Q4 2023 Sabre Corp Earnings Call

Yeah.

Operator: Good morning, and welcome to the Sabre Sports Quarter and Full Year 2023 Earnings Conference Call. (Inaudible) Thank you, and good morning, everyone.

Speaker Change: Good morning, and welcome to the Sabre sports quarter and full year 2023 earnings conference call.

Livia: My name is Livia and I'll be your operator as.

Livia: As a reminder, please note today's call is being recorded.

Brian Evans: Welcome to Sabre's fourth quarter and full year 2023 earnings call. This morning, we issued an earnings press release, which is available on our website at investors.sabre.com. The slide presentation, which accompanies today's prepared remarks, is also available during this call on the Sabre Investor Relations webpage. A replay of today's call will be available on our website later this morning.

Livia: I'll now turn the call over to the senior Vice President Investor Relations and Treasurer, Brian Evans. Please go ahead Sir.

Brian Essex: Thank you and good morning, everyone welcome to <unk> fourth quarter and full year 2023 earnings call. This morning, we issued an earnings press release, which is available on our website at investors Sabre Dot com.

Brian Essex: A slide presentation, which accompanies today's prepared remarks is also available during this call on the Sabre Investor Relations webpage.

Brian Essex: A replay of today's call will be available on our website later this morning.

Unnamed Speaker: We advise you that our comments contain forward-looking statements that represent our beliefs or expectations about future events, including the effects of cost efficiencies and growth strategies. Distribution Volume, benefits from our technology transformation. Commercial and Strategic Arrangements, our financial guidance and targets, including Expected Revenue, Adjusted EBITDA, Free Cash Flow, Interest, Capital Expenditures, Margins, and Liquidity, among others.

Brian Essex: We advise you that our comments contain forward looking statements that represent our beliefs or expectations about future events.

Brian Essex: Looking at the effects of cost efficiencies and growth strategies distribution volumes benefits from our technology transformation.

Brian Essex: Commercial and strategic arrangements, our financial guidance and targets expected revenue adjusted EBITDA free cash flow interest capital expenditures margins and liquidity among others.

Brian Evans: All forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from the statements made on today's conference call. More information on these risks and uncertainties is contained in our earnings release issued this morning and our SEC filings, including our Form 10-K for the year ended December 31st, 2023. Throughout today's call, we will also be presenting certain non-GAAP financial measures; references during today's call to Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EPS, and Free Cash Flow have been adjusted to exclude certain items. The most directly comparable gap measures and reconciliations for non-gap measures are available in the earnings release and on other documents posted on our website at investors.sabre. Participating with me are Kurt Ekert, President and CEO; Mike Randolfi, Chief Financial Officer. Scott Wilson, Executive Vice President and President of Hospitality Solutions, will be available for Q&A after the prepared remarks. With that, I'll turn the call over to Kurt. Thanks, Brian. Good morning, everyone.

Brian Essex: All forward looking statements involve risks and uncertainties that may cause actual results to differ materially from the statements made on today's conference call more.

Brian Essex: More information on these risks and uncertainties is contained in our earnings release issued this morning, and our SEC filings, including our Form 10-K for the year ended December 31 2023.

Brian Essex: Throughout today's call. We will also be presenting certain non-GAAP financial measures references during today's call to adjusted EBITDA adjusted EBITDA margin adjusted EPS and free cash flow have been adjusted to exclude certain items the.

Brian Essex: The most directly comparable GAAP measures and reconciliations for non-GAAP measures are available in the earnings release and on other documents posted on our website at investors about saver Dot com.

Brian Essex: Participating with me are Curt Hecker, President and CEO, Mike <unk>, Chief Financial Officer.

Brian Essex: Scott Wilson Executive Vice President and President of Hospitality solutions will be available for Q&A. After the prepared remarks with that I will turn the call over to Kirk.

Brian Essex: Sure.

Kirk: Thanks, Brian.

Kurt J. Ekert: Thank you for joining us today. I'm pleased this morning to discuss the many accomplishments of the Sabres team. Earlier today, we reported our fourth quarter and full year 2023 results that included strong revenue growth, significant margin expansion, and substantial increases in both adjusted EBITDA and operating cash flow, which allowed us to achieve our pre-cash flow objective for the year. In addition to reviewing our financial performance, I will also spend time highlighting recent achievements in our technology transformation, our many commercial wins, and our product innovations that help position our portfolio for the future of travel while helping to deliver sustainable growth. Now, let me walk you through the agenda for today's call. On slide four, you can see an overview of the topics that Mike and I will cover. First,

Kirk: Good morning, everyone and thank you for joining us today.

Kirk: I'm pleased this morning to discuss the many accomplishments of the sabre team.

Kirk: Earlier today, we reported our fourth quarter and full year 2023 results that.

Kirk: That included strong revenue growth significant margin expansion.

Kirk: And substantial increases in both adjusted EBITDA and.

Kirk: And operating cash flow.

Kirk: Which allowed us to achieve our free cash flow objective for the year.

Kirk: In addition to reviewing our financial performance.

Kirk: I'll also spend time, highlighting the recent achievements and our technology transformation our.

Kirk: Our many commercial wins.

Kirk: And our product innovations that help position our portfolio for.

Kirk: For the future of travel.

Kirk: Helping to deliver sustainable growth.

Speaker Change: Now, let me walk through the agenda for today's call.

Speaker Change: On slide four you can see an overview of the topics that Mike and I will cover.

Speaker Change: First I will review our business highlights and accomplishments from 2023.

Kurt J. Ekert: I will review our business highlights and accomplishments for 2023. Next, I'll provide a brief overview of how the industry landscape is evolving. Finally, before handing it over to Mike...

Speaker Change: Next I'll provide a brief overview of how the industry landscape is evolving.

Speaker Change: Finally, before handing it over to Mike.

Kurt J. Ekert: I'll close with a review of our growth strategy and how we believe it positions Sabre for success. Mike will then take you through the financial results for the fourth quarter and full year 2023 and provide an update to our 2024 guidance and 2025 target. Now, let's turn to slide five.

Mike: I'll close with a review of our growth strategies and.

Mike: And how we believe they position <unk> for success.

Mike: Mike will then take you through the financial results for the fourth quarter and full year 2023.

Mike: And provide an update to our 2020 for guidance in 2025 targets.

Mike: Now, let's turn to slide five.

Kurt J. Ekert: 2023 was a year of strong execution at Sabre. Our team members around the world delivered the commercial, operational, and product development success that drove the strong financial results depicted on this slide. We generated 15% top-line growth in 2023, improved our efficiency, and effectively contained costs. These achievements combined to drive significant margin expansion and growth in adjusted EBITDA with a $272 million year-on-year improvement. Importantly, our team achieved positive free cash flow excluding restructuring for full year 2023, which was one of our primary financial priorities. These strong financial results supported our innovation and product development initiatives that are essential to achieving Sabre's long-term strategic priorities. Turning to slide six.

Mike: 2023 was a year of strong execution at sabre.

Our team members around the world delivered the commercial.

Mike: Operational and product development success.

Mike: That drove the strong financial results depicted on this slide.

Mike: We generated 15% topline growth in 2023.

Mike: Improved our efficiency.

Mike: And effectively contain costs.

Mike: These achievements combined to drive significant margin expansion.

Mike: And growth in adjusted EBITDA with a $272 million year on year improvement.

Mike: Importantly, our team achieved positive free cash flow excluding restructuring.

Mike: For full year 2023.

Mike: Which was one of our primary financial priorities.

Mike: These strong financial results supported our innovation.

Mike: And product development initiatives that are essential to achieving <unk> long term strategic priorities.

Mike: Turning to slide six.

Kurt J. Ekert: As a reminder, we have four key strategic priorities that drive our long-term direction and form the foundation of our resource allocation and decision-making, as I refer to each priority. I will briefly touch on some of the 2023 accomplishments listed on this slide. First, generating positive free cash flow and de-levering the balance sheet remain important financial objectives, as mentioned.

Mike: As a reminder, we have four key strategic priorities that.

Mike: To drive our long term direction.

Mike: Form the foundation of our resource allocation and decision making.

Mike: As I referred to each priority.

Mike: I will briefly touch on some of the 2023 accomplishments listed on this slide.

Mike: First generating positive free cash flow and de levering the balance sheet remain important financial objectives.

As mentioned the significant improvement in our adjusted EBITDA in 2023 and.

Kurt J. Ekert: Significant improvement in our adjusted EBITDA in 2023. [inaudible] help deliver positive free cash flow for the year, after excluding restructuring, on our second priority, achieving sustainable long-term growth. I am pleased to announce that we continue to grow our share of the GDS Industry Book, which I will touch on in a moment. We are encouraged by the momentum we are seeing with our carrier and agency customers and believe we will achieve further GDS market share growth in the future. Turning to Hospitality Solutions,

Mike: In addition to our working capital initiatives.

Mike: Deliver positive free cash flow for the year.

Mike: After excluding restructuring.

Mike: On our second priority achieving sustainable long term growth.

Mike: I am pleased to announce that we continue to grow our share of GDS industry bookings.

Mike: Which I will touch on in a moment.

Mike: We are encouraged by the momentum, we're seeing with our carrier and agency customers.

Mike: And believe we will achieve further GDS market share growth ahead.

Mike: Turning to hospitality solutions our.

Kurt J. Ekert: Our team delivered strong financial results in 2023, that exceeded our initial forecasts for growth and profitability. We expect this momentum to continue in 2024, including from our Hyatt Enterprise Implementation, and a number of additional businesses, on our third strategic priority, which is to drive innovation and enhance our value proposition. We've reached an important next step in our strategic partnership with Google. As I mentioned last quarter, Sabre engineering teams are now developing products and solutions, that harness Google's cutting-edge AI capabilities, which translated into several successful product launches earlier in 2023, for example, Upgrade IQ, which optimizes airlines premium cabin, We believe this important partnership is essential to providing our customers with intelligent retail solutions, and Modern Distribution Technology, as another area of excellence in execution by our.., our technology transformation to the cloud, continues on schedule, and we expect to achieve our stated goals by the end of 2024.

Mike: Our team delivered strong financial results in 2023.

Mike: That exceeded our initial forecast for growth and profitability.

Mike: We expect this momentum to continue in 2024 <unk>.

Mike: Including from our highest enterprise implementation.

And a number of additional business wins.

On our third strategic priority, which is to drive innovation and enhance our value proposition.

Mike: We've reached an important next step in our strategic partnership with Google.

Mike: As I mentioned last quarter.

Mike: Our engineering teams are now developing products and solutions.

Mike: Harnessed google's cutting edge AI capabilities.

Mike: Which translated into several successful product launches earlier 2023.

For example upgrade IQ.

Mike: Which optimizes airlines premium cabin inventory.

Mike: We believe this important partnership is essential to providing our customers with intelligent retail solutions at moderate distribution technology.

Mike: As another area of excellence in execution by our team.

Mike: Our technology transformation to the cloud continues on schedule and we expect to achieve our stated goals by the end of 2024.

Kurt J. Ekert: In addition to the cost and operating efficiency gains we are already seeing, our migration to the cloud provides a more powerful launchpad on which to create, develop, and distribute future product innovation. Before I move on, I want to take a moment to say thank you to our team members around the world for delivering these results, for consistently providing superior service to our customers, and for providing the exciting new technology that makes me so proud to be a member of the Sabre Corp. It is this collective commitment to continuous innovation and service to our customers that personifies our group. Turning to slide seven.

Mike: In addition to the cost and operating efficiency gains we are already seeing.

Mike: Our migration to the cloud provides a more powerful launch pad.

Mike: On which to create develop.

Mike: And distribute future product innovations.

Speaker Change: Before I move on.

Speaker Change: I want to take a moment to say thank you to.

Speaker Change: Our team members around the world for delivering these results.

Speaker Change: Consistently providing superior service to our customers.

Speaker Change: And for providing the exciting new technology.

Speaker Change: That makes me so proud to be a member of the sabre team.

Speaker Change: It is this collective commitment to continuous innovation.

Speaker Change: That service to our customers.

Speaker Change: Personifies agriculture.

Speaker Change: Turning to slide seven.

Kurt J. Ekert: As you can see, Travel Solutions delivered impressive financial results in 2023 across many key metrics, strong JDS bookings growth, and continued improvement in the average fee from a richer booking mix helped drive a year-on-year double-digit..., and Travel Solutions revenue and Gross Income. Sabre achieved steady GDS industry share growth through 2023, as well as 16% overall volume growth in GDS bookings and 27% growth in distribution lodging, ground, and sea Highlighting our growth opportunity in hotels, At IT Solutions, our passengers boarded increased by 8% versus 2020. Attorney's Slide 8, as we've highlighted throughout the past year.

Speaker Change: As you can see travel solutions delivered impressive financial results in 2023.

Speaker Change: Across many key metrics.

Speaker Change: Strong GDS bookings growth.

Speaker Change: And continued improvement in the average fee from a richer booking mix helped drive a year on year double digit decrease in.

Speaker Change: Travel solutions revenue and gross income.

Speaker Change: <unk> achieved steady GDS industry share growth through 2023.

Speaker Change: As well as 16% overall volume growth in GDS bookings and.

Speaker Change: 27% growth in distribution lodging ground and sea bookings.

Speaker Change: Getting our growth opportunity at hotel distribution.

Speaker Change: In it solutions, our passengers boarded increased by 8%.

Speaker Change: Versus 2022.

Speaker Change: Turning to slide eight.

Speaker Change: As we highlighted throughout the past year.

Speaker Change: Paper is growing its share of GDS industry bookings.

Speaker Change: As you can see our share in Q4 'twenty three.

Kurt J. Ekert: Sabre is growing its share of GDS Industry Book. As you can see, our shared Q423, again expanded on a year-on-year basis for the fourth consecutive quarter. In addition... We achieved a GDS industry share of 33.8% for full year 2023, a 1.2 percentage point improvement versus 2022. In the fourth quarter, our share of the GDS industry bookings was up a year on tier but declined slightly sequentially from the third quarter. This is due largely to the temporary slowdown in corporate travel, a natural seasonal decline in corporate bookings during the quarter, as corporate travel comprises a larger proportion of our client footprint and bookings relative to the GDS industry.

Speaker Change: Again expanded on a year on year basis.

Speaker Change: For the fourth consecutive quarter.

Speaker Change: In addition.

Speaker Change: We achieved GDS industry share of 33, 8%.

Speaker Change: For full year 2023, a one two percentage point improvement versus 2022.

Speaker Change: In the fourth quarter, our share of the GDS industry bookings was up year on year.

Speaker Change: But declined slightly sequentially from the third quarter.

Speaker Change: This is due largely to the temporary slowdown corporate travel.

Speaker Change: Natural seasonal decline in corporate bookings during the quarter.

As corporate travel comprises a larger proportion of our client footprint and bookings relative to the GDS industry.

Speaker Change: Importantly, as Mike will explain we.

Speaker Change: We have seen a rebound corporate bookings and resulted strong GDS market share performance trends.

Speaker Change: As we start 2024.

Speaker Change: We are pleased with these results and believe our compelling distribution offering.

