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Sabre - Earnings Call - Q3 2025

November 5, 2025

Executive Summary

  • Q3 revenue of $715.2M grew 3% YoY; Normalized Adjusted EBITDA rose 23% to $150.0M with margin expanding ~340 bps to 21%; revenue was in line with guidance and Street, while Adjusted EPS of $(0.01) missed S&P Global consensus of $0.06, driven by gross margin pressure and mix. Revenue est vs. actual: $715.3M* vs $715.2M; EPS est vs. actual: $0.06* vs $(0.01)*. Values retrieved from S&P Global.
  • Guidance tightened: FY25 Pro Forma Adjusted EBITDA now ~$530M (from prior ~$550M midpoint scenarios) and Pro Forma FCF ~+$70M (from prior ~$120M midpoint) on government shutdown impact and lower high-margin product mix/FX; year-end cash raised to ~+$800M (>+$750M prior).
  • Bookings accelerated in September (+7% YoY), Distribution revenue +4% YoY, while IT Solutions was flat; average booking fee improved to $6.05 (from $5.94).
  • Strategic updates: 41 live NDC integrations; first-mover “agentic AI” APIs (MCP server) and payments scaling (>40% YoY quarterly gross spend), positioning SABR for 2026 mid-single digit bookings growth as LCC solution launches in 1Q26.

What Went Well and What Went Wrong

  • What Went Well

    • Normalized Adjusted EBITDA +23% YoY to $150.0M; margin +340 bps to 21%, helped by cost discipline and technology cost reductions.
    • Commercial momentum: