Q4 2024 Sabre Corp Earnings Call
Who is the one? Who is the one? Who is the one? Who is the one? Who is the one?
to be continued
Thank you for watching!
DeeDee: Good morning and welcome to the SABRE fourth quarter and full year 2024 earnings conference call. My name is DeeDee and I will be your operator.
DeeDee: As a reminder, please note today's call is being recorded. I will now turn the call over to the Senior Vice President, Investor Relations and Treasurer, Brian Evans. Please go ahead, sir.
Brian Evans: Good morning, and welcome to our fourth quarter and full year 2024 earnings call.
DeeDee: This morning, we issued an earnings press release, which is available on our website at investors.saber.com. A slide presentation, which accompanies today's prepared remarks, is also available during this call on the Saber Investor Relations webpage. A replay of today's call will be available on our website later this morning.
DeeDee: We advise you that our comments contain forward-looking statements that represent our beliefs or expectations about future events.
DeeDee: including the effects of growth strategies, transactions and bookings growth, results of our technology transformation, commercial and strategic arrangements, and our financial guidance and targets, free cash flow and liquidity among others.
DeeDee: All four looking statements involve risks and uncertainties that may cause actual results to differ materially from the statements made on today's conference call.
DeeDee: 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, 2024.
DeeDee: Throughout today's call, we will also be presenting certain non-GAAP financial measures.
DeeDee: References during today's call to adjusted EBITDA, adjusted EBITDA margin, and free cash flow have been adjusted to exclude certain items.
Speaker Change: Participating with me are Kurt Ekert, President and CEO, and Mike Randolfi, Chief Financial Officer. Scott Wilson, EVP 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.
Speaker Change: Thanks, Brian. Hello, everyone, and thank you for joining us today to discuss our fourth quarter and full year 2024 results.
Speaker Change: Our performance this quarter and our expectations for 2025 highlight the continued progress we are making executing against our strategy and strengthening our balance sheet.
Speaker Change: Turning to slide four, you can see an overview of the topics that Mike and I will cover this morning.
Speaker Change: First, I will review our 2024 business highlights, including our financial performance.
Speaker Change: Then I will provide an overview of the progress we have made on our growth strategies, how these focused investments address the evolving global travel industry, and how they are reshaping Sabre's growth trajectory.
Speaker Change: Next, Mike will take you through our fourth quarter and full year 2024 financial results and discuss our 2025 guidance.
please turn to slide 6.
Speaker Change: Sabre had a successful year in 2024. Our team delivered on our strategic technology transformation objectives, including significant product and platform enhancements.
positioning us for meaningful growth from commercial winds.
Speaker Change: steady revenue growth combined with effective cost management resulted in 550 basis points of margin expansion and a 53% year-on-year increase in adjusted EBITDA.
which totaled $517 million for the year.
Speaker Change: above our initial guidance of greater than 500 million dollars provided last February. I commend our team members around the world for their hard work and dedication towards positioning Sabre for accelerated growth in 2025 and beyond.
Turning to slide 7.
Speaker Change: Travel Solutions achieved solid financial results in 2024 due to higher average distribution booking fees from a richer customer mix, double-digit year-on-year growth in hotel distribution bookings, and contributions from new air distribution business.
Speaker Change: Notably, our exit rate for GDS industry share was up one percentage point versus the prior year.
Speaker Change: Looking forward, we expect our year-on-year distribution bookings growth to continue building momentum, driven primarily by the progress we are making on our growth initiatives. Turning to slide 8.
Speaker Change: Our Hospitality Solutions team delivered strong results in 2024 as total revenue reached an all-time high, due mainly to increased CRS transactions.
Speaker Change: This revenue performance was driven by new customer deployments and a favorable mix within our customer base.
Speaker Change: Overall strong revenue growth and continued operational focus contributed to a 25 million dollar increase in adjusted EBITDA to 38 million dollars in line with our target.
Speaker Change: Revenue growth accelerated into year-end driven by higher transactions in part due to the Hyatt implementation which is beginning to generate meaningful increases in CRS transaction growth.
Please turn to slide 9.