Speaker Change: As well as signed but not yet implemented business and.

Speaker Change: Our robust pipeline of distribution deals.

Kurt J. Ekert: Importantly, as Mike will explain... We have seen a rebound, a corporate book, and a resulted strong GDS market share performance trend as we start 2024. We are pleased with these results and Believe, our compelling distribution offering, as well as signed but not yet implemented business, and our robust pipeline of distribution deals. GDS Industry Market Share Expansion. Turning to slide 9.

Speaker Change: <unk> us well for continued.

Speaker Change: Tds industry market share expansion.

Speaker Change: Turning to slide nine.

Speaker Change: Our hospitality solutions team delivered excellent results in 2023.

Speaker Change: Total revenue was up 19%.

Speaker Change: Versus 2022.

Speaker Change: A significant jump in both Crs transactions at rate per transaction.

Speaker Change: Adjusted EBITDA reported for the year was well above our initial expectation breakeven results at.

Speaker Change: That represented more than a $40 million improvement versus 2022.

Speaker Change: Additionally, the SaaS operating model inherent in our hospitality solutions business generates high recurring revenue.

Kurt J. Ekert: Our Hospitality Solutions team delivered excellent results in 2023. Total revenue was up 19% versus 2022 on a significant jump in both CRS transactions and Rape for Transaction. Adjusted EBITDA was reported for the year, well above our initial expectation for breakeven results, and represented more than a $40 million improvement versus 2022. Additionally, the SAS operating model inherent in our hospitality solutions business generates high recurring revenue.

Speaker Change: Consistent double digit revenue growth.

Speaker Change: 79% recurring revenue.

Speaker Change: And a strong margin expansion trend provide markers and the value trajectory of this business.

Speaker Change: Please turn to slide 10.

Speaker Change: Our technology transformation remains on course to achieve our cost savings targets.

Speaker Change: And technology goals by year end 2024.

Speaker Change: As you can see the efficiency with which taper conducts its business today is substantially improved.

Speaker Change: In the fourth quarter.

Speaker Change: Our unit cost of compute declined by nearly 20%.

Speaker Change: From the year ago period, and was down approximately 50% versus 2019.

Kurt J. Ekert: Consistent double-digit revenue growth, 79% recurring revenue, and a strong margin expansion trend provide markers. Please turn to slide 10. Our technology transformation remains on course to achieve our cost savings targets and Technology Goals by year-end 2024. As you can see, the efficiency with which Sabre conducts its business today is substantially improved. In the fourth quarter, our unit cost of compute declined by nearly 20% from the year-ago period and was down approximately 50% versus 2019.

Speaker Change: In addition.

Speaker Change: Our focus on investing and offer an order capabilities is a pivotal aspect of our future product portfolio.

Speaker Change: We're actively developing our offer in order platform.

Speaker Change: Within the Google cloud environment.

Speaker Change: And we recently completed a successful pilot program with a major airline partner.

Speaker Change: This successful program validated our ability to efficiently integrate shopping.

Speaker Change: At ordering functionalities within the platform.

Speaker Change: Overall, we believe our technology transformation.

Speaker Change: Our commitment to innovation will continue to help us deliver modern technology solutions and execute on our strategic priorities.

Kurt J. Ekert: In addition, our focus on investing in offer and order capability is a pivotal aspect of our future product portfolio. We are actively developing our offer and order platform within the Google Cloud environment, and we recently completed a successful pilot program with a major airline partner. The successful program validated our ability to efficiently integrate shopping and ordering functionalities within the platform.

Speaker Change: Please turn to slide 11.

Speaker Change: In addition to the significant customer announcements, we highlighted earlier in 2023.

Speaker Change: I am pleased to review a number of more recent business wins.

Speaker Change: Light safer has consistently being selected.

Speaker Change: As a partner of choice by leading global travel suppliers seeking modern distribution and retail technology.

Speaker Change: We continue to see momentum in hospitality solutions.

Speaker Change: Our implementation work with Hyatt to provide them with our <unk> Central reservation system technology.

Speaker Change: <unk> and we are on track for initial go live in the first half of 2024.

Kurt J. Ekert: Overall, we believe our technology transformation and Commitment to Innovation will continue to help us deliver modern technology solutions and execute on our strategic priorities. Please turn to slide 11. In addition to the significant customer announcements we highlighted earlier in 2023, I am pleased to review a number of more recent business wins. But Highlight Sabre is consistently being selected as a partner of choice by leading global travel suppliers seeking modern distribution. [inaudible] We continue to see momentum in hospitality; our implementation work with Hyatt, to provide them with our Cenexus Central Reservation System technology, continues, and we are on track for initial go live in the first half of 2024. We also recently announced a new agreement with Frazier's Hospitality, a luxury management company in Asia Pacific, which selected our Retail Studio software to provide its guests with greater personalization.

Speaker Change: We also recently announced a new agreement with Frazier is hospitality and.

Speaker Change: A luxury management company in Asia Pacific.

Speaker Change: Which selected our retail studio software.

Speaker Change: To provide guests with greater personalization.

Speaker Change: Earlier this week, we announced a key partnership with Reata are the new national airline of the Kingdom of Saudi Arabia.

Speaker Change: To utilize our network planning and optimization solutions.

Speaker Change: With the airline will be using our advanced data analytic and intelligent decision, making capabilities to improve data efficiency.

Speaker Change: And help optimize flight types for incremental revenue gains.

Speaker Change: In distribution we.

Speaker Change: We continue to expand our relationship with Air India.

Speaker Change: And as of January one 2024.

Speaker Change: Travel agencies in India, now have access to that carriers expensive domestic content through sabre.

Speaker Change: We were also pleased to sign a new multiyear agreement with.

Speaker Change: With International Airlines group or IAG.

Speaker Change: That will allow sabre connected buyers of agencies to sell at a fact and that you see content.

Speaker Change: Furthermore, we are accelerating our investment to offer more robust FCC functionality.

Kurt J. Ekert: Earlier this week, we announced a key partnership with Riyadh Air, the new national airline of the Kingdom of Saudi Arabia, to utilize our network planning and optimization, where the airline will be using our advanced data analytic and intelligent decision making capabilities to improve data efficiency and help optimize flight times for incremental.., and Distribution. We continue to expand our relationship with Air India. And as of January 1st, 2024, travel agencies in India now have access to that carrier's expansive domestic content through Sabre.

Speaker Change: Our recent agreements for MDC contact with Hawaiian.

Speaker Change: Malaysian Airlines and lot Polish Airlines.

Speaker Change: I think the customers seeking modern distribution technologies consistently juicy burger to meet their evolving needs.

Speaker Change: We also had a number of meaningful agency wins, including one of the leading providers of online travel priceline.

Speaker Change: In summary.

Speaker Change: Our team achieved a number of commercial wins during the fourth quarter.

Speaker Change: And we are confident that our modern technology solutions.

Speaker Change: Pipeline of business will help us execute on our strategic priorities.

Speaker Change: Now on to slide 12.

Speaker Change: I will take a few moments now to look forward and.

Speaker Change: And discuss the latest trends in global Air travel.

Speaker Change: How is the travel market places are evolving and how we believe we are positioned for success in this environment.

Kurt J. Ekert: We were also pleased to sign a new multi-year agreement with International Airlines Group, or IAG, for Cell Edifact and Denti-C Contact. Furthermore, we are accelerating our investment to offer more robust FDC functionality, our recent agreements for NDC content with Hawaiian Airlines and Malaysian Airlines, and Matt Polish here live.

Speaker Change: This chart depicts the long run upward forecasted trend.

Speaker Change: And air travel demand.

Speaker Change: The expected resiliency global air passenger growth.

Speaker Change: As you can see in the chart.

Speaker Change: Industry forecasts suggest healthy growth passenger traffic will continue.

Kurt J. Ekert: I'd like the customer seeking modern distribution technology to consistently choose Sabre to meet their evolving needs. We also had a number of meaningful agency wins, including one of the leading providers of online travel, Christline. In summary, our team achieved a number of commercial wins during the fourth quarter. And we are confident that our modern technology solution..., and Pipeline of Business will help us execute on our strategic priorities. Now on to slide 12.

Speaker Change: And approached nearly 7% per year over the next five years.

Speaker Change: Looking forward, we see a number of reasons to be optimistic.

Speaker Change: That broader industry volume growth will continue such as moderating airfares.

Speaker Change: Solid capacity growth driven by robust international demand.

Speaker Change: And less acute industry supply constraints.

Speaker Change: Sabre GDS industry experienced significant growth in recent years as global travel recovered however.

Speaker Change: However.

Speaker Change: Overall air travel rebounded at a faster pace over this period.

Speaker Change: We believe the GDS industry has recovered at a slower rate for several reasons.

Kurt J. Ekert: I will take a few moments now to look forward and discuss the latest trends in global air travel, how the travel marketplace is evolving, and how we believe we are positioned for success in this environment. This chart depicts the long-run upward forecasted trend in air travel demand and the Expected Resilience Global Air Passenger Program, as you can see in the chart.

Speaker Change: First.

Speaker Change: The GDS industry has historically been comprised of about 50% corporate at 50% leisure.

Speaker Change: Generally over indexing to longer haul international segments.

Speaker Change: Which is more complex in nature.

Speaker Change: As discussed in the marketplace.

Speaker Change: Global corporate travel has recovered to about 75% on.

Speaker Change: On a unit basis of its pre COVID-19 levels.

Kurt J. Ekert: Industry Forecast. We suggest healthy growth in passenger traffic. We'll continue... and approach nearly 7% per year over the next five years.

Speaker Change: Note that with air and hotel yields much higher in 2023.

And pre Covid.

Speaker Change: The dollar recovery often cited by suppliers is higher than this unit percentage.

Kurt J. Ekert: Looking forward, we see a number of reasons to be optimistic that broader industry volume growth will continue, such as moderating airfares, solid capacity growth driven by robust international demand, and Less Acute Industry Supply Constraints. Sabre and the GDS industry have experienced significant growth in recent years as a result of the Global Travel Recovery. However...

Speaker Change: And as I mentioned earlier.

Speaker Change: Greater proportion of our business is corporate or TMC business as compared to our competitors.

Speaker Change: While there may be a structural element to this in the corporate travel today is smaller than it was historically.

Speaker Change: We believe this is an opportunity for sabre.

Speaker Change: We are well positioned to grow volume and share.

Speaker Change: Corporate travel growth prospectively.

Speaker Change: Second.

Speaker Change: Longer haul international capacity is generally returned more slowly than shorter haul and domestic capacity give.

Kurt J. Ekert: Overall, air travel rebounded at a faster pace over this period, but we believe the GDS industry has recovered at a slower rate for several reasons. Bursch.

Speaker Change: Given the shorter haul in domestic capacity generally accrues more to airline direct that.

Speaker Change: To the GDS channel.

Kurt J. Ekert: The GDS industry has historically been comprised of about 50% corporate and 50% business, generally over-indexing to longer-haul international segments, which is more complex than this, as discussed in the marketplace. Global corporate travel has recovered to about 75% on a unit basis of its pre-COVID levels, noted with air and hotel yields much higher in 2023 than before COVID. Dollar recovery is often cited by suppliers, higher than this unit perception. And, as I mentioned earlier, a greater proportion of our business is corporate or TMC business as compared to our competitors. While there may be a structural element to this, in that corporate travel today is smaller than it was historically, we believe this is an opportunity for Sabre, as we are well positioned to grow volumes and share as corporate travel grows. SEC.

Speaker Change: This is slow GDS industry recovery.

Speaker Change: This has had the effect of reducing the proportion of overall bookings going through the GDS channel as.

Speaker Change: As compared to airline direct.

Speaker Change: We believe that this is not a long term issue for the industry.

Speaker Change: Third.

Speaker Change: Do you see volumes today comprise only about 1%.

Speaker Change: Of total volumes for travel management companies and brick and mortar agencies.

Speaker Change: And we believe the MVC volumes of these buyers are flowing almost entirely through sabre and other GDS.

Speaker Change: However, while not a new construct.

Speaker Change: We have seen over the Covid period, an increase in airline direct connect volumes with online travel agents.

Some of which may be characterized as mtc.

Speaker Change: Wildly generally lower margin business.

Speaker Change: Volumes remain a very meaningful contributor to the GDS industry.

Speaker Change: And this dynamic is a negative volume impact to GDS.

Speaker Change: Looking ahead.

Speaker Change: As Otas are now seeking our help with automation shopping and caching solutions to deal with their content.

Kurt J. Ekert: Walker Hall International Capacity has generally returned more slowly than shorter haul and domestic capacity. Given that shorter haul and domestic capacity generally accrues more to airline direct, then to the GDS channel, this is slow GDS industry recovery. This has had the effect of reducing the proportion of overall bookings going through the GDS channel as compared to Airline Direct. We believe that this is not a long-term issue for the United States. 3rd.

Speaker Change: Retailing and operational needs.

There may be opportunity to recapture volume as.

Speaker Change: As well as provide additional services.

Speaker Change: And last low cost carriers have traditionally outgrown full service carriers.

Speaker Change: And we and other GDS has been a smaller part of the LCC distribution footprint.

Speaker Change: Given their general short haul at leisure focus.

Speaker Change: Prospectively, we believe this is a largely untapped opportunity for sabre.

Kurt J. Ekert: NDC volumes today comprise only about 1% of total volumes for travel management companies and Brick-and-Mortar HQ, and we believe the NDC volumes of these buyers are flowing almost entirely through Sabre and other GDSs. However, while not a new construct, we have seen over the COVID period an increase in airline direct connect volumes with online travel, some of which may be characterized as..., while a generally lower margin business. OTA volumes remain a very meaningful contributor to the GDS industry, and this OTA dynamic is a negative volume impact on GDS.

Speaker Change: In addition, there have been a number of recent positive comments from large airlines and industry experts.

Speaker Change: Corporate and international travel demand growth in 2024.

Speaker Change: It should be supportive of the industry volume scenarios that Mike will discuss shortly.

Speaker Change: Onto slide 13.

Speaker Change: Looking at the future of travel any.

Speaker Change: And the evolving marketplace our growth strategies are designed to deliver modern distribution and retailing technology.

Speaker Change: Our multi source content platform strategy.

Speaker Change: <unk> is designed to efficiently increase agency and buyer access to relevant air content from a wide array of airline products, including at effect and DC and low cost carrier content through.

Kurt J. Ekert: Looking ahead, as OTAs are now seeking our help with automation, shopping, and Caching solutions to deal with their content, retailing, and operational needs, there may be opportunity to recapture volume, as well as provide additional services. And last, low-cost carriers have traditionally outgrown full-service carriers, and we, and other GDS, have been a smaller part of the LCC distribution footprint, given their general short haul and leisure focus.

Speaker Change: Through all channels and points of sale.

Speaker Change: And with leading shopping.

Speaker Change: Retailing and automation capabilities.

Speaker Change: Agencies and other buyers consistently tell us.

Speaker Change: We have one of the leading MDC solutions in the world to support their businesses.

Speaker Change: Next.

Speaker Change: Our distribution expansion strategy consists of targeted <unk>.

