traction, with 9 airlines using SabreMosaic Offer Management products, including new agreement with Avelo Airlines.

Sabre reported revenue of $687 million in the second quarter, down 1% year-on-year. Distribution revenue decreased by $5 million due to air distribution bookings decline, partially offset by hotel distribution bookings growth of 2%. IT Solutions revenue decreased 2% year-on-year, driven by de-migrated carriers, but partially offset by increased passengers boarded and license fee revenue. Normalized adjusted EBITDA in the second quarter increased 6% year-on-year, with normalized adjusted EBITDA margin expanding by 120 basis points to approximately 19%. Air distribution bookings were down 1% year-on-year, while hotel distribution bookings grew 2% and IT Solutions passengers boarded increased 1%.

• Revised outlook for second half of 2025: air distribution bookings growth range 4%-10%.
• Third quarter expected air distribution bookings growth 2%-6% due to growth strategies realizing implemented new business. Fourth quarter expected 6%-14% growth from growth strategies acceleration.
• Full year 2025 air distribution bookings flat to low single digits. Pro forma adjusted EBITDA expected in range $530 million to $570 million. Pro forma free cash flow expected $100 million to $140 million. End of year cash expected >$750 million.
• Growth strategy timing delay: multi-source low-cost carrier solution launch delayed 6 months to early 2026 due to technology and connectivity development.

• Uncertainties in GDS industry growth, including higher impact from corporate travel, military, and government travel which book disproportionately through GDS. Sabre's higher exposure to these sectors and certain geographic markets with disproportionate travel decline pressure air distribution bookings.
• Delay in growth strategy initiatives, such as the multi-source low-cost carrier solution launch, which affected the expected growth timeline.

Q: Why was prior guidance so optimistic given the first half trends?

A: Important to note growth strategy impact was constant, but market changed with airlines paring back capacity and incremental industry weakness in June and July. Current outlook reflects market changes.

Q: Any technology-wise changes impacting GDS industry bookings down?

A: GDS market issues include higher corporate impact vs leisure, government/military travel decline disproportionately affecting GDS. Sabre disproportionately impacted by GDS market changes due to higher exposure to corporate, TMC, government/military, and geographic mix.

Q: Progress on multi-source platform and delay in multi-source LCC solution?

A: 38 live NDC connections, multi-source offering is best in market. Multi-source LCC solution delay is execution delay on tech side, aiming to integrate long tail of LCC content.

Q: Confidence in transitory nature of bookings decline and 2026 outlook?

A: Believes bookings decline is transitory due to mix of channel and geographic factors. 2026 air distribution volume growth expected high single digit based on realization of current growth strategies.

Q: NDC mix, GDS industry numbers, and revenue per booking?

A: NDC proportion low single digit due to reintermediation by OTAs. GDS industry down 300-400 bps YOY due to mix factors. Revenue per booking expected to perform similarly to prior year, with gross margin improving slightly in second half.