Speaker Change: And finally, before moving on to our strategy update, please note the successful completion of our technology transformation objectives.
Speaker Change: Our team, in partnership with Google, has delivered the migration of more than 99% of our compute capacity to the cloud.
Speaker Change: achieving greater than 150 million dollars of cost benefits versus both 2019 and 2023 and establishing a strong foundation for future innovations.
Now, looking ahead.
please turn to slide 11.
Speaker Change: The global travel industry has experienced substantial change in recent years. As the marketplace continues to evolve, our strategic focus to innovate and deliver value to our customers and stakeholders remains unchanged.
Speaker Change: First, generating free cash flow and delevering our balance sheet remain our top financial priorities. We are pleased with the progress we're making on this front and Mike will share greater detail shortly.
Second, we are investing to drive sustainable growth.
Speaker Change: To achieve this, we are prioritizing three areas, a modern technology stack, an open marketplace, and intelligent retailing solutions.
Speaker Change: We believe these areas, the last two of which encapsulate our growth strategies, are essential in today's dynamic travel marketplace.
Speaker Change: I will now go into more detail around the promising results that we are already realizing from our growth strategies, which are expected to drive significantly greater volume and revenue growth starting in 2025.
On to slide 12.
Speaker Change: Travelers and businesses increasingly require immediate access to real-time data and information that can only be delivered by powerful modern technology infrastructure.
Speaker Change: Having achieved the objectives of our technology transformation, Sabre is able to design, build, and deliver advanced solutions that not only address customer and market demands, but also fuel our strategic growth plans.
Speaker Change: Operating in a modern, open, and cloud-based technology stack means we can deliver products to customers with critical SaaS capabilities, including more seamless integration, excellent performance and scalability, high availability, and enhanced security.
In addition, AI-powered capabilities are increasingly differentiating winners from losers.
Speaker Change: Our partnership with Google harnesses the power of its advanced AI capabilities and infuses high quality data into our next generation products and solutions.
Speaker Change: We are also leveraging classical and generative AI that enable our teams to write better code at faster pace, to diagnose and resolve problems swiftly, and improve engineering productivity and throughput.
Now I will review our specific strategies starting with OpenMarketplace.
On to slide 13.
Speaker Change: Sabre is transforming our historical distribution offering, namely the GDS, into a broader, modern, open marketplace.
Speaker Change: The foundational elements are four of our previously articulated growth strategies.
Multisource Platform, Distribution Expansion, Hotel B2B Distribution, and Digital Payments.
Speaker Change: Sabre's multi-source platform provides a ubiquitous, efficient, open marketplace for buyers and travelers by standardizing and consolidating fragmented air content sources, including NDC, low-cost carrier, and traditional edifect.
Speaker Change: Our early adopter program already connects content from over 50 LCCs to approximately 500 agencies.
Speaker Change: And we now have NDC integrations with 27 airlines currently live on our platforms.
Speaker Change: including recent expanded relationships with Emirates, Qantas, Tap Air Portugal and Air India. Our distribution expansion initiative focuses on growing our share in key geographic and market segments.
Speaker Change: In 2024, our commercial team signed new business totaling between 30 to 40 million air distribution segments from global agencies.
Speaker Change: From this we expect to realize significant volume growth in 2025, which I will touch on shortly.
Speaker Change: Sabre's enhanced hotel B2B distribution platform is on a strong growth trajectory as we continue to build on our leading position.
Speaker Change: Our success in adding new global hotel partners and our investments in product enhancements are driving higher attachment rates.
Speaker Change: As I mentioned earlier, hotel distribution bookings were up double digits year on year in 2024, driving a 16% increase in global booking value moving through our platform, totaling $21 billion. We believe there is significant growth opportunity ahead.
Speaker Change: Last, our digital payments business contributes to our open marketplace by reducing friction and bringing efficiency to sellers and buyers.
Speaker Change: The Digital Payments team continues to win new business and drove a 12% year-on-year increase in gross spending through the platform to $14 billion, resulting in a 45% increase in payment solutions revenue.
On to slide 14.
Speaker Change: The third key area of our strategy is delivering intelligent retailing solutions to our airline and hotel customers.
Speaker Change: Saber Mosaic, our modernized and enhanced travel platform that over time will replace traditional PSS systems, is by design open, modular, and flexible with AI powered revenue optimization solutions that are already delivering results for our customers.
notably Saber Mosaic is also PSS agnostic.
Speaker Change: In 2024, we signed Sabre Mosaic commercial agreements with Virgin Australia, Riyadh Air, and Air Serbia, providing momentum and strong market interest.
Speaker Change: Additionally, in the fourth quarter, we were pleased to announce a renewal of our technology partnership with American Airlines, including a multi-year extension of the PSS.
Speaker Change: In Hospitality Solutions, we have a leading CRS platform, Cynicsys, and a growing presence in property management. And Cynicsys Retail Studio brings accretive retailing capabilities on top of these existing platforms.
Speaker Change: This retailing offering enables hoteliers to optimize revenue with greater personalization of offers, including ancillaries and third-party content, and improve selling conversion rates.
Speaker Change: Based on early results, properties utilizing Synexis Retail Studio experienced a greater than five times increase in hotel ancillary sales year-on-year. On to slide 15.
Speaker Change: Sabre's open marketplace and retailing solutions are resonating with customers and are reshaping our growth trajectory.
Speaker Change: In 2025, we expect double-digit growth for air distribution bookings, hotel distribution bookings, and hospitality solutions CRS transactions.
Speaker Change: We expect the majority of growth in air distribution bookings will come from a number of signed but not yet fully implemented agreements including the largest Korean OTA as well as World Travel Inc. and another large win we signed in 2024.
Speaker Change: While we are not at liberty to disclose this customer's name
Speaker Change: They are a rapidly growing top five agency in North America focused on loyalty and credit card space.
This agency generated nearly 25 million airline segments in 2024.
Speaker Change: We were pleased to win a commitment of strong majority share of this business.
Speaker Change: and are steadily progressing through the migration process, which we expect to complete.
in 2025.
Speaker Change: In addition, we expect our multi-source strategy to drive incremental MDC and LCC volumes.
Speaker Change: Regarding industry share, to better represent the growing total addressable market for air distribution bookings.
Speaker Change: that we are targeting with our multi-source platform, including NDC, LCC, and EdiFact content.
Speaker Change: Moving forward, we will focus on total distribution bookings growth rather than solely GDS industry share.
Speaker Change: We believe this approach more accurately reflects the evolving distribution marketplace.
Speaker Change: and we are confident that our projected double-digit growth in air distribution bookings in 2025 demonstrates our strengthening competitive position.
Speaker Change: and Hospitality Solutions. We expect double-digit CRS transaction growth in 2025.
Speaker Change: driven by existing business and the implementation of signed new business, including HIRE.
Speaker Change: Mike will provide additional details on the drivers of our air distribution and hospitality CRS volume growth expectations for 2025 shortly.
Speaker Change: In summary, we are confident that we have the right strategies and solutions in place to drive significant acceleration in volume and revenue growth for Sabre in 2025 and beyond.
Speaker Change: I will now hand the call over to Mike to walk you through our financial performance and forward outlook.
Mike Randolfi: Thanks Kurt and good morning everyone. Please turn to slide 17.
The SABRE team delivered strong financial results in 2024.
Mike Randolfi: We generated year-on-year revenue growth, invested strategically to support innovation, and effectively managed costs, all of which resulted in higher margins and strong flow-through to the bottom line.
Mike Randolfi: Adjusted EBITDA increased by more than 50% in 2024 to 517 million dollars, above our initial guidance of greater than 500 million dollars provided last February.
Mike Randolfi: On the strength of this financial performance, we achieved our free cash flow objective for the year, improved our capital structure, and made significant advancements on each of our long-term strategic priorities.
Turning to slide 18.
Mike Randolfi: Total fourth quarter revenue increased 4% versus last year to $715 million. Distribution revenue totaled $500 million, a 5% increase compared to $476 million in Q4 2023.
Mike Randolfi: Total distribution bookings were $81 million in the quarter, a 4% increase compared to $78 million in Q4 2023.
Mike Randolfi: Our average booking fee was $6.17 in the fourth quarter, up 1% year-on-year.