Speaker Change: Resource and product investments.

Speaker Change: To help drive growth in specific geographies.

Speaker Change: Marketplace segments.

Kurt J. Ekert: Consequently, we believe this is a largely untapped opportunity for Sabre. In addition, there have been a number of recent positive comments from our airlines and industry experts around corporate and international travel demand growth in 2024, which should be supportive of the industry volume scenarios that Mike will discuss shortly. Now on to slide 13.

Speaker Change: Clearly countries and segments in.

Speaker Change: Which we are under indexed today.

Speaker Change: We expect to realize continued strong share growth.

Speaker Change: In the months and years ahead.

Speaker Change: <unk> existing and new agencies and other buyers see us as their preferred technology partner.

Speaker Change: And hotel distribution.

Speaker Change: We believe <unk> can become the premier business to business.

Kurt J. Ekert: Looking at the future of travel and the evolving market, our growth strategies are designed to deliver modern distribution and retailing technology; our multi-source content platform strategy is designed to efficiently increase agency and buyer access to relevant air content from a wide array of airline products, including Edifat, and DC and low-cost carrier content, through all channels and points of sale. And with leading shopping, retailing, and automation capabilities, agencies and other buyers consistently tell us that we have one of the leading NEC solutions in the world to support their business.

Speaker Change: Intermediary lodging platform globally.

Speaker Change: Best thing to enhance our current product suite.

Speaker Change: Tapping more deeply into our existing distribution customer base.

Speaker Change: And increasingly attachment of hotel bookings to our GDS market offerings.

Speaker Change: In payments, we are excited about the long term opportunity.

Speaker Change: At Bolivar confirm our platform can.

Speaker Change: And become a leader in virtual cards.

Speaker Change: Market penetration of virtual cards for commercial payments remains in the early stages.

Speaker Change: But adoption is accelerating overall.

Speaker Change: Overall, our payment solutions experienced 25% plus growth.

Spend volume for 2023 versus 22.

Speaker Change: As businesses increasingly seek more efficient payment methods.

Kurt J. Ekert: Our distribution expansion strategy consists of targeted resource and product investment to help drive growth in specific geography and Marketplace Check, which we are under-indexed for today. We expect to realize continued strong share growth in the months and years ahead as existing and new agencies and other buyers see us as their preferred technology partner and Hotel Distribution. We believe Sabre can become the premier business-to-business, intermediary lodging platform globally by investing to enhance our current products, tapping more deeply into our existing distribution customer base, and increasing the attachment of hotel books... to our GDS market office. We are excited about the long-term opportunities and believe our Confermo platform can become a leader in virtual cards. Market penetration of virtual cards for commercial payment remains in the early stages, but adoption is accelerating.

Speaker Change: With $14 billion spend volume already flowing through the payment gateway.

Speaker Change: We see confirm as an important contributor to the future of our business.

Speaker Change: <unk> core capabilities in airline it.

Speaker Change: Address the changing needs of global carriers are demanding greater personalization.

Speaker Change: And flexible technologies.

Speaker Change: We plan to grow our <unk> business with intelligent retailing solutions.

Speaker Change: Built on a modular platform with offer order technology at the core.

Speaker Change: These products and solutions are already getting traction with customers.

Speaker Change: In our hospitality solutions business, we have a strong revenue pipeline of new customer wins in our Crs and <unk>.

Speaker Change: Our retail studios suite of solutions.

Speaker Change: This offering brings the power of personalization.

Speaker Change: Two our hotelier customers to significantly expand their revenue opportunities beyond standard booking process, improving the overall guest experience.

In summary, we are committed.

Speaker Change: To focused investments in these strategies to deliver winning modern retailing and distribution technologies and.

Speaker Change: And deliver sustainable growth.

Speaker Change: I again commend our team members globally for their hard work.

Kurt J. Ekert: Overall, our payment solutions experienced 25% plus growth in spend volume in 2023 versus 22, as businesses increasingly seek more efficient payment methods, with $14 billion in spend volume already flowing through the payment gateway. We see Confirma as an important contributor to the future of our business. shaper's core capabilities in the airline industry address the changing needs of global carriers that are demanding greater personalization and flexible technology. We plan to grow our LNIT business with intelligent retailing solutions built on a modular platform with offer order technology at the core. These products and solutions are already gaining traction with customers in our Hospitality Solutions business. We have a strong revenue pipeline of new customer wins in our CRS and our retail studio. This offering brings the power of personalization to our Hotel Your Customer to significantly expand their revenue opportunities beyond the standard booking process. Improving your broadcast experience.

Speaker Change: And I am confident that we have the right strategies in place to continue delivering on our priorities.

Speaker Change: I'll now hand, the call over to Mike to walk you through our financial performance and forward outlook.

Mike: Thanks, Kurt and good morning, everyone. Please turn to slide 14.

Mike: I'm pleased to share our 2023 accomplishments that highlight the dedication and hard work of our sabre team members.

As Kirk mentioned previously we achieved our free cash flow objectives for the year on solid revenue growth effective cost management that led to significant margin expansion and working capital initiatives that delivered meaningful cash flow benefits.

Mike: With the actions we have taken we have developed significant operating leverage in our business that is allowing strong flow through of topline revenue to the bottom line.

Mike: To illustrate this increase in operating leverage note that in the fourth quarter and in the second half of 2023, we saw adjusted EBITDA grow at a meaningfully greater rate than revenue.

Mike: For the year Sabre generated a substantial improvement in both cash from operations and free cash flow.

Mike: Our distribution business generated a 27% year over year increase in revenue, an 18% more bookings and solid improvement in our average booking fee.

Mike: Hospitality solutions achieved better financial results faster than we had anticipated on strong growth in Crs transactions and higher average revenue per transaction driven by strong growth in ancillary sales.

Michael O. Randolfi: In summary, we are committed to focused investments in these strategies to deliver winning modern retail and distribution technology and deliver sustainable growth. I again congratulate our team members globally for their hard work, and I am confident that we have the right strategies in place to continue delivering on our priorities. I will now hand the call over to Mike to walk you through our financial performance and Forward Outlook. Thanks, Kurt. And good morning, everyone.

Mike: This led to an approximate $40 million improvement in adjusted EBITDA in 2023 versus 2022.

Mike: In addition, we are pleased to have refinanced the vast majority of our 2025 maturities.

Mike: Please turn to slide 15.

Speaker Change: I will now briefly review recent GDS industry bookings trends.

Speaker Change: During the fourth quarter, we experienced softness of GBS bookings late in the year below our expectations. We believe this is largely attributable to the slowdown in corporate travel in Q4 as Kurt mentioned earlier.

Michael O. Randolfi: Please turn to slide 14. I'm pleased to share our 2023 accomplishments that highlight the dedication and hard work of our Sabre team members. As Kurt mentioned previously, we achieved our free cash flow objective for the year on solid revenue growth, effective cost management that led to significant margin expansion, and working capital initiatives that delivered meaningful cash flow benefits. With the actions we have taken, we have developed significant operating leverage in our business that is allowing a strong flow through of top line revenue to the bottom line. To illustrate this increase in operating leverage, note that in the fourth quarter and in the second half of 2023, we saw adjusted EBITDA grow at a meaningfully greater rate than revenue. For the year, Sabre generated a substantial improvement in both cash from operations and free cash flow.

Speaker Change: Despite this I am pleased to share that we are seeing significant improvement in GBS volumes and GBS market share performance year to date.

Speaker Change: Now moving to the table.

Speaker Change: As I highlighted earlier, we reported substantial year over year increases each of our key financial metrics in both the fourth quarter and for the full year 2023 with significant improvements in both revenue generation and adjusted EBITDA.

Speaker Change: We also achieved positive free cash flow for the year after excluding restructuring, which was once again one of our primary financial objectives for 2023.

Speaker Change: Furthermore, the fourth quarter $77 million and free cash flow generation was the highest in four years.

Speaker Change: Turning to slide 16.

Speaker Change: Total Q4 revenue was $687 million, an increase of $56 million or 9% versus last year.

Speaker Change: Distribution revenue totaled $476 million.

Michael O. Randolfi: Our distribution business generated a 27% year-over-year increase in revenue on 18% more bookings and a solid improvement in our average booking fee. Hospitality solutions achieved better financial results faster than we had anticipated on strong growth in CRS transactions and higher average revenue per transaction, driven by strong growth in ancillary sales. This led to an approximate $40 million improvement in adjusted EBITDA in 2023 versus 2022. In addition, we are pleased to have refinanced the vast majority of our 2025 maturity. Please turn the slide on.

Speaker Change: $59 million or 14% increase compared to $417 million in Q4 2022.

Speaker Change: Our distribution bookings totaled $78 million in the quarter a.

3% increase compared to $76 million in Q4 2022.

Speaker Change: Our average booking fee was $6.09 in the fourth quarter up 11%.

Speaker Change: From Q4, 2022, as we continue to realize favorable mix into higher rate regions and types of travel.

Speaker Change: It solutions revenue totaled $146 million in the quarter. This was an $11 million decline versus revenue of $157 million.

Michael O. Randolfi: I will now briefly review recent GDS industry booking trends. During the fourth quarter, we experienced softness in GDS bookings late in the year, below our expectations. We believe this is largely attributable to the slowdown in corporate travel in Q4, as Kurt mentioned earlier. Despite this, I'm pleased to share that we are seeing significant improvement in GDS volumes and GDS market share performance year-to-date. Now moving to the table.

Speaker Change: In the prior year, driven by the migrations and large portion of which is the result of changes in Russian law in October 2022.

Speaker Change: Hospitality solutions, Q4, 2023 revenue totaled $75 million, a $10 million or 16% improvement versus revenue of $65 million in Q4 2022.

Speaker Change: 16 points of revenue growth was driven by five points of central reservation system transactions growth in.

Speaker Change: And 11 points of higher rate per transaction.

Michael O. Randolfi: As I highlighted earlier, we reported substantial year-over-year increases in each of our key financial metrics in both the fourth quarter and for the full year 2023, with significant improvements in both revenue generation and adjusted EBITDA. We also achieved positive pre-cash flow for the year after excluding restructuring, which was, once again, one of our primary financial objectives for 2020. Furthermore, the fourth quarter $77 million in free cash flow generation was the highest in four years. Turning to slides,

Speaker Change: Hospitality solutions generated $5 million of adjusted EBITDA in the fourth quarter and $13 million in 2023, representing an approximate $40 million improvement in 2023 versus 2022.

Speaker Change: And as a reminder, we believe that our recently announced Crs agreement with Hyatt will contribute to the momentum we're already seeing in hospitality solutions.

Speaker Change: <unk> adjusted EBITDA of $96 million in Q4, 2023 versus $1 million in Q4, 2022 represented a $94 million improvement year over year.

Speaker Change: Before I move on I want to highlight the significant impact that our cost reduction program continues to have on our financial performance.

Michael O. Randolfi: Total Q4 revenue was $687 million, an increase of $56 million or 9% versus last year. Distribution revenue totaled $476 million, a $59 million or 14% increase compared to $417 million in Q4 2022. Our distribution bookings totaled $78 million in the quarter, a 3% increase compared to $76 million in Q4 2022. Our average booking fee was $6.09 in the fourth quarter, up 11% from Q4 2022 as we continue to realize favorable mix into higher rate regions and types of travel. IT solutions revenue totaled $146 million in the quarter.

Speaker Change: While our total revenue was up $56 million year over year in the fourth quarter, our adjusted EBITDA increased by $94 million over the same period.

Speaker Change: Free cash flow was $77 million in the fourth quarter, including the impact of restructuring as improving margins and our working capital initiatives delivered strong results.

Speaker Change: We ended the fourth quarter with a cash balance of $669 million.

Speaker Change: Turning to slide 17.

Speaker Change: Regarding guidance, we expect first quarter 2020 for revenue of approximately $750 million and adjusted EBITDA of approximately $115 million.

Speaker Change: As a reminder, we typically experienced higher working capital and cash outflows in the first quarter due to the seasonality of our business.

Speaker Change: Therefore, it is typically our weakest quarter of the year from a free cash flow perspective.

Michael O. Randolfi: This was an $11 million decline versus revenue of $157 million in the prior year, driven by demigration, a large portion of which is the result of changes in Russian law in October 2022. Hospitality Solutions' Q4 2023 revenue totaled $75 million, a $10 million or 16% improvement versus revenue of $65 million in Q4 2020. The 16 points of revenue growth was driven by five points of central reservation system, transactions growth, and 11 points of higher rates per transaction. Hospitality Solutions generated $5 million of adjusted EBITDA in the fourth quarter and $13 million in 2023, representing an approximate $40 million improvement in 2023 versus 2022. And as a reminder, we believe that our recently announced CRS agreement with Hyatt will contribute to the momentum we are already seeing in hospitality.

Speaker Change: This seasonality is driven primarily by timing of when we receive airline partner receipts in the fourth quarter.

Speaker Change: Versus when we make agency payments in the first quarter.

Speaker Change: Additionally, during the first quarter, we pay our annual incentive compensation payments and we will also begin to lap the benefits of some of our working capital initiatives in 2023 that are not expected to provide additional benefits to 2020 for cash flow.

Speaker Change: For the full year 2024, we expect revenue of approximately $3 billion.

Speaker Change: And adjusted EBITDA of greater than $500 million or an approximate 50% increase compared to 2023.

Speaker Change: With additional upside to this outcome based on potential GDS market growth.

As you can see in this guidance, we continue to expect strong operating leverage from our cost reduction efforts and we expect flow through of incremental revenue growth to adjusted EBITDA to remain above 100% for full year 2024.

Speaker Change: In addition in 2024, we also expect cash interest of about $350 million, which includes the impact of payment in kind on a portion of our debt.

Speaker Change: And capital expenditures of $100 million.

Michael O. Randolfi: Sabre's adjusted EBITDA of $96 million in Q4 2023 versus $1 million in Q4 2022 represented a $94 million improvement year over year. Before I move on, I want to highlight the significant impact that our cost reduction program continues to have on our financial performance. While our total revenue was up $56 million year-over-year in the fourth quarter, our adjusted EBITDA increased by $94 million over the same period. Pre-cash flow was $77 million in the fourth quarter, including the impact of restructuring. As improving margins and our working capital initiatives delivered strong results, we ended the fourth quarter with a cash balance of $669 million. Turning to slide 17.

Speaker Change: In 2024, we once again expect to generate positive free cash flow.

Speaker Change: <unk>, we have increased our capex assumption moving forward to support the growth strategies that Kurt outlined earlier.

Speaker Change: Now onto our 2025 targets.

Speaker Change: As a quick reminder, our previous targets for adjusted EBITDA and free cash flow included an assumption for GDS industry market growth of 1% to two points sequentially per quarter.

Speaker Change: And as we mentioned in our Q3 earnings call in November we have seen GDS industry market growth come in below these levels.

Speaker Change: Given the flatter trends in GDS industry volumes, we are now targeting 2025, adjusted EBITDA to be greater than $700 million and free cash flow of greater than $200 million.

Speaker Change: With upside to these figures based on potential GDS industry market growth.

