Sabre(US:SABR)2025-05-07 14:00Financial Data and Key Metrics Changes - Revenue for Q1 2025 was approximately $777 million, roughly flat year on year, while adjusted EBITDA increased by 5% to $150 million, aligning with guidance [23][12][26] - Adjusted EBITDA margin improved by 110 basis points year on year to 19.3%, driven by lower technology costs and effective cost management [12][23] - Free cash flow remains on track for the full year, with expectations of greater than $200 million [49][33] Business Line Data and Key Metrics Changes - Air distribution bookings decreased by 3% year on year, primarily due to lower group bookings in the APAC region and a decline in U.S. government and military travel [13][6] - Hotel B2B distribution business saw strong bookings growth of 7% year on year, with gross booking value transacted through the platform increasing by 11% in Q1 [14][18] - IT Solutions revenue decreased by $8 million year on year, expected to resume growth in the second half of 2025 [27][12] Market Data and Key Metrics Changes - The GDS industry growth assumption was adjusted from flat to a decline of 1% to 2% for the full year 2025, reflecting recent airline traffic softness [6][40] - The company anticipates low single-digit growth in air distribution bookings for Q2, with expectations of double-digit growth for the full year [21][31] Company Strategy and Development Direction - The company is focused on generating free cash flow, deleveraging the balance sheet, and investing in innovation for sustainable long-term growth [11][34] - The sale of the Hospitality Solutions business, valued at $1.1 billion, is aimed at strengthening the balance sheet and focusing on core airline IT and travel marketplace platforms [10][9] - Strategic priorities include multi-source content aggregation, distribution expansion, and growth in the digital payments business [16][18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging macro environment but expressed confidence in achieving double-digit distribution bookings growth despite market softness [5][40] - The company expects to see stronger APAC group booking trends in Q2 and anticipates significant growth in air distribution bookings in the second half of 2025 [31][21] - Management reiterated that the revenue model is based on transaction volume rather than pricing, which may mitigate the impact of market pressures [40][39] Other Important Information - The company plans to use approximately $960 million in net proceeds from the sale of Hospitality Solutions primarily to pay down debt, reducing leverage significantly [10][29] - The company expects to generate pro forma adjusted EBITDA of greater than $630 million for 2025, excluding the impact of the Hospitality Solutions business [32][30] Q&A Session Summary Question: Can you expound more on the macro environment and its impact? - Management noted a shift in GDS market growth expectations from flat to down 1% to 2%, indicating that while there is price pressure, the need for travel remains strong [39][40] Question: What does the sale of Hospitality Solutions allow for in terms of refinancing? - The sale is seen as a significant credit-enhancing event, improving net debt to EBITDA and reducing interest expenses, which will facilitate more efficient future financings [41][42] Question: How quickly can cash proceeds from the sale be used to pay down debt? - The company plans to pay down debt shortly after receiving proceeds, within five days, and expects free cash flow to be greater than $200 million this year [49][48] Question: Can you provide insights on the softness in Q1 and its implications for Q2? - The softness was broad, affecting both corporate and leisure travel, with improvements expected in Q2 based on recent trends [58][59] Question: How is the implementation of new business going? - Management expressed confidence in the execution of new business, with no significant risks anticipated [75][76] Question: What are the gross margins for new agency business compared to existing volumes? - New business is expected to have slightly lower margins due to geographical mix and increased NDC volumes, but overall margins are expected to remain in line with previous years [88][90] Question: Can you provide updates on the Coforge partnership? - The partnership aims to accelerate product delivery and innovative solutions, with a mix of fixed fee and gainshare components [91][90]