Mike Randolfi: IT solutions revenue was roughly flat year-on-year in the fourth quarter and totaled 145 million dollars.
Mike Randolfi: Hospitality Solutions Q4 2024 revenue increased 8% to $81 million dollars primarily driven by an 8% increase in CRS transactions.
Mike Randolfi: Segment-adjusted EBITDA in the fourth quarter was $9 million, an improvement of $4 million versus prior year.
Mike Randolfi: Strong Cost Discipline helped drive our adjusted EBITDA margin from 14% in Q4 2023 to 16% in the fourth quarter of 2024.
Moving to our full year financial performance.
Mike Randolfi: Additionally, Hospitality Solutions delivered 38 million dollars of segment adjusted EBITDA, growth of 25 million dollars, in line with our targeted objective.
Mike Randolfi: Free cash flow for the year was negative $14 million, including $19 million in debt modification costs related to the opportunistic refinancing we completed in November. Excluding the accounting treatment of this opportunistic refinancing, we generated positive free cash flow in 2024.
Mike Randolfi: We ended the year with a cash balance of $746 million.
Now looking to 2025.
Please turn to slide 20.
Mike Randolfi: As Kurt mentioned, our targeted strategies are resonating with customers and position us to grow revenue and transactions significantly faster in 2025 as compared to 2024.
Speaker Change: I'll now take a moment to provide more clarity on the key contributors to this growth.
Speaker Change: Starting with air distribution, as you can see in the chart to the left highlighted in green, the vast majority of our expected double-digit bookings growth this year will come from already signed commercial wins that are being implemented over the course of the year.
Speaker Change: These deals include the two North America wins that we announced during the third quarter last year along with significant contributions from agency wins in Europe and Asia.
Speaker Change: Importantly, we continue to assume only a nominal contribution from overall industry growth in 2025.
Speaker Change: Based on recent airline and industry commentary, the outlook for both corporate and international travel, where Sabre is more heavily indexed, remains positive.
Speaker Change: The chart on the right outlines our quarterly expectations for air distributions bookings growth.
Speaker Change: Beginning with the second quarter, we expect to see the sequential pace of year-over-year bookings growth accelerate through the balance of the year as these implementations come online.
Speaker Change: Overall, we expect more than 30 million incremental error bookings in 2025 as compared to 2024.
Turning to slide 21.
Speaker Change: At Hospitality Solutions, we also expect double-digit, year-on-year growth in CRS transactions, with the vast majority of incremental volumes coming from signed but not yet implemented business.
Speaker Change: Hyatt is expected to approximate roughly half of CRS transactions growth in 2025.
Speaker Change: Moving to the chart on the right, we expect mid to high single-digit year on year growth in CRS transactions in the first quarter, followed by a steady acceleration throughout the remainder of the year.
Turning to slide 22 and our guidance.
Speaker Change: In the first quarter, we expect flat to low single-digit year-on-year revenue growth with adjusted EBITDA of greater than $150 million.
Speaker Change: Based on our timing and implementation of our new commercial winds, we expect our quarterly revenue and adjusted EBITDA will likely not follow historical seasonal patterns.
Speaker Change: As we move through 2025, we expect the ramp of our commercial wins will result in significant increases in year-on-year quarterly revenue and adjusted EBITDA.
Speaker Change: With regards to free cash flow, as a reminder, we typically experience higher working capital and cash outflows in the first quarter due to seasonality of our business.
We also pay annual incentive compensation payments during this period.
Speaker Change: As a result, we expect first quarter free cash flow to be similar to last year and positive in the remaining quarters of 2025.
Speaker Change: For the full year 2025, we expect high single-digit, year-on-year revenue growth, adjusted EBITDA of greater than $700 million, and free cash flow of greater than $200 million.
Speaker Change: In addition, we expect capital expenditures of approximately $85 million to support our strategic investments and cash interest expense of about $375 million.
Speaker Change: Given the atypical seasonal pattern of revenue and adjusted EBITDA that we expect in 2025, I will provide additional color on how we expect our primary financial metrics to move in 2025.