Speaker Change: Turning to slide 18, now I will walk you through how we expect our 2023 adjusted EBITDA to build toward our 2025 target of greater than $700 million.

Michael O. Randolfi: Regarding guidance, we expect first quarter 2024 revenue of approximately $750 million and adjusted EBITDA of approximately $115 million. As a reminder, we typically experience higher working capital and cash outflows in the first quarter due to the seasonality of our business. Therefore, it is typically our weakest quarter of the year from a free cash flow perspective. This seasonality is driven primarily by the timing of when we receive airline partner receipts in the fourth quarter versus when we make agency payments in the first quarter.

Speaker Change: And the illustrative impact of GDS industry volume growth to our adjusted EBITDA baseline assumption.

Speaker Change: Due to the early achievement of cost savings, we expect the combined savings from our technology transformation and expense reduction efforts announced last year to drive approximately $250 million and adjusted EBITDA growth by 2025.

Speaker Change: As you can see on the page, we expect two thirds of the improvement.

Speaker Change: In adjusted EBITDA from 2023 to 2025 to be driven by lower costs.

Speaker Change: We expect the growth strategies that Curt highlighted earlier on today's call, we will generate approximately $115 million toward our 2025 adjusted EBITDA target.

Michael O. Randolfi: Additionally, during the first quarter, we will pay our annual incentive compensation payments, and we will also begin to reap the benefits of some of our working capital initiatives. 2023 that are not expected to provide additional benefits to 2024 cash flow. For the full year 2024, we expect revenue of approximately $3 billion and adjusted EBITDA of greater than $500 million, or an approximate 50% increase compared to 2023, with additional upside to this outcome based on potential GDS market growth. As you can see in this guidance, we continue to expect strong operating leverage from our cost reduction efforts, and we expect flow-through of incremental revenue growth to adjust to remain above 100% for full year 2024. In addition, in 2024, we also expect cash interest of about $350 million, which includes the impact of payment in kind on a portion of our debt, and capital expenditures of $100 million.

Speaker Change: We expect hospitality solutions to provide nearly half of the $115 million an improvement given the strong momentum we have seen in 2023 and the robust pipeline of additional business, including our recent Hyatt agreement.

Speaker Change: We believe our other growth strategies led by distribution expansion initiatives.

Speaker Change: We will provide the remainder of the $115 million improvement by 2025.

Speaker Change: This adjusted EBITDA benefit from our growth strategies is lower than our prior $150 million target primarily from earlier achievement in 2023, specifically for hospitality solutions.

Speaker Change: And lower GDS market growth during 2023 and assumed prospectively.

Moving to GDS industry volumes, the greater than $700 million baseline target assumes only flat to nominal GDS industry growth, which we believe is the low end of potential market growth outcomes.

Speaker Change: As you can see from the chart, we have illustrated a range of potential outcomes for the GDS industry market.

Speaker Change: Up to four points of annual growth above our baseline assumption.

Speaker Change: Note that four points of potential annual market growth improvement is not meant as a ceiling.

Michael O. Randolfi: In 2024, we once again expect to generate positive free cash flow. Notably, we have increased our CapEx assumption moving forward to support the growth strategies that Kurt outlined earlier. Now, on to our 2025 target.

Speaker Change: If we see as illustrated for points of agile GDS market growth over 2024 and 2025.

Speaker Change: Then we would expect to achieve approximately $800 million of adjusted EBITDA in 2025.

Speaker Change: To provide more color on the potential benefit from stronger GDS market growth, we estimate that each point of additional growth is worth approximately $13 million of adjusted EBITDA per year.

Michael O. Randolfi: As a quick reminder, our previous targets for adjusted EBITDA and free cash flow included an assumption for GDS industry market growth of 1 to 2 points sequentially per quarter. And, as we mentioned in our Q3 earnings call in November, we have seen GDS industry market growth come in below these levels. Given flat trends in GDS industry volumes, we are now targeting 2025 adjusted EBITDA to be greater than $700 million and free cash flow of greater than $200 million, with upside to these figures based on potential GDS industry market growth. Turning to slide 8.

Speaker Change: Note that GDS market share growth is separate from these volume figures and included in our aforementioned growth strategy projections.

Speaker Change: As Kurt and I stated earlier, we believe there is reason for optimism that industry volume growth will exceed our baseline assumption.

Speaker Change: Looking forward I.

Speaker Change: <unk> is projected high single digit capacity growth over the next several years.

Speaker Change: Many of the largest global airlines or articulate the continued capacity increases.

Speaker Change: Skewed toward long haul international travel and.

Speaker Change: In business travel surveys have indicated strong growth in corporate travel spend.

Michael O. Randolfi: Now I will walk you through how we expect our 2023 Adjusted EBITDA to build toward our 2025 target of greater than $700 million and the illustrative impact of GDS industry volume growth on our Adjusted EBITDA baseline assumption. Due to the early achievement of cost savings, we expect the combined savings from our technology transformation and expense reduction efforts announced last year to drive approximately $250 million in Adjusted EBITDA growth by 2025. As you can see on the page, we expect two-thirds of the improvement and Adjusted Ibiza from 2023 to 2025 to be driven by lower costs.

Speaker Change: Turning to slide 19.

This chart provides a path for how we plan to achieve our 2024 adjusted EBITDA guidance for greater than $500 million.

Speaker Change: We expect the vast majority of our adjusted EBITDA gains in 2024 to come from greater cost efficiency.

Speaker Change: Both our technology transformation and cost reduction program announced last may.

Speaker Change: Gain on track to deliver the expense savings that we have previously communicated.

Speaker Change: It is important to note that our baseline guidance of greater than $500 million in 2024.

Speaker Change: In baseline target of greater than $700 million in 2025.

Speaker Change: Does not include meaningful benefits from GDS market growth, even though we are optimistic based on positive external commentary and data points that we have referenced.

Speaker Change: We believe our growth strategies, primarily driven by further gains in hospitality solutions will provide approximately $30 million toward our 2024 adjusted EBITDA target.

Michael O. Randolfi: We expect the growth strategies that Kurt highlighted earlier on today's call will generate approximately $115 million dollars toward our 2025 Adjusted Eva.target. We expect Hospitality Solutions to provide nearly half of the $115 million in improvement, given the strong momentum we have seen in 2023 and the robust pipeline of additional business, including our recent Hyatt agreement. We believe our other growth strategies, led by, will provide the remainder of the $115 million improvement by 2025. This adjusted EBITDA benefit from our growth strategies is lower than our prior $150 million target, primarily due to earlier achievement in 2023, specifically from hospitality solutions, and lower GDS market growth during 2023 and assumed prospect. Moving to GDS industry volume, the greater than $700 million baseline target assumes only flat... nominal GDS industry growth, which we believe is the low end of potential market growth outcomes.

Please note that the expected gross benefit from our growth strategies is substantially above this level.

Speaker Change: And that the $30 million represents a net amount.

Speaker Change: The investments we are making this year will drive future growth.

Speaker Change: With positive GDS industry market growth, we would expect to realize upside to these baseline targets and as illustrated we expect that four points of you.

Speaker Change: GDS market growth would drive targeted adjusted EBITDA outcomes of $550 million in 2024 and $800 million in 2025.

In closing, we are targeting to more than double adjusted EBITDA between now and 2025 with upside potential based on GDS industry growth.

Speaker Change: This would be a strong outcome, we understand that this new target is below what we articulated last year.

Speaker Change: This is due to external GDS market conditions that evolve during 2023, and the likelihood of slower perspective GDS market growth.

Speaker Change: Lower than the six points of annual GDS market growth that we assumed when we provided full year guidance.

Michael O. Randolfi: As you can see from the chart, we have illustrated a range of potential outcomes for the GDS industry market, up to four points of annual growth above our baseline. Note that four points of potential annual market growth improvement is not meant as a ceiling. If we see, as illustrated, four points of actual GDS market growth over 2024 and 2025, then we would expect to achieve approximately $800 million of adjusted EBITDA in 2025. To provide more color on the potential benefit from stronger GDS market growth, we estimate that each point of additional growth is worth approximately $13 million of adjusted EBITDA per year. Note that GDS market share growth is separate from these volume figures and included in our aforementioned growth strategy projection.

Speaker Change: We delivered strong 2023 results from our team's excellent execution and we remain keenly focused on continuing to run the business to deliver on our strategic priorities, which are to generate free cash flow and delever the balance sheet deliver.

Speaker Change: To deliver sustainable growth drive innovation and to reduce our cost structure. We believe the outlook we have outlined today will.

Speaker Change: We will enable us to accomplish those objectives.

Speaker Change: With that operator, please open the line for questions.

Speaker Change: Certainly ladies and gentlemen to ask a question you wanted to press star one on your telephone and wait for your name to be announced to withdraw. Your question you May Press Star one again, please send myeloma compile to Kenny roster.

Speaker Change: And our first question coming from the line of Josh Baer from Morgan Stanley. Your line is now open.

Jim Schneider: Great. Thank you for the question.

Jim Schneider: Just thinking about what 2025 EBITDA margin could look like if you make some assumption on the EBITDA contribution from growth strategies and gross that up you might get to like 353 6 billion in revenue in 2025 with 700 EBITDA So talking about.

Michael O. Randolfi: As Kurt and I stated earlier, we believe there are reasons for optimism that industry volume growth will exceed our baseline assumption. Looking forward, IATA has projected high single-digit capacity growth over the next several years. Many of the largest global airlines have articulated continued capacity increases, have skewed toward long-haul international travel, and business travel surveys have indicated strong growth in corporate travel spend. Turn it to slide 19.

Jim Schneider: 20% or slightly below margin.

Jim Schneider: High teens, and Thats lower than the EBITDA margin from 2019, but 2025 has.

Jim Schneider: Cost savings from our successful tech transformation and all of the <unk>.

Michael O. Randolfi: This chart provides the path for how we plan to achieve our 2024 Adjusted EBITDA guidance of greater than $500 million. We expect the vast majority of our adjusted even dies, both are technology transformation. The cost reduction program, announced last May, remains on track to deliver the expense savings that we have previously communicated.

Jim Schneider: <unk> of layoffs and focus on efficiency.

So it's just cost of compute down and kind of success on the tech transformation. I guess question. Just why is margin why couldn't margins would be lower than 25 versus 2019.

Jim Schneider: Thanks for the question Josh This is Mike.

Mike: First we haven't.

Mike: Given more recent update on margin guidance, but if you go back to what we had previously stated.

Michael O. Randolfi: It is important to note that our baseline guidance of greater than $500 million in 2024 and baseline target of greater than $700 million in 2025 does not include meaningful benefits and the CDS market growth, even though we are optimistic based on positive external commentary and data points that we are referencing. We believe our growth strategies, primarily driven by further gains in hospitality solutions, will provide approximately $30 million toward our 2024 Adjusted EBITDA target. Please note that the expected gross benefit from our growth strategies is substantially above this level, and that the $30 million represents a net amount. The investments we are making this year will drive future growth. With positive GDS industry market growth, we would expect to realize upside to these baseline targets.

Mike: On prior earnings calls, we had talked about.

Mike: The adjusted EBITDA margin.

Mike: Being essentially in the range by 2025 of 2019.

Mike: Actually still would think that is the case, we think will still be roughly in that range for 2025.

Mike: Compared to 2019.

Mike: And you really see a lot of the growth initiatives.

Mike: We're generating have really strong flow through to the bottom line. So if you look at what we're doing both in terms of cost there is really strong flow through to the bottom line you can tell by the math we presented.

Mike: We had a 12% margin on adjusted EBITDA in 2023, we see that expanding to 17% based on the guide that.

Mike: That we gave today and.

Mike: And we would also expect continued margin expansion from 24 to 25, because the initiatives that we're pursuing actually have really strong flow through to the bottom line. So we still think will be roughly in the range in 2025 of where we were in 2019.

Michael O. Randolfi: And as illustrated, we expect that four points of annual GDS market growth would drive targeted adjusted EBITDA outcomes of $550 million in 2024 and $800 million in 2025. In closing... We are targeting to more than double adjusted EBITDA between now and 2025 with upside potential based on GDS industry growth. While this would be a strong outcome, we understand that this new target is below what we articulated last year.

Speaker Change: Got it thanks, Mike and then maybe just one more on sort of the Capex free cash flow side.

Speaker Change: Talk a little bit more about where the $100 million in capex dollars are going to be going toward over the next few years, just a little bit surprised with that.

Speaker Change: That level of Capex in that I think it's higher than what we've seen in the last three or four years, but then again like you are going to be out of your data centers and not spending on server and network equipment.

Operator: This is due to external GDS market conditions that evolved during 2023 and the likelihood of slower future GDS market growth, lower than the 6 points of annual GDS market growth that we assumed when we provided earlier guidance. We delivered strong 2023 results from our team's excellent execution, and we remain keenly focused on continuing to run the business, to deliver on our strategic priorities, which are to generate free cash flow and balance the balance sheet, deliver sustainable growth, drive innovation, and reduce our cost of. We believe the outlook we have outlined today will enable us to accomplish those objectives. And with that, Operator, please open the line for questions. Certainly. Ladies and gentlemen, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced.

More kind of context on that capex spend and how that contributes to the free cash flow targets. Thank you.

Speaker Change: Yeah. Thanks, Thanks for the question and you know by definition, our capital expenditure is almost primarily R&D, it's essentially capitalized labor for software development and we've been very strategic and we're thinking beyond $24 25, and as we've looked at driving our strategic growth initiatives forward.

Speaker Change: There were investments that we thought were really important to make over the course of time and it's really focused on supporting the.

Speaker Change: The sixth growth strategies current outlined earlier.

Speaker Change: And our multi source content platform investment and distribution expansion investment in our hotel <unk> distribution further investment in digital payments.

Speaker Change: On the next generation airline it you see a lot of progress on airline on airline retailing products. There is continued investment in there that we stepped up as well as hospitality solutions. So we really focused on leaning into our six growth strategies, we think thats going to have legs.

Joshua Phillip Baer: To withdraw your question, you may press star 11 again. Please stand by while we compile the Q&A roster. And our first question coming from the lineup: Josh Baer from Morgan Stanley. Your line is open. Great. Thank you for the question. Thinking about what 2025's EBITDA margin could look like, if you make some assumptions on the EBITDA contribution from growth strategies and growth sped up, you might get to like three and a half, 3.6 billion in revenue in 2025 with 700 EBITDA. So, talking about 20% or slightly below margin, high teens, and that's lower than the EBITDA margin from 2019, but 2025 has, you know, the cost savings from So, with just the cost of compute down and kind of success in the tech transformation, I guess the question is just why is margin, and why could margin be lower in 2025 versus 2019? Thanks for the question, Josh. This is Mike.

Speaker Change: Beyond the period, we're talking about here.

Speaker Change: Got it thank you.

Thank you and our next question coming from the line of Jed Kelly with Oppenheimer. Your line is now open.

Hey, great.

Jed Kelly: Joined the call a little late.

Jed Kelly: Just a couple of questions for me if we just look at like the overall trajectory of the GDS growth kind of where it was versus 19 can you kind of dig into that more is that more of capacity or are we starting to see an impact.

Jed Kelly: And D C and then can you mention.

How you planned in the.

Jed Kelly: To manage some of your upcoming converts that are due.

Jed Kelly: Okay.

Jed Kelly: Okay. Thank you for the questions I'll take the this is Curt I'll take the first piece and then.

Curt Hecker: Let me deal with the converts.

Speaker Change: Excuse me.

Speaker Change: When you look at the overall GDS industry, it's recovered to somewhere in the low seventies on a percentage basis versus 2019, I'll remind you that our number now excludes expedia, which migrated off of us during COVID-19.

Speaker Change: Yeah.

Curt Hecker: As I described in my prepared remarks, John you may not have heard them.

Curt Hecker: Talked about why there has not been full flow through of industry capacity.

Michael O. Randolfi: And, you know, first, we haven't given a more recent update on margin guidance. But, you know, if you go back to what we had previously stated in prior earnings calls, we had talked about the adjusted EBITDA margin being, you know, essentially in the range by 2025. We actually still would think that is the case.

Curt Hecker: Growth or return to the GDS industry and I'll go through those very briefly here number one is corporate travel has recovered all need to about 75%.

Curt Hecker: Of its pre COVID-19 levels on a unit basis.

Curt Hecker: The GDS industry is traditionally a 50 50 corporate and leisure mix.

Curt Hecker: And for Sabre corporate TMC, comprising a higher proportion of our booking and client portfolio than it does for our competitors.

Michael O. Randolfi: We think we'll still be roughly in that range for 2025 compared to 2019, and you really see a lot of the growth initiatives that we're generating have really strong flow through to the bottom line. So if you look at what we're doing, both in terms of cost, there's really strong flow through to the bottom line. You can tell by the math we presented.

Curt Hecker: Secondly, if you look traditionally.

Curt Hecker: Domestic leisure or short haul traffic tends to accrue more to airline direct more complex travel such as long haul international tends to accrue more to intermediaries in the GDS channel. We believe that is still true.

Curt Hecker: You look at where capacity has been put back.

Curt Hecker: During cover to recovery. It has been put back disproportionately on short haul and domestic versus international long haul as compared to the historical proportion of long haul versus short haul. We do not believe that that is a long term or permanent trend.

Michael O. Randolfi: We had a 12 percent margin on adjusted EBITDA in 2023. We see that expanding to 17 percent based on the guide that we gave today. And we would also expect continued margin expansion from 24 to 25 because the initiatives that we're pursuing actually have really strong flow through to the bottom line. So we still think we'll be roughly in the range in 2025 of where we were in 2019.

Curt Hecker: So on each of those on corporate travel and on short haul versus long haul capacity, we're very optimistic about where the industry is headed.

Curt Hecker: Shall I also spoke about for Otas.

Curt Hecker: Gds's and sabre remain the predominant booking channel for Otas. It remains an important part of our business and we believe we provide the most efficient platform for them to search book and service their customers.

Michael O. Randolfi: Thanks, Mike. And then maybe just one more on sort of the CapEx free cash flow side. Let's talk a little bit more about where the $100 million in CapEx dollars are going to be going over the next few years. I'm just a little bit surprised by that level of CapEx, in that I think it's higher than what we've seen in the last three or four years. But then again, you're going to be out of your data centers and not spending on server and network equipment. A little bit more context on that CapEx spend and how that... contributes to the free cash flow targets Yeah, no, thanks for the question.

Curt Hecker: That said during the Covid period as I acknowledged in my remarks.

Curt Hecker: There has been an increase in the volumes transacted through the.

Curt Hecker: The airline direct net channel largely with.

Larger otas and larger full service carriers around the world.

Curt Hecker: Now that said if you look at online travel agencies, what we're hearing from them is that where they have done that they are having challenges with the cost and complexity of managing those to recognize they're looking to us for solutions around automation shopping and caching and we believe there may be opportunity for volume recapture.

Curt Hecker: So suffice to say.

Curt Hecker: We understand the reality of the market today.

Curt Hecker: Today, we're optimistic that the GDS industry, and therefore sabre are well positioned for growth as we go forward when you look at NBC specifically.

Michael O. Randolfi: And, you know, by definition, our capital expenditure is primarily for R&D. It's essentially capitalized labor for software development. And, you know, we've been very strategic, and we're thinking, you know, beyond 24 and 25. And as we've looked at driving our strategic growth initiatives forward, there were investments that we thought were really important to make over the course of time. And it's really focused on supporting the growth, the six growth strategies that Kurt outlined earlier, our investment in our multisource content platform, investment in distribution expansion, investment in our hotel B2B distribution, further investment in digital payments. And on the next generation airline IT, you see a lot of progress on airline retailing products. There's continued investment in there that we stepped up, as well as hospitality solutions. So we really focused on leaning into our six growth strategies. We think that it's going to have legs well beyond the period we're talking about here.

Curt Hecker: D C for brick and mortar and four TMC customers only comprises about 1% of the airline tickets that theyre purchasing that is going effectively all through the GDS is from what we understand and can see.

Curt Hecker: We've invested very significantly not only on connections with carriers.

Curt Hecker: But also on building out about 600, new functionality ease of use cases to solve the needs of the brick and mortar and TMC customer base around automation workflow capabilities et cetera.

Curt Hecker: So we're very well positioned there and.

Curt Hecker: And we don't think that the impact of MDC to date.

Curt Hecker: There has been no material on that sector with Otas, we think the adoption for MDC is higher.

Some of that may be going through their direct channel.

Curt Hecker: But again theyre looking to us for help so overall, we're optimistic about where the industry is headed.

Curt Hecker: And with.

Speaker Change: In regards to your question on our converts so a couple of things I would just first remind you. We ended the year in 2023 was $669 million of cash on our balance sheet. We do expect to generate positive free cash flow. This year, we expect that to start building meaningfully in 2025.

Michael O. Randolfi: Thank you. Thank you. And our next question comes from the line of Jed Kelly with Oppenheimer. Your line is open.

Speaker Change: So we really see our cash position continued to strengthen over the course of time.

Jed Kelly: Hey, great. I joined the call a little late. Um, just a couple questions for me. If we just look at the overall trajectory of GDS growth kind of where it was versus, can you kind of dig into that more? Is that more capacity, or are we starting to see an impact from NDC? And then, can you mention how you plan to manage some of your upcoming converts that are due? Thanks. Jed, thank you for the questions. I'll take the, this is Kurt. I'll take the first piece and then let Mike deal with the converts. Excuse me.

Speaker Change: I would highlight you can see over this past year, we've been very proactive.

Speaker Change: In terms of addressing our maturities and aligning that over time.

Speaker Change: With cash flow generation of the company.

Speaker Change: And what I would say is you should look for us to continue to be proactive and manage our debt maturities in a way that's most efficient as possible, but beyond that I wouldn't get into specifics in terms of thoughts around any specific instruments or how we would address it.

Speaker Change: Okay got it and just one follow up I mean, I think typically.

Speaker Change: Before COVID-19 <unk> used to be the high watermark for EBITDA.

Kurt J. Ekert: When you look at the overall GDS industry, it's recovered to somewhere in the low 70s on a percentage basis versus 2019. A reminder that our number now excludes Expedia, which migrated off of us during COVID. As I described in my prepared remarks, and Jed, you may not have heard them, I talked about why there has not been a full flow through of industry capacity, growth, or return to the GDS industry. And I'll go through those very briefly here.

Speaker Change: Looking at your guide I don't know if thats going to be the case. This year. So can you just give us a sense on like just the quarter quarterly trajectory, how we should be thinking about the cadence.

Speaker Change: Yes. So thanks for the question. So a couple of things and in General you are right seasonally.

Speaker Change: First quarter is the strongest volume quarter and others. There are a couple of things that are helping as we progress through the year first of all our growth strategies.

Speaker Change: Hospitality solution GDS expansion or growth in our payments business increased hotel attach on air we see that all building momentum as the year progresses.

Kurt J. Ekert: Number one is that corporate travel has recovered only to about 75% of its pre-COVID levels on a unit basis. The GDS industry is traditionally a 50-50 corporate and leisure mix. And for Sabre, corporate and TMC travel comprises a higher proportion of our booking and client portfolio than it does for our competitors. Secondly, if you look traditionally...

Speaker Change: And so that offsets some of the seasonal difference at the same time, if you look at in our build on 2024.

Speaker Change: Where we have.

Speaker Change: The cost the cost initiatives about one third of the $115 million of cost savings that we expect in 2020 for about one third of that is from tech transformation and we expect that to be realized through the P&L.

Kurt J. Ekert: Domestic leisure or short haul traffic tends to accrue more to airline direct. More complex travel, such as long haul international, tends to accrue more to intermediaries or the GDS channel. We believe that is still true.

Speaker Change: I'm sorry, one third of the 135 that we expect to hear about $45 million of tech transformation costs, we expect those benefits to be realized in the P&L as the year progresses, and we would expect them to be greater as we get to the fourth quarter than the first quarter. So youre right in that the first quarter generally has stronger seasonality, but the.

Kurt J. Ekert: If you look at where capacity has been put back, during COVID recovery, it has been put back disproportionately on short-haul and domestic versus international long-haul as compared to the historical proportion of long-haul versus short-haul. However, we do not believe that that is a long-term or permanent trend. So on each of those, on corporate travel and on short-haul versus long-haul capacity, we're very optimistic about where the industry is headed. Jed, I also spoke about OTAs. GDSs and Sabre remain the predominant booking channel for OTAs. It remains an important part of our business, and we believe we provide the most efficient platform for them to search, book, and serve their customers. That said, during the COVID period, as I acknowledged in my remarks, there has been an increase in the volumes transacted through the Airline Direct Connect channel, largely with larger OTAs and larger full-service carriers around the world. Now, that said, if you look at online travel agencies, what we're hearing from them is that where they have done that, they're having challenges with the cost and the complexity of managing those direct connects.

Speaker Change: Benefits of our strategic growth initiatives and the tech transformation.

Speaker Change: Support higher EBITDA as the year progresses.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: And our next question coming from the lineup.

Morningstar: <unk> with Morningstar. Your line is now open.

Morningstar: Yeah, Hey, thanks for taking my questions. So just looking at the 2025 targets I just want to make sure on the cost of pension efficiencies $250 million.

That's not a change from prior guidance.

Morningstar: I believe tech transformation of 150, and then the cost savings annualized $200 million.

Morningstar: 350 million. So just kind of wondering if theres been any change with that and then when you talk about GDS flat to nominal I'm wondering if you can provide.

Morningstar: Any further quantification on what nominal might mean for overall GDS funds that you're incorporating in that $700 million.

Speaker Change: Yeah, I mean, I would start with the last question first in a flat to nominal is pretty darn close to flat in terms of that baseline assumption.

Speaker Change: That's the way I would think about it with regards to the cost efficiency bucket. You had previously indicated on our May earnings call last year that we expected about $300 million and cost efficiency benefits about.

Speaker Change: 100 of that was <unk> of actions that we were.

Kurt J. Ekert: They're looking to us for solutions around automation, shopping, and caching, and we believe there may be opportunity for volume recapture. So suffice to say, we understand the reality of the market today. We're optimistic that the GDS industry and, therefore, Sabre are well positioned for growth as we go forward. But when you look at NDC specifically, NDC for brick and mortar and for TMC customers only comprises about 1% of the airline tickets that they're purchasing.

Speaker Change: We are taking in 2023 that would annualize that you'll get a run rate benefit in 2024.

Speaker Change: Greater than $150 million of that was from tech transformation and the remainder was some other non labor cost savings what I would say is we're on track and more than on track to achieve all of that.

Speaker Change: However, what occurred in 2023 is we actually realized.

Speaker Change: A lot of the benefits earlier than we expected we were able to accelerate them and that essentially was able to offset some of the lower volumes that ensued throughout the year. So I would remind you that on may when we had our earnings call volumes in terms of industry recovery of air distribution bookings were around 61%.

Kurt J. Ekert: That is going effectively all through the GDSs from what we understand and can see. We've invested very significantly, not only in connections with carriers but also in building out about 600 new functionalities or use cases to solve the needs of the brick and mortar and TMC customer base around automation, workflow capabilities, et cetera. And so we're very well positioned there, and we don't think that the impact of NDC to date has been that material on that sector.

Speaker Change: At that time, we had indicated that we expected.

Speaker Change: Going forward, one to two percentage points of sequential air distribution booking volume that would have had us exiting the year around the mid <unk> in terms of recovery relative to 2019, we exited the year at.

Speaker Change: 58%.

Speaker Change: And that difference essentially was.

Speaker Change: Offset by accelerated cost savings, so we more than achieving the full 300 that we set out to achieve but because we were able to.

Kurt J. Ekert: With OTAs, we think the adoption for NDC is higher. Some of that may be going through their Direct Connect channel, but again, they're looking to us for help.

Michael O. Randolfi: So overall, we're optimistic about where the industry is headed. Yeah. And Jed, with regard to your question on our converts. So a couple of things I would just first remind you, you know, we ended the year in twenty-two with six hundred and sixty nine million dollars of cash in our balance sheet. We do expect to generate positive free cash flow this year, and we expect that to start building meaningfully in twenty twenty five. And so we really see our cash position strengthening over the course of time. Second, I would highlight, you know, we've been very proactive in terms of addressing our maturities and aligning that over time with cash flow generation of the company. And what I would say is you should look for us to continue to be proactive and manage our debt maturities in a way that's the most efficient as possible. But beyond that, I wouldn't get into specifics in terms of thoughts around any specific instruments or how we would address it. I got it.

Speaker Change: Those actions earlier, the lapping benefit is less on a year over year basis.

Speaker Change: Okay. No that's perfect and then just maybe one more for me on the revenue per air booking.

Speaker Change: Up nicely like you talked about.

Speaker Change: And it seems like you guys had pointed out some.

Speaker Change: I guess a potential to be optimistic that kind of that mix benefit that you saw in 2023.

Speaker Change: Take place in 2024 is that fair to kind of assume that maybe that revenue per.

Speaker Change: That pricing might be enduring maybe in 2024.

Speaker Change: Thanks for the question.

Speaker Change: So on the.

Speaker Change: The average booking fee I would say, particularly around Q4, I would view Q4 as a high watermark.

Speaker Change: One we had a very very rich better better than typical mix of booking.

Bookings traffic in terms of.

Speaker Change: Both the mix of carrier and region. We also saw when we saw a pullback in December in addition to corporate travel we saw a very big pullback in group bookings.

Speaker Change: And those group bookings tend to come at a much lower average booking fee. So when you have the absence of them it causes a skew up.

Speaker Change: And booking fees now what I would say is as we've come into the year in January and February we have seen a significant step up.

Jed Kelly: Just one follow-up. I mean, typically, before COVID, 1Q used to be the high watermark for EBITDA. Looking at your guide, I don't know if that's going to be the case this year. So can you just give us a sense of just the quarterly trajectory, how we should be thinking about the cadence? Yeah, no.

Speaker Change: In our air distribution bookings.

Speaker Change: As we've seen strength in corporate bookings and we've seen a resumption in air distribution bookings.