Speaker Change: For the full year, we expect to achieve high single-digit revenue growth primarily from the increases in air distribution bookings, hotel distribution bookings, and hospitality solutions CRS transactions, as well as revenue growth in IT solutions that we expect to resume in the second half of 2025.
Speaker Change: We also expect Average Booking Fee and Gross Margin as a percentage of total revenue to be marginally down year-on-year as a portion of the expected new bookings in 2025 will have a lower average booking fee driven by geographic mix, NDC, and LCC growth.
Speaker Change: Further, the completion of Sabre's Technology Transformation Objective is expected to drive adjusted technology costs lower versus 2024.
Speaker Change: We expect the lower cost to compute from operating in the cloud and the elimination of the bubble cost required in 2024 to complete the cloud migration will be partially offset by increased hosting costs related to higher volumes and further investments to support our strategy.
Speaker Change: On SG&A for the full year 2025, we expect a slight year-over-year increase.
Speaker Change: Overall, we expect accelerating revenue growth coupled with expense management will drive robust flow through of gross profit dollars to the bottom line.
Turn it to slide 23.
Speaker Change: We advanced each of our strategic priorities in 2024. With the actions taken over the last couple of years to realign resources, we are a more efficient and cost-disciplined organization.
Speaker Change: As Kurt highlighted, the momentum within our growth strategies is expected to drive significant contributions and top-line revenue growth.
Speaker Change: As a result, we remain on track and expect to achieve the greater than $700 million of adjusted EBITDA we communicated last February and as part of our 2025 guidance.
Speaker Change: Turning to slide 24, we completed several refinancing transactions in 2024 to strengthen Sabre's balance sheet, while also better aligning projected free cash flow generation with upcoming debt maturities.
Speaker Change: As mentioned earlier, in November 2024, we opportunistically extended $1.6 billion in debt maturities to the fourth quarter of 2029, significantly improving Sabre's debt maturity profile.
Speaker Change: Our next large maturity will not come due until June 2027.
Speaker Change: As a result of the refinancing activities during 2024 and the financial improvements achieved, we are well positioned to repay our 2025 debt maturities with cash on hand as they come due.
Turning to slide 25
Speaker Change: In closing, our strategic focus remains unchanged to generate free cash flow and de-lever the balance sheet through sustainable growth and innovation.
Speaker Change: We believe our accomplishments in 2024 have reshaped Savers' growth trajectory and position us well to deliver shareholder value in 2025 and beyond. And with that, Operator, please open the line for questions.
Speaker Change: Thank you. As a reminder to ask a question please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question please press star 1 1 again. Please stand by while we compile the Q&A roster.
Speaker Change: And our first question comes from Josh Baer of Morgan Stanley. Your line is open.
Josh Baer: Great, thank you for the question. I was hoping you could walk me through the process of implementing new agency just as far as the commercial wind. I'm wondering
Speaker Change: like how that ramp looks, come online over time, can you talk through any risks to that and just like a little more insight into the process of onboarding that.
Josh, thank you. This is Kurt.
So we have a tremendous amount of historical knowledge.
Speaker Change: and experience in implementing new business, whether it's with an existing client or whether it's with a new client that we have won.
Speaker Change: There's not a single one-size-fits-all. Typically, for example, with an online travel agent, there may be specific functionalities that you have to develop that they may have had with somebody else or they may have uniquely geographically.
Speaker Change: Once you develop those, it's a fairly seamless and, I'd say, easier integration with an OTA, and it's up to them on their side in terms of how quickly that wraps.
by comparison with brick-and-mortar leisure agencies or TMCs
Speaker Change: given that they typically run either single automated, meaning a single GDS, or multi-automated
Speaker Change: but they run multi-automated typically by geography so they may run in one call center or one geography
Speaker Change: one vendor and then somewhere else another one and so there's a significant change effort that is required by the brick-and-mortar or TMC agency on their side
Speaker Change: because the GDS approximates an operating system in many ways for them. So while there are things that we have to do on our side to drive the implementation, oftentimes the timeline is predicated on the actions of the customer or the prospect.
Speaker Change: In terms of the projections that we've given today and the ramp that we've given today, we have great confidence that we will achieve those outcomes.