Speaker Change: From group bookings and so because group bookings are a lot stronger as we've entered the year.

Speaker Change: We would see we would expect to see that the air just the average booking fee to moderate somewhat from the 609 that we saw.

Michael O. Randolfi: So thanks for the question. So a couple things. And in general, you're right.

Michael O. Randolfi: Seasonally, the first quarter is the strongest volume quarter. Now, there are a couple of things that are helping as we progress through the year. First of all, our growth strategies, you know, hospitality solution, GDS expansion, our growth in our payments business, increased hotel attachement on air, we see that all building momentum as the year progresses. And so that offsets some of the seasonal difference.

Speaker Change: In the fourth quarter.

Speaker Change: Okay perfect. Thanks, guys.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: And our next question coming from the line of Alex <unk> with Bernstein. Your line is now open.

Alex: Hi, Good morning, two for me. Please if I may 1st of all just thinking about your GDS booking fee that was up 9% year on year in the third quarter and 11% in the fourth quarter, what's driving that acceleration. Please helps to disaggregate into its constituent parts.

Alex: My second question more around the cost side of things do you have any leeway on travel agent incentives as a lever to reduce costs and improve your EBITDA is that something you could cut and is it something that you would cut.

Michael O. Randolfi: At the same time, if you look at our build for 2024, where we have the cost, the cost initiatives, about one third of the hundred and $15 million of cost savings that we expect in 2024, about one third of that is from tech transformation. And we expect that to be realized through the P&L 40. I'm sorry, one third of the 135 that we expect this year, about $45 million in tech transformation costs. We expect those benefits to be realized in the P&L as the year progresses. And we'd expect them to be greater as we get to the fourth quarter than the first quarter.

Alex: Alex Thank you on the first piece, which is the average booking fee.

Alex: Remember that's looking at all components of revenue as compared to the units of air booking and so you have a few things going on one is the mix of the type of air booking were getting globally. The other is that as we grow our land ground and sea bookings, which grew at a very strong rate through the year and secondly with payments Youll.

Alex: See that accrue into the average revenue per booking.

Alex: With respect to the incentive structure.

Alex: We compete in a vigorous industry.

Michael O. Randolfi: So you're right in that the first quarter generally has higher seasonality, but the benefits of our strategic growth initiatives and the tech transformation support higher EBITDA as the year progresses. Thank you. And our next question, coming from the lineup, is from Dan Wasiolek with Morningstar. Your line is open.

Alex: The economics, which are one of the mechanisms by which we compete which is a very normal contract for a <unk> industry.

Alex: And we valued it but the business that we get from our buyer or agency customers. So I'm not going to comment prospectively on the way we view that.

Alex: Other than to say, it's a competitive dynamic along with content and technology and product and service.

Dan Wasiolek: Hey, thanks for taking my question. So just looking at the 2025 targets, I just want to make sure on the cost efficiencies, $250 million, that that's not a change from prior guidance. I believe, you know, tech transformation $150 million and then the cost savings annualized $200 million. That's $350 million.

Alex: Thanks.

Speaker Change: Thank you.

Speaker Change: And our next question coming from the line of Victor Chen with Bank of America. Your line is open.

Victor Chen: Hi, Thanks for taking my question, maybe first of all I want to break down a bit more on the corporate travel.

<unk>.

Victor Chen: We can probably if I get down to manage corporate travel versus unmanaged, Papa travel and I think managed corporate travel which is.

Victor Chen: When our GTS over index has been recovering a bit slower.

Michael O. Randolfi: So just kind of wondering if there's been any change with that. And then when you talk about GDS, flat to nominal, I'm wondering if you can provide any further quantification on what nominal might mean for, you know, overall GDS funds that you're incorporating in that $700 million. Yeah, I mean, I would start with the last question first. The flat denominable is pretty darn close to flat in terms of that baseline

Victor Chen: Do you think this is structural or this will reverse over time with more managed corporate travel coming back.

Speaker Change: And then secondly.

Speaker Change: <unk>.

Speaker Change: Can you provide any comments on the highest contribution is it hasnt started to implement.

Speaker Change: I think you said Im sorry, 2024 shows so should we expect some revenue contribution this year.

Speaker Change: And then.

Speaker Change: Finally.

Speaker Change: You talked about this.

Speaker Change: On the call as well, but.

Speaker Change: On the 25 outlook about the GDS growth.

Michael O. Randolfi: So that's the way I would think about it with regard to the cost efficiency bucket. You previously indicated on our May earnings call last year that we expected about three hundred million dollars in cost efficiency benefits. About about a hundred of that was the annualization of actions that we were taking in twenty twenty three. That would annualize for you to get a run rate benefit in twenty twenty four greater than one hundred and fifty million dollars. That was from the tech transformation.

Speaker Change: You are making.

Speaker Change: Can you talk a bit about some of the tailwind and headwinds because when I think about in the last couple of years.

It's more domestic or more leisure.

Speaker Change: That's why GBS growth has been slower Cynthia travel, but in the next year or two should we not expect internationally, especially comprehensive recover more and so GDS to be.

Speaker Change: Covering in line or.

Speaker Change: Not flat growth versus the broader recovery.

Speaker Change: <unk>.

Victor Thank you for the three questions. This is Kurt let.

Michael O. Randolfi: And the remainder was some other non-labor cost savings. What I would say is we're on track and more than on track to achieve all of that. However, what occurred in twenty twenty three is that we actually realized a lot of the benefits earlier than we expected. We were able to accelerate them, and that essentially was able to offset some of the lower volumes that ensued throughout the year. So I would remind you that in May, when we had our earnings call, volumes in terms of industry recovery of air distribution bookings were around sixty one percent. At that time, we had indicated that we expected one to two percentage points of sequential air distribution booking volume in going forward. That would have had us exiting the year around the mid-60s in terms of recovery relative to twenty nineteen. Instead, we exited the year at fifty eight percent.

Kurt: Let me take them in order first of all on corporate travel.

Right: Right, what we look at and we talked about corporate travel is largely managed corporate travel, which is what largely transactional tmc's.

Kurt: And if you look structurally that's a business that on a unit basis is about three quarters. The size it was globally versus pre COVID-19.

Kurt: If you read all of the analyst reports and you listen to market conjecture signs are that corporate travel will grow prospectively very well.

Kurt: I believe on a 20 year CAGR preceding COVID-19 corporate travel or managed corporate travel had grown based on that 4% to 5% per year.

Kurt: Two a one three trillion dollar industry.

Kurt: So again, you'd say structurally today, it's a smaller industry and the question going forward will it grow at that historical rate.

Kurt: Or may grow faster, because there's still some recovery left in there.

Kurt: There is a wide range of potential scenarios and I think that's uncertain, but we're confident.

Michael O. Randolfi: And that difference essentially was offset by accelerated cost savings. So we were more than achieving the full three hundred that we set out to achieve. But because we were able to complete those actions earlier, the lapping benefit is less on a year-to-year basis. Okay, no, that's perfect.

Kurt: That that growth is going to come and again, we think we're very well positioned because we are proportionately more highly indexed against TMC corporate travel than our competitive peers.

Kurt: With Hyatt specifically as we indicated will.

Kurt: We will be beginning the implementation of Hyatt.

Kurt: In the first half of this calendar year.

Dan Wasiolek: And then just maybe one more for me on the revenue per air booking, you know, up nicer, like you talked about, and it seems like you guys have pointed out, I guess the potential to be optimistic that kind of that mixed benefit that you saw in 2023 might take place in 2024. Is that fair to kind of assume that maybe that revenue per that pricing might be enduring maybe in 2024? Thanks for the question.

Kurt: And you will see that ramp up we think starting in Q2.

Kurt: Pretty well going forward. The last question is about.

Kurt: Headwinds a tailwind on our 25 outlook with respect to GDS market growth.

Kurt: As I indicated in my prepared remarks, and the question earlier with respect to both corporate travel recovery prospectively or growth and two international long haul capacity coming back more robustly in the years ahead, we feel very optimistic and confident.

Michael O. Randolfi: So on the average booking fee, I would say, particularly around Q4, I would view Q4 as a high watermark. One, we had a very, very rich, you know, better than typical mix of booking traffic in terms of both the mix of carrier and region. We also saw when we saw a pullback in December, in addition to corporate travel, we saw a very big pullback in group bookings, and those group bookings tend to come at a much lower average booking fee. So when you have the absence of them, it causes a skewing of booking fees.

Kurt: But we're going to see both of those trends continue.

Kurt: <unk> have obviously performed relatively well during COVID-19 and I mentioned <unk>.

Kurt: Some level of direct connect activity there.

Kurt: Based on the conversations we're having with his clientele, we think theres recapture and growth opportunity there as well so I'd say that a lot of the headwinds that the GDS market has faced.

Kurt: We have faced here through the Covid recovery period, our hope and our optimism is that we're going to see more tailwind prospectively than what we've realized in recent years.

Speaker Change: Okay. Thank you.

Thank you.

Dan Wasiolek: Now, what I would say is that as we've come into the year in January and February, we have seen a significant step up in our air distribution bookings, as we have seen strength in corporate bookings, and we have seen a resumption in air distribution bookings from group bookings. And so because group bookings are a lot stronger as we've entered the year, we would expect to see that the average booking fee to moderate somewhat from the 609 that we saw in the fourth quarter. Okay, perfect.

Speaker Change: And I see no further questions in the queue. At this time I will now turn the call back over to Mr. Tucker for any closing remarks.

Thank you everyone again for joining us. This morning, we do appreciate your interest in Sabre and look forward to speaking with all of you again very soon.

Speaker Change: Ladies and gentlemen that does conclude our conference for today. Thank you for your participation you may now disconnect.

Speaker Change: [music].

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Michael O. Randolfi: Thanks, guys. Thank you. And our next question comes from the lineup: Alex Irving with Bernstein and Yolanda Solfin. And our next question comes from the lineup: Alex Irving with Bernstein and Yolanda Solfin.

Okay.

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Alexander Irving: Hi, good morning. Two from me, please, if I may. First of all, just think about your GDS unit booking fee. That was up 9% year-on-year in the third quarter and 11% in the fourth quarter. What's driving that acceleration, please, if it helps to disaggregate it into its constituent parts? My second question, more on the cost side of things, do you have any leeway on travel agent incentives as a lever to reduce costs and improve your EBITDA? Is that something you could cut, and is it something that you would cut?

Speaker Change: Okay.

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Kurt J. Ekert: Thanks. Alex, thank you. On the first piece, which is the average booking fee, remember that's looking at all components of revenue as compared to units of air booking. And so you have a few things going on. One is the mix of the type of air bookings we're getting globally. The other is that as we grow our land, ground, and sea bookings, which grew at a very strong rate through the year. And secondly, with payments, you'll see that accumulate into the average revenue per booking. With respect to the incentive structure, we compete in a vigorous industry. Economics, which is one of the mechanisms by which we compete, which is a very normal construct for a B2B industry.

Speaker Change: Yes.

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Kurt J. Ekert: And we value the business that we get from our buyer or agency customers. So I'm not going to comment prospectively on the way we view that, other than say it's a competitive dynamic along with content and technology and products and services. Thanks.

Speaker Change: Okay.

Speaker Change: Sure.

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Okay.

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Victor Cheng: Thank you. And our next question comes from the line of Victor Cheng with Bank of America. Your line is open. I think you should take my question, maybe.

Speaker Change: Yes.

Speaker Change: Sure.

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Kurt J. Ekert: First of all, I want to break down a bit more on corporate travel. I believe, you know, we can broadly break it down to managed corporate travel versus unmanaged corporate travel. And I think managed corporate travel, which is where GDS over index has been recovering a bit slower. Do you think this is structural or will reverse all the time with more managed corporate travel coming back? Do you think this is structural or will this reverse all the time with more managed corporate travel coming back? And then, secondly, can you provide any comments on the HIA contribution?

Speaker Change: Yes.

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Yes.

Kurt J. Ekert: Has it started to implement, I think you said at the start of 2024, so should we expect some revenue contribution this year? and then finally, you talked about this, you know, early in the call as well, but on the 25 outlook about the GDS growth that you're making, can you talk a bit about some of the tailwinds and headwinds, because when I think about the last couple of years, where it's more domestic and more leisure, that's why GDS growth has been slower versus air travel. But in the next year or two, should we not expect, you know, international and especially corporate, to recover more? And so GDS could be, you know, recovering in line, or at least not flat growth versus the broader air recovery. Thank you. Victor, thank you for the three questions. This is Kurt. Let me take them one at a time.

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Kurt J. Ekert: First of all, on corporate travel, you're right. What we look at when we talk about corporate travel is largely managed corporate travel, which is what largely transacts through TMCs. And if you look structurally, that's a business that on a unit basis is about three quarters the size it was globally versus pre-COVID. If you read all of the analyst reports and you listen to market conjecture, or may grow faster because there's still some recovery left in there. There's a wide range of potential scenarios, and I think that's uncertain, but we're confident that that growth is going to come. And again, we think we're very well positioned because we are proportionally more highly indexed against TMC and corporate travel than our competitive peers. With Hyatt specifically, as we indicated, we'll be beginning the implementation of Hyatt in the first half of this calendar year.

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Kurt J. Ekert: And you will see that ramp up, we think, starting in Q2, and pretty well going forward. The last question is about headwinds and tailwinds on our 25 Outlook with respect to GDS market growth. As I indicated in my prepared remarks and the question earlier, with respect to both corporate travel recovery prospectively or growth, and two, international long-haul capacity coming back more robustly in the years ahead, we feel very optimistic and confident that we're going to see both of those trends continue. OTAs have obviously performed relatively well during COVID. And I mentioned some level of direct connectivity there.

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Kurt J. Ekert: But based on the conversations we're having with this clientele, we think there's recapture and growth opportunity there as well. So I'd say that a lot of the headwinds that the GDS market has faced. We have faced here through the COVID recovery period. Our hope and our optimism is that we're going to see more tailwinds prospectively than what we've realized in recent years. Very clear. Thank you. Thank you. And I see no further questions in the queue at this time.

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Operator: I will now turn the call back over to Mr. Ekert for any closing remarks. Thank you, everyone, again, for joining us this morning. We do appreciate your interest in Sabre and look forward to speaking with all of you again very soon. Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.

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Operator: Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music, ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Good morning and welcome to the Sabre Sports Quarter and Full Year 2023 Earnings Conference Call. My name is Livia, and I'll be your operator. As a reminder, please note today's call is being recorded. I will now turn the call over to the Senior Vice President of Investor Relations and Treasurer, Brian Evans. Please go ahead, sir.

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Brian Evans: Thank you, and good morning, everyone. Welcome to Sabre's fourth quarter and full year 2023 earnings call. This morning, we issued an earnings press release, which is available on our website at investors.sabre.com. The slide presentation, which accompanies today's prepared remarks, is also available during this call on the Sabre Investor Relations webpage. A replay of today's call will be available on our website later this morning.

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Unnamed Speaker: We advise you that our comments contain forward-looking statements that represent our beliefs or expectations about future events, including the effects of cost efficiencies and growth strategy, distribution volume, benefits from our technology transformation, Commercial and Strategic Arrangements, our financial guidance, and targets, including Expected Revenue, Adjusted EBITDA, Free Cash Flow, Interest, Capital Expenditures, Margins, and Liquidity, among others.

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Speaker Change: Good morning.

Speaker Change: Did you say you were spot quarter and full year 2023 earnings conference call.

Brian Evans: All forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from the statements made on today's conference call. More information on these risks and uncertainties is contained in our earnings release issued this morning and our SEC filings, including our Form 10-K for the year ended December 31st, 2023. Throughout today's call, we will also be presenting certain non-GAAP financial measures; references during today's call to Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EPS, and free cash flow have been adjusted to exclude certain items. The most directly comparable gap measures and reconciliations for non-gap measures are available in the earnings release and on other documents posted on our website at investors.sabre.com Participating with me are Kurt Ekert, President and CEO; Mike Randolfi, Chief Financial Officer. Scott Wilson, Executive Vice President and President of Hospitality Solutions, will be available for Q&A after the prepared remarks. With that, I'll turn the call over to Kurt. Thanks, Brian. Good morning, everyone, and thank you for joining us today.

My name is Livia and I'll be your operator.

Livia: As a reminder, please note today's call is being recorded.

Livia: I'll now turn the call over to the senior Vice President Investor Relations and Treasurer, Brian Evans. Please go ahead Sir.

Brian Essex: Thank you and good morning, everyone welcome to <unk> fourth quarter and full year 2023 earnings call. This morning, we issued an earnings press release, which is available on our website at investors thought sabre dot com.

Brian Essex: Slide presentation, which accompanies today's prepared remarks is also available during this call on the Sabre Investor Relations webpage.

Brian Essex: A replay of today's call will be available on our website later this morning.

Brian Essex: We advise you that our comments contain forward looking statements that represent our beliefs or expectations about future events.

Brian Essex: And the effects of cost efficiencies and growth strategies distribution volumes benefits from our technology transformation commercial and strategic arrangements, our financial guidance and targets expected revenue adjusted EBITDA free cash flow interest capital expenditures margins and liquidity.

Brian Essex: Others.

Brian Essex: All forward looking statements involve risks and uncertainties that may cause actual results to differ materially from the statements made on today's conference call more.

Brian Essex: More information on these risks and uncertainties is contained in our earnings release issued this morning, and our SEC filings, including our Form 10-K for the year ended December 31 2023.

Kurt J. Ekert: I'm pleased this morning to discuss the many accomplishments of the Sabre team. Earlier today, we reported our fourth quarter and full year 2023 results that included strong revenue growth, significant margin expansion, and substantial increases in both adjusted EBITDA and operating cash flow, which allowed us to achieve our pre-cash flow objective for the year. In addition to reviewing our financial performance, I will also spend time highlighting recent achievements in our technology transformation, our many commercial wins, and our product innovations that help position our portfolio for the future of travel while helping to deliver sustainable growth. Now, let me walk you through the agenda for today's call. On slide four, you can see an overview of the topics that Mike and I will cover. First,

Brian Essex: Throughout today's call. We will also be presenting certain non-GAAP financial measures references during today's call to adjusted EBITDA adjusted EBITDA margin adjusted EPS and free cash flow have been adjusted to exclude certain items the.

Brian Essex: The most directly comparable GAAP measures and reconciliations for non-GAAP measures are available in the earnings release and on other documents posted on our website at investors <unk> Dot com.

Brian Essex: Participating with me are Curt Hecker, President and CEO, Mike <unk>, Chief Financial Officer.

Brian Essex: Scott Wilson Executive Vice President and President of Hospitality solutions will be available for Q&A. After the prepared remarks with that I will turn the call over to Kirk.

Brian Essex: Sure.

Kurt J. Ekert: I will review our business highlights and accomplishments for 2023. Next, I'll provide a brief overview of how the industry landscape is evolving. Finally, before handing it over to Mike...

Kirk: Thanks, Brian.

Kirk: Good morning, everyone and thank you for joining us today.

I'm pleased this morning to discuss the many accomplishments of the sabre team.

Kirk: Earlier today, we reported our fourth quarter and full year 2023 results that.

Kirk: That included strong revenue growth significant margin expansion.

Kirk: And substantial increases in both adjusted EBITDA and.

Kurt J. Ekert: I'll close with a review of our growth strategy and how we believe it positions Sabre for success. Mike will then take you through the financial results for the fourth quarter and full year 2023 and provide an update to our 2024 guidance and 2025 target. Now, let's turn to slide five.

And operating cash flow.

Kirk: Which allowed us to achieve our free cash flow objective for the year.

Kirk: In addition to reviewing our financial performance.

Kirk: I'll also spend time, highlighting the recent achievements and our technology transformation.

Kirk: Our many commercial wins.

Kirk: And our product innovations that help position our portfolio.

Kirk: For the future of travel.

Kirk: While helping to deliver sustainable growth.

Speaker Change: Now, let me walk through the agenda for today's call.

Speaker Change: On slide four you can see an overview of the topics that Mike and I will cover.

Kurt J. Ekert: 2023 was a year of strong execution at Sabre. Our team members around the world delivered the commercial, operational, and product development success that drove the strong financial results depicted on this slide. We generated 15% top line growth in 2023. Improved Hourly Efficient, and Effectively Contained Costs.

Speaker Change: First I will review our business highlights and accomplishments from 2023.

Speaker Change: Next I'll provide a brief overview of how the industry landscape is evolving.

Speaker Change: Finally, before handing it over to Mike.

Mike: I'll close with a review of our growth strategies and.

Mike: And how we believe they position <unk> for success.

Mike: Mike will then take you through the financial results for the fourth quarter and full year 2023.

Mike: And to provide an update to our 2020 for guidance in 2025 targets.

Kurt J. Ekert: These achievements combine to drive significant margin expansion and growth in adjusted EBITDA with a $272 million year-on-year improvement. Importantly, our team achieved positive free cash flow excluding restructuring for full year 2023, which was one of our primary financial priorities. These strong financial results supported our innovation and product development initiatives that are essential to achieving Sabre's long-term strategic priorities. Turning to slide six.

Mike: Now, let's turn to slide five.

Mike: 2023 was a year of strong execution at sabre.

Our team members around the world delivered the commercial operational and product development success.

Mike: That drove the strong financial results depicted on this slide.

Mike: We generated 15% topline growth in 2023 <unk>.

Mike: Improved our efficiency.

And effectively contain costs.

These achievements combined to drive significant margin expansion.

Mike: And growth in adjusted EBITDA with a $272 million.

Kurt J. Ekert: As a reminder, we have four key strategic priorities that drive our long-term direction and form the foundation of our resource allocation and decision-making as I refer to each priority. I will briefly touch on some of the 2023 accomplishments listed on this slide. First, generating positive free cash flow and de-levering the balance sheet remain important financial objectives.

Mike: Year on year improvement.

Mike: Importantly, our team achieved positive free cash flow excluding restructuring.

Mike: For full year 2023.

Mike: Which was one of our primary financial priorities.

Mike: These strong financial results supported our innovation.

Mike: And product development initiatives that are essential to achieving <unk> long term strategic priorities.

Mike: Turning to slide six.

Mike: As a reminder, we have four key strategic priorities.

Mike: Drive our long term direction at.

Kurt J. Ekert: As mentioned, a significant improvement in our adjusted EBITDA in 2023, in addition to our working capital initiatives, helps deliver positive free cash flow for the year, after excluding restructuring, on our second priority, achieving sustainable long-term growth. I am pleased to announce that we continue to grow our share of the GDS industry book, which I will touch on in a moment. We are encouraged by the momentum we are seeing with our carrier and agency customers and believe we will achieve further GDS market share growth in the future. Turning to Hospitality Solutions.

Mike: That form the foundation of our resource allocation and decision making.

Mike: As I referred to each priority I will briefly touch on some of the 2023 accomplishments listed on this slide.

Mike: First generating positive free cash flow and de levering the balance sheet remain important financial objectives.

Mike: As mentioned the significant improvement in our adjusted EBITDA in 2023.

Mike: In addition to our working capital initiatives.

Mike: Helped deliver positive free cash flow for the year.

Mike: After excluding restructuring.

Mike: On our second priority achieving sustainable long term growth.

Kurt J. Ekert: Our team delivered strong financial results in 2023 that exceeded our initial forecasts for growth and profitability. We expect this momentum to continue in 2024, including from our Hyatt Enterprise Implementation and a number of additional businesses on our third strategic priority, which is to drive innovation and enhance our value proposition. We've reached an important next step in our strategic partnership with Google.

Mike: I am pleased to announce that we continue to grow our share of GDS industry bookings.

Mike: Which I will touch on in a moment.

Mike: We are encouraged by the momentum, we're seeing with our carrier and agency customers.

Mike: And believe we will achieve further GTS market share growth ahead.

Mike: Turning to hospitality solutions.

Mike: Our team delivered strong financial results in 2023.

It exceeded our initial forecast for growth and profitability.

Mike: We expect this momentum to continue in 2024.

Kurt J. Ekert: As I mentioned last quarter, Sabre engineering teams are now developing products and solutions that harness Google's cutting-edge AI capabilities, which translated into several successful product launches earlier in 2023, for example, Upgrade IQ, which optimizes airlines' premium cabins. We believe this important partnership is essential to providing our customers with intelligent retail solutions, and Modern Distribution Technology, as another area of excellence in execution by our... Our technology transformation to the cloud continues on schedule, and we expect to In addition to the cost and operating efficiency gains we are already seeing, our migration to the cloud provides a more powerful launchpad on which to create, develop, and distribute future product innovation. Before I move on, I want to take a moment to say thank you to our team members around the world for delivering these results, for consistently providing superior service to our customers, and for providing the exciting new technology that makes me so proud to be a member of the Sabre Corp. It is this collective commitment to continuous innovation and service to our customers that personifies our group. Turning to slide seven.

Mike: Including from our Hyatt enterprise implementation.

Mike: And a number of additional business wins.

Mike: On our third strategic priority, which is to drive innovation and enhance our value proposition.

Mike: We've reached an important next step in our strategic partnership with Google.

Mike: As I mentioned last quarter.

Mike: Our engineering teams are now developing products and solutions.

Harnessed google's cutting edge AI capabilities.

Mike: Which translated into several successful product launches earlier 2023.

For example, upgrade IQ, which.

Which optimizes airlines premium cabin inventory.

Mike: We believe this important partnership is essential to providing our customers with intelligent retail solutions and modern distribution technology.

Mike: As another area of excellence in execution by our team.

Mike: Our technology transformation to the cloud.

Mike: Continues on schedule and we expect to achieve our stated goals by the end of 2024.

Mike: In addition to the cost and operating efficiency gains we are already seeing.

Mike: Our migration to the cloud provides a more powerful launch pad.

Mike: On which to create.

Mike: Develop and distribute future product innovations.

Speaker Change: Before I move on.

Speaker Change: I want to take a moment to say thank you.

Speaker Change: Our team members around the world for delivering these results.

Speaker Change: Consistently providing superior service to our customers.

Speaker Change: And for providing the exciting new technology.

Speaker Change: That makes me so proud to be a member of the shape of the table.

Speaker Change: It is this collective commitment to continuous innovation.

Speaker Change: That service to our customers.

Speaker Change: That personifies agriculture.

Speaker Change: Turning to slide seven.

Kurt J. Ekert: As you can see, Travel Solutions delivered impressive financial results in 2023 across many key metrics, strong JDS bookings growth, and continued improvement in the average fee from a richer booking mix helped drive a year-on-year double-digit... Travel Solutions, Revenue, and Gross Income. Sabre achieved steady GDS industry share growth through 2023, as well as 16% overall volume growth in GDS book and 27% growth in distribution lodging, ground, and seaboat, highlighting our growth opportunity in hotels. At IT Solutions, our passengers boarded increased by 8% versus 2020. Attorney's Slide 8, as we've highlighted throughout the past year.

Speaker Change: As you can see travel solutions delivered impressive financial results in 2023.

Speaker Change: Cross many key metrics.

Speaker Change: Strong GDS bookings growth.

Speaker Change: And continued improvement in the average fee from a Richard booking mix helped drive a year on year double digit increase at.

Speaker Change: At travel solutions revenue and gross income.

Speaker Change: <unk> achieved steady GDS industry share growth through 2023.

Speaker Change: As well as 16% overall volume growth in GDS bookings at.

Speaker Change: 27% growth in distribution lodging ground and sea bookings.

Speaker Change: Getting our growth opportunity at hotel distribution.

In it solutions, our passengers boarded increased by 8%.

Speaker Change: Versus 2022.

Speaker Change: Turning to slide eight.

As we highlighted throughout the past year.

Kurt J. Ekert: Sabre is growing its share of GDS Industry Book. As you can see, our shared Q423, again expanded on a year-on-year basis for the fourth consecutive quarter. In addition... We achieved a GDS industry share of 33.8% for full year 2023, a 1.2 percentage point improvement versus 2022. In the fourth quarter, our share of the GDS industry bookings was up a year on tier but declined slightly sequentially from the third quarter. This is due largely to the temporary slowdown in corporate travel, a natural seasonal decline in corporate bookings during the quarter, as corporate travel comprises a larger proportion of our client footprint and bookings relative to the GDS industry.

Speaker Change: Paper is growing its share of GDS industry bookings.

As you can see our share in Q4 23.

Again expanded on a year on year basis.

Speaker Change: For the fourth consecutive quarter.

Speaker Change: In addition.

Speaker Change: We achieved GDS industry share of 33, 8% for.

Speaker Change: For full year 2023, a one two percentage point improvement versus 2022.

Speaker Change: In the fourth quarter, our share of the GDS industry bookings was up year on year.

Speaker Change: But declined slightly sequentially from the third quarter.

Speaker Change: This is due largely to the temporary slowdown corporate travel.

Speaker Change: Natural seasonal decline in corporate bookings during the quarter.

Speaker Change: <unk> corporate travel comprises a larger proportion of our client footprint and bookings relative to the GDS industry.

Kurt J. Ekert: Importantly, as Mike will explain... We have seen a rebound, a corporate book, and a resulted strong GDS market share performance trend as we start 2024. We are pleased with these results and Believe, our compelling distribution offering, as well as signed but not yet implemented business, and our robust pipeline of distribution deals. GDS Industry Market Share Expansion. Turning to slide 9.

Speaker Change: Importantly, as Mike will explain.

Speaker Change: We have seen a rebound corporate bookings and resultant strong GDS market share performance trends as.

Speaker Change: As we start 2024.

Speaker Change: We are pleased with these results.

Speaker Change: I believe our compelling distribution offering.

Speaker Change: As well as signed but not yet implemented business.

And our robust pipeline of distribution deals.

Speaker Change: Position us well for continued GDS industry market share expansion.

Speaker Change: Turning to slide nine.

Kurt J. Ekert: Our Hospitality Solutions team delivered excellent results in 2023. Total revenue was up 19% versus 2022 on a significant jump in both CRS transactions and Rape for Transaction. Adjusted EBITDA was reported for the year, well above our initial expectation for breakeven results, and represented more than a $40 million improvement versus 2022.