Speaker Change: because we're well underway with many of those large opportunities. We're in sync and in concert both commercially and technically.
Speaker Change: with those customers, and we have a team that specializes in doing this. So we have the experience to do it. There's a lot of work that has to happen execution-wise by us and by our clients, but we are well underway toward achieving those objectives.
Speaker Change: Thank you. Very helpful. And then was just hoping you could unpack the incremental.
$100 million in cost efficiencies, a bit further.
is that sort of realizing.
Speaker Change: the completion of the tech transformation, or is there anything else that's embedded in that bucket? Thank you.
Speaker Change: Yeah, thanks for the question, Josh. So yeah, the $100 million, if you recall, when we had provided a walk last year from 2023 to 2025, we indicated there were two big things we were undertaking. We had a cost efficiency program, as well as tech transformation, which was all our cost.
savings in total.
Speaker Change: of $250 million. $150 million of that was realized in 2024.
the remaining $100 million, which is tech transformation.
Speaker Change: all of which the actions have already been taken and completed as we exit 2024, our savings from the original tech transformation initiative we undertook.
Speaker Change: starting around 2019-2020 and we've achieved the objectives and so that's that's what you're seeing in the P&L this year.
Great, thank you.
Speaker Change: Our next question comes from Alex Irving of Bernstein. Your line is open.
Alex Irving: Hi, good morning gentlemen. A question from me please. What are your expectations for revenue for passenger boarded evolution this year? I know the big step up sequentially from Q3 beyond normal seasonality. Any colour on what's driving that please and how you see that in 2025?
Alex Irving: Yeah, thanks Alex. First, we don't really manage the revenue per passenger boarded. I mean, there's a couple of...
Alex Irving: There's two different constructs there. Part of the revenue in airline IT is based on passengers boarded.
Alex Irving: Other portions, roughly half the revenue is driven by something other than passengers boarded. What I would say is as we look to the airline IT solutions revenue line,
Alex Irving: and we looked throughout the year. I would expect in the first half of the year, ARIT revenue to be down slightly year over year. That's because we had some revenue in 2024 associated with carriers that had previously demigrated prior to 2024, but there was a small tail of that revenue in the first half.
Alex Irving: that's completed in the first half. And then when we get to the second half, we start to see more of the benefits of higher PBEs from existing carriers. And then we're also expecting to see some additional revenue from Sabre Mosaic. So we would expect the revenue in RIT to be down slightly on a year-over-year basis in the first half. And then we'd expect it to resume growth in the second half and we'd expect it to demonstrate growth for the year overall.
Excellent. Thank you.
Alex Irving: Our next question comes from Jed Kelley of Oppenheimer. Your line is open.
Jed Kelley: Hey, great. Thanks for taking my questions and nice job reiterating on the guidance.
Jed Kelley: Can you talk about just how you think that impacts SABRE? And then, you know, I was late to joining the call, but can you sort of talk about just what's implied in your full-year outlook, you know, the corporate side versus leisure? Thank you.
Good. Hi, this is Kurt. Thank you for the questions.
Kurt Ekert: First of all on the capital infusion coming into the sector, I think that speaks to the attractiveness of the sector generally, especially corporate travel.
Jed Kelley: So you're speaking about the likes of Navin and Travel Perk and Spotnana. We generally have relationships with most or all of these companies.
Jed Kelley: and we believe with our multi-source content platform that we actually provide the best connectivity for them to all sorts of content, NDC, LCC, and traditional artifact. And don't forget that the algorithmic.
Jed Kelley: capabilities we put in terms of parsing that shopping is very fundamental in the corporate space.
Jed Kelley: because the relevant of shop returns is critical. So, you know, we applaud the capital coming in and whether it is a more traditional or a new entrant player, we intend to do business robustly with all of them.
Yeah, with regard to
Jed Kelley: as we look at travel expectations and kind of our overall base assumption.
Speaker Change: First, I would just highlight, Jed, our baseline assumption is flat to nominal industry growth.
Jed Kelley: which, as you know, has been our assumption for quite a while at this stage. Now, with that being said,
you know, when you look at the overall backdrop.