Speaker Change: Our hospitality solutions team delivered excellent results in 2023.

Speaker Change: Total revenue was up 19%.

Speaker Change: Versus 2022.

Speaker Change: Significant jump in both Crs transactions at rate per transaction.

Speaker Change: Adjusted EBITDA reported for the year was well above our initial expectation breakeven results.

Speaker Change: It represented more than a $40 million improvement versus 2022.

Kurt J. Ekert: Additionally, the SAS operating model inherent in our hospitality solutions business generates high recurring revenue and consistent double-digit revenue growth. 79% recurring revenue and a strong margin expansion trend provide markers; please turn to slide 10. Our technology transformation remains on course to achieve our cost savings targets and Technology Goals by year-end 2024. As you can see, the efficiency with which Sabre conducts its business today is substantially improved. In the fourth quarter, our unit cost of compute declined by nearly 20% from the year-ago period and was down approximately 50% versus 2019.

Speaker Change: Additionally, the SaaS operating model inherent in our hospitality solutions business generates high recurring revenue.

Speaker Change: Consistent double digit revenue growth.

Speaker Change: 79% recurring revenue.

Speaker Change: And a strong margin expansion trend provide markers and the value trajectory of this business.

Speaker Change: Please turn to slide 10.

Speaker Change: Our technology transformation remains on course to achieve our cost savings targets.

Speaker Change: And technology goals by year end 2024.

As you can see the efficiency with which taper conducts its business today is substantially improved.

Speaker Change: In the fourth quarter.

Speaker Change: Our unit cost of compute declined by nearly 20%.

Speaker Change: From the year ago period, and was down approximately 50% versus 2019.

Kurt J. Ekert: In addition, our focus on investing in offer and order capabilities is a pivotal aspect of our future product portfolio. We are actively developing our offer and order platform within the Google Cloud environment, and we recently completed a successful pilot program with a major airline partner. The successful program validated our ability to efficiently integrate shopping and ordering functionalities within the platform.

Speaker Change: In addition.

Speaker Change: Our focus on investing and offer an order capabilities is a pivotal aspect of our future product portfolio.

Speaker Change: We're actively developing our offer in order platform.

Speaker Change: Within the Google cloud environment.

Speaker Change: And we recently completed a successful pilot program with a major airline partner.

Speaker Change: This successful program validated our ability to efficiently integrate shopping.

Speaker Change: At ordering functionalities within the platform.

Kurt J. Ekert: Overall, we believe our technology transformation and Commitment to Innovation will continue to help us deliver modern technology solutions and execute on our strategic priorities. Please turn to slide 11. In addition to the significant customer announcements we highlighted earlier in 2023, I am pleased to review a number of more recent business wins. But Highlight Sabre is consistently being selected as a partner of choice by leading global travel suppliers seeking modern distribution. [inaudible] We continue to see momentum in hospitality; our implementation work with Hyatt, to provide them with our Cenexus Central Reservation System technology, continues, and we are on track for initial go live in the first half of 2024. We also recently announced a new agreement with Frazier's Hospitality, a luxury management company in Asia Pacific, which selected our Retail Studio software to provide its guests with greater personalization.

Speaker Change: Overall, we believe our technology transformation.

Our commitment to innovation will continue to help us deliver modern technology solutions and execute on our strategic priorities.

Speaker Change: Please turn to slide 11.

Speaker Change: In addition to the significant customer announcements, we highlighted earlier in 2023.

Speaker Change: I am pleased to review a number of more recent business wins.

Speaker Change: <unk> has consistently being selected.

Speaker Change: As a partner of choice by leading global travel suppliers seeking modern distribution at retail and technology.

Speaker Change: We continue to see momentum in hospitality solutions.

Speaker Change: Our implementation work with Hyatt to provide them with our <unk> Central reservation system technology.

Speaker Change: <unk> and we are on track for initial go live in the first half of 2024.

Speaker Change: We also recently announced a new agreement with Frazier is hospitality.

Speaker Change: A luxury management company in Asia Pacific.

Speaker Change: Which selected our retail studio software.

Speaker Change: To provide guests with greater personalization.

Kurt J. Ekert: Earlier this week, we announced a key partnership with Riyadh Air, the new national airline of the Kingdom of Saudi Arabia, will utilize our network planning and optimization, where the airline will be using our advanced data analytic and intelligent decision making capabilities to improve data efficiency, and help optimize flight times for incremental and Distribution. We continue to expand our relationship with Air India, and as of January 1st, 2024.

Speaker Change: Earlier this week, we announced a key partnership with Reata are the new national airline of the Kingdom of Saudi Arabia.

Speaker Change: To utilize our network planning and optimization solutions.

Speaker Change: The airline will be using our advanced data analytic.

Speaker Change: And intelligent decision, making capabilities to improve data efficiency.

Speaker Change: And help optimize flight types of our incremental revenue gains.

Speaker Change: And distribution.

Speaker Change: We continue to expand our relationship with Air India.

Speaker Change: And as of January one 2024.

Kurt J. Ekert: Travel agencies in India now have access to that carrier's expansive domestic content through Sabre. We were also pleased to sign a new multi-year agreement with International Airlines Group, or IAG, that will allow Sabre-connected buyers in a... Edifact, and Denti-C Contact. Furthermore, we are accelerating our investment to offer more robust FDC functionality, our recent agreements for NDC content with Hawaiian Airlines, Malaysian Airlines, and Matt Polish here

Speaker Change: Travel agencies in India, now have access to that carriers expansive domestic content receiver.

Speaker Change: We were also pleased to sign a new multiyear agreement with.

Speaker Change: With International Airlines group or IAG.

Speaker Change: That will allow sabre connected buyers of agencies to sell at a fact and WC content.

Speaker Change: Furthermore, we are accelerating our investment to offer more robust ADC functionality.

Speaker Change: Our recent agreements for NBC contact with Hawaiian.

Speaker Change: Malaysian Airlines and lot Polish Airlines.

Kurt J. Ekert: I'd like the customer seeking modern distribution technology. We also had a number of meaningful agency wins, including one of the leading providers of online travel, Christline. In summary, our team achieved a number of commercial wins during the fourth quarter, and we are confident that our modern technology solution and Pipeline of Business will help us execute on our strategic priorities. Now on to slide 12.

Speaker Change: I think our customers seeking modern distribution technologies consistently choose safer to meet their evolving needs.

Speaker Change: We also had a number of meaningful agency wins, including one of the leading providers of online travel priceline.

Speaker Change: In summary.

Speaker Change: Our team achieved a number of commercial wins during the fourth quarter.

Speaker Change: And we are confident that our modern technology solutions.

Speaker Change: Pipeline of business will help us execute on our strategic priorities.

Speaker Change: Now onto slide 12.

Kurt J. Ekert: I will take a few moments now to look forward and discuss the latest trends in global air travel, how the travel marketplace is evolving, and how we believe we are positioned for success in this environment. This chart depicts the long-run upward forecasted trend. Air Travel Demand and the Expected Resilience Global Air Passenger Program, as you can see in the chart. Industry Forecast. We suggest healthy growth in passenger traffic. It will continue and approach nearly 7% per year over the next five years.

Speaker Change: I will take a few moments now to look forward and.

Speaker Change: And discuss the latest trends in global Air travel.

Speaker Change: How is the travel market places are evolving and how we believe we are positioned for success in this environment.

Speaker Change: This chart depicts the long run upward forecasted trend.

And air travel demand.

Speaker Change: The expected resiliency global air passenger growth.

Speaker Change: As you can see in the chart.

Industry forecasts suggest healthy growth in passenger traffic will continue.

Speaker Change: And approached nearly 7% per year over the next five years.

Kurt J. Ekert: Looking forward, we see a number of reasons to be optimistic that broader industry volume growth will continue, such as moderating airfares, solid capacity growth driven by robust international demand, and Less Acute Industry Supply Constraints. Sabre and the GDS industry have experienced significant growth in recent years as a result of the Global Travel Recovery. However...

Speaker Change: Looking forward, we see a number of reasons to be optimistic.

Speaker Change: That broader industry volume growth will continue such as moderating airfares.

Speaker Change: Solid capacity growth driven by robust international demand.

Speaker Change: And less acute industry supply constraints.

Speaker Change: Sabre GDS industry experienced significant growth in recent years as global travel recovered however.

Kurt J. Ekert: Overall, air travel rebounded at a faster pace over this period, but we believe the GDS industry has recovered at a slower rate for several reasons. Bursch.

Speaker Change: However.

Speaker Change: Overall air travel rebounded at a faster pace over this period.

We believe the GDS industry has recovered at a slower rate for several reasons.

Kurt J. Ekert: The GDS industry has historically been comprised of about 50% corporate and 50% venture capital, generally over-indexing to longer-haul international segments, which is more complex than that, as discussed in the marketplace. Global corporate travel has recovered to about 75% on a unit basis of its pre-COVID levels. Note that with air and hotel yields much higher in 2023 than pre-COVID. Dollar recovery is often cited by suppliers, higher than this unit

Speaker Change: First.

Speaker Change: The GDS industry has historically been comprised of about 50% corporate at 50% leisure.

Speaker Change: Generally over indexing to longer haul international segments.

Speaker Change: Which is more complex in nature.

Speaker Change: As discussed in the marketplace.

Speaker Change: Global corporate travel has recovered to about 75% on.

Speaker Change: On a unit basis of its pre COVID-19 levels.

Speaker Change: Note that with air and hotel yields much higher in 2023.

Speaker Change: Pre COVID-19.

Speaker Change: Dollar recovery often cited by suppliers is higher than this unit percentage.

Kurt J. Ekert: And as I mentioned earlier, a greater proportion of our business is corporate or TMC business as compared to our competitors. While there may be a structural element to this, in that corporate travel today is smaller than it was historically, we believe this is an opportunity for Sabre, as we are well positioned to grow volumes and share as corporate travel grows prospectively. SEC.

Speaker Change: And as I mentioned earlier, a greater proportion of our business is corporate or TMC business as compared to our competitors.

Speaker Change: While there may be a structural element to this in the corporate travel today is smaller than it was historically.

Speaker Change: We believe this is an opportunity for sabre as.

Speaker Change: We are well positioned to grow volumes and share as corporate travel growth prospectively.

Speaker Change: Second.

Kurt J. Ekert: Walker Hall International Capacity has generally returned more slowly than shorter haul and domestic capacity. Given that shorter haul and domestic capacity generally accrues more to airline direct, then to the GDS channel, this is slow GDS industry recovery. This has had the effect of reducing the proportion of overall bookings going through the GDS channel as compared to Airline Direct. We believe that this is not a long-term issue for the United States. 3rd.

Speaker Change: Longer haul international capacity is generally returned more slowly than shorter haul and domestic capacity.

Speaker Change: Given the shorter haul in domestic capacity generally accrues more to airline direct.

Then to the GDS channel.

Speaker Change: This is slow GDS industry recovery.

Speaker Change: This has had the effect of reducing the proportion of overall bookings with GDS channel as.

Speaker Change: As compared to airline direct.

Speaker Change: We believe that this is not a long term issue for the industry.

Kurt J. Ekert: NDC volumes today comprise only about 1% of total volumes for travel management companies and Brick-and-Mortar HQ, and we believe the NDC volumes of these buyers are flowing almost entirely through Sabre and other GDSs. However, while not a new construct, we have seen over the COVID period an increase in airline direct connect volumes with online travel, some of which may be characterized as..., while a generally lower margin business. OTA volumes remain a very meaningful contributor to the GDS industry, and this OTA dynamic is a negative volume impact on GDS.

Speaker Change: Third.

Speaker Change: Do you see volumes today comprise only about 1%.

Speaker Change: Of total volumes for travel management companies and brick and mortar agencies.

Speaker Change: And we believe the NBC volumes of these buyers are flowing almost entirely through sabre and other GDS.

Speaker Change: However, while not a new construct.

Speaker Change: We have seen over the Covid period.

Speaker Change: An increase in airline direct connect volumes with online travel agents.

Speaker Change: Some of which may be characterized as MPC.

Speaker Change: Widely generally lower margin business.

Speaker Change: Volumes remain a very meaningful contributor to the GDS industry.

Speaker Change: And this dynamic is a negative volume impact to GDS.

Kurt J. Ekert: Looking ahead, as OTAs are now seeking our help with automation, shopping, and caching solutions to deal with their content, retailing, and operational needs, there may be an opportunity to recapture volume, as well as provide additional services. And last, low-cost carriers have traditionally outgrown full-service carriers, and we and other GDS have been a smaller part of the LCC distribution footprint, given their general short haul and leisure focus. Consequently, prospectively, we believe this is a largely untapped opportunity for Sabre. In addition, there have been a number of recent positive comments from large airlines and industry experts around corporate and international travel demand growth in 2024, which should be supportive of the industry volume scenarios that Mike will discuss shortly.

Speaker Change: Looking ahead.

As Otas are now seeking our help with automation.

Speaker Change: <unk>, Inc, and caching solutions to deal with their content.

Speaker Change: Retailing and operational needs.

There may be opportunity to recapture volume as.

Speaker Change: As well as provide additional services.

Speaker Change: And last low cost carriers have traditionally outright full service carriers.

Speaker Change: And we and other GDS has been a smaller part of the LCC distribution footprint.

Speaker Change: Given their general short haul and future focus.

Speaker Change: Prospectively, we believe this is a largely untapped opportunity for sabre.

Speaker Change: In addition, there have been a number of recent positive comments from large airlines and industry experts.

Speaker Change: Corporate and international travel demand growth in 2024.

Speaker Change: It should be supportive of the industry volume scenarios that Mike will discuss shortly.

Speaker Change: Onto slide 13.

Kurt J. Ekert: Looking at the future of travel and the evolving market, our growth strategies are designed to deliver modern distribution and retailing technology; our multi-source content platform strategy is designed to efficiently increase agency and buyer access to relevant air content from a wide array of airline products, including Edifat, and DC and low-cost carrier content, through all channels and points of sale. And with leading shopping, retailing, and automation capabilities, agencies and other buyers consistently tell us that we have one of the leading NEC solutions in the world to support their business. Our distribution expansion strategy consists of targeted resource and product investment to help drive growth in specific geography and marketplace segments.

Speaker Change: Looking at the future of travel and.

Speaker Change: And the evolving marketplace our growth strategies are designed to deliver modern distribution and retailing technology.

Speaker Change: Our multi source content platform strategy.

Speaker Change: <unk> is designed to efficiently increased agency and buyer access to relevant air content from a wide array of airline products.

Speaker Change: Including at effect and D C and low cost carrier content through.

Speaker Change: Through all channels and points of sale.

Speaker Change: And with leading shopping.

Speaker Change: Retailing and automation capabilities.

Speaker Change: Agencies and other buyers consistently tell us that.

We have one of the leading ADC solutions in the world to support their businesses.

Speaker Change: Next.

Speaker Change: Our distribution expansion strategy consists of targeted.

Speaker Change: Resource and product investments.

Speaker Change: To help drive growth in specific geographies.

Speaker Change: End market.