Jed Kelley: It's actually fairly constructive and positive. There's still expectations for increases, meaningful increases in business travel spend.
and when you look at airline capacity increases.
Jed Kelley: There's still some meaningful growth internationally, particularly as yields domestically have softened.
Jed Kelley: So, with that being said, there's reason to believe we could be better than our industry assumption applied to nominal, but there's our assumption. What I would highlight is, quite frankly, we're focused on that which we can control. As you can see, we've won significant business this year.
Jed Kelley: and we expect to have significant ramp-up in volume based on what we've won and based on what we control.
Thank you.
Jed Kelley: Thank you, and as a reminder, if you have a question, please press star 11.
Speaker Change: Our next question comes from Victor Chang of Bank of America. Your line is open.
Speaker Change: implies a substantially higher growth in Q4 and to some extent maybe the growth going into 26 is quite material as well, is that how we think about it? And then on the win, undisclosed win,
Speaker Change: How do we, how should we think about the impact to revenue per booking? Is it higher or will it be lower? How does it affect the mix?
Speaker Change: Victor, let me take the first and then we'll try to do the second as well. So on air bookings growth, you're right, you'll see a significant ramp through the year.
Speaker Change: as we implement and realize the wins that we have had.
Speaker Change: That implies strong momentum into Q4 and then into 2026. That's clearly an expectation that you should have.
Yep.
Speaker Change: And with regard to, as we think about booking fee and impact, as we talked about in the prepared remarks...
Speaker Change: First, as we look at the EBITDA improvement coming up in this year, we expect it to be driven
Speaker Change: to the largest degree by gross profit dollar growth from the double-digit booking distribution growth that we're seeing.
Speaker Change: Now, with that being said, what I would highlight is some of these volumes are coming with a slightly lower margin and slightly lower booking fee. So we ended the year for 2024 at $5.98.
I would expect that the average booking fee
Mike Randolfi: in 2025 would be slightly below that. And so I would expect the trends overall to be lower. I would expect gross margin to be slightly lower, but I would also expect that we're gonna generate substantial gross profit dollars. And that's what's gonna drive the lion's share of EBITDA growth this year. Yeah, just to add on to Mike's point,
Mike Randolfi: with respect to the undisclosed North American customer, given that booking fees in North America tend to be slightly lower than the balance of the world, and there's significant volume associated with this win, that will have a slightly dilutive effect on the average booking fee.
Yeah, very clear. Thank you.
Speaker Change: I think this this quarter you didn't mention about share gains. I don't know whether you have some color on whether
Speaker Change: how you perform relative to the market and Q4 specifically, and also on the mix of NDC bookings as well, given your life of 29 airlines now, any updates on whether you're seeing NDC volumes ramping on your end?
Speaker Change: Yeah, Victor. In Q4 2024, as indicated, we exited the year off about one percentage point year on year.
Speaker Change: we're winning that pretty broadly against the competition. With NDC specifically, NDC remains a low single digit component of our overall air distribution bookings total. We do expect from that very low basis.
to see significant or exponential growth in 2025 and beyond.
Speaker Change: We think the solution we have provided in terms of content connectivity coupled with the leading functionality for TMCs for brick-and-mortar and for OTAs will make us the NDC provider of choice over the long term.
Speaker Change: The only other thing I would just remind you is, we're expecting double-digit bookings growth this year. I think that highlights our competitiveness in the marketplace.
Speaker Change: Very clear and maybe if I can squeeze in one last one. The wins that you mentioned and especially the undisclosed ones
Speaker Change: generally speaking, is it Wynn versus other GDS peers or is it going to, you know...
and me.
Speaker Change: Is it more re-intermediation? How should we think about the trend going forward as well on re-intermediation or maybe winning more on the LCC front?
Speaker Change: Obviously you have guided for 25 a bit, the portion of that, but maybe if we think about medium term as well, what are the potential there?
Speaker Change: Yeah, thanks, Victor. In 2025 specifically, the vast majority of the growth you're going to see is the realization of
Speaker Change: new wins as we articulated. Now a portion of that, an increasing portion of the pie will be for NDC and for long-tail LCC content that we did not traditionally have. As you go out beyond 2025
Speaker Change: We expect NDC and especially the LCC Longtail to become more meaningful contributors to our growth.
Speaker Change: So we feel very good about what that mix is going to be over time.
Got it, heard, clear, thank you.
Thank you.
Speaker Change: Our next question comes from Dan Wasiolik of Morningstar. Your line is open.
Speaker Change: Hey, great. Good morning guys. Thanks for taking the question. So just with your kind of communication that gross margins in 2025 might be slightly lower just as a result of signing all this new business.
Speaker Change: Is that a result, like you've talked about, of just kind of the mix of that new business, or has there been some kind of change in the competitive environment with incentives? Thank you.
Speaker Change: Yeah, first, you know, thanks for the question. First, let me also just highlight
Speaker Change: When you look at our trajectory, one, we expect to generate significant gross profit dollars, albeit at a slightly lower margin. Second, if you look at 24,
Speaker Change: We increased our EBITDA margin by over 500 basis points. And if you do the math between 24 and 25...
Speaker Change: We expect significant EBITDA margin accretion. What I would say is, you know, I don't see, we haven't seen any significant change in the competitive environment. It's been a highly competitive environment, and we work.
Speaker Change: to compete effectively. It really has more to do with the mix of types of transactions that are being added in terms of bookings. It's a higher mix of NDC, a higher mix of LCC content.
Speaker Change: And so with that, some of that does have a lower average booking fee and slightly lower margin, but again, very accretive from a gross profit dollar perspective.
Okay, perfect. Congrats on the quarter.
Speaker Change: Our next question comes from Deepak Mathavanan of Canterbury, Gerald, your line is open.
Speaker Change: Hey, guys. This is Jack on for Deepak. Just a high-level one for me. You talked a little bit about AI in your prepared remarks. Can you discuss where you see the most opportunity from implementing AI across your business kind of going forward in 2025 and maybe even beyond? Thanks.
Yeah, thanks, Jack. Near-term, the two biggest opportunities are...
in the efficiency
Speaker Change: for the productivity of our customer service operations. And then number two is on developer productivity and throughput, meaning for the thousands of developers we have, enabling them to put our code at a faster pace. Those are things that we're stepping into and realizing within this calendar year.
and so right now we're, for example, embedding...
Speaker Change: Google's Gemini AI code within our revenue optimization products that we deliver for airlines, for example, and you'll see us begin to promulgate that fully into the Safer Mosaics stack as well as into our distribution footprint.
Speaker Change: And so we think that's going to one, help make our competitors or excuse me our customers more competitive and then two, help Sabre turn that into revenue over time. But near term again more on the first two, medium to long term more on the latter.
Got it, thanks.
Speaker Change: Our next question comes from Wei Fang of Mizuho. Your line is open.
Thank you guys, this is LeWay calling for James.
First of all, congrats on the sound results.
Speaker Change: Most of my questions have been answered, but I just want to double check, since you guys called out, right, Hyatt will be, like, half of the incremental transactions for the house in 2025. I was wondering if that happens to carry a little bit different margin profile versus the rest of the transactions.
while. Thank you.
Speaker Change: Wayne, thank you for the question. I just think for clarity, I believe what you asked is...
Speaker Change: is the margin profile for Hyatt different than the other HS customers. We don't break out the details of individual customer contracts.
Hi, it will be, as Mike indicated.
Speaker Change: Roughly half of the overall CRS transaction growth that we expect to see
Speaker Change: and the NHS this year. And it like the balance of business we're bringing on is accretive to HS. Yeah, and we would expect, if you look at hospitality solutions and you look at EBITDA, you'll see continued EBITDA margin expansion overall year on year.
Great, thank you.
Speaker Change: Thank you. I'm showing no further questions at this time. I'd like to turn it back to Kurt Ekert for closing remarks.
Kurt Ekert: All right, well, thank you. I could not be prouder of the team at Sabre and look forward as we go into the future in sharing additional progress on how Sabre is performing, and I do appreciate your support and interest. Thank you.
Kurt Ekert: This concludes today's conference call. Thank you for participating and you may now disconnect.
Thank you.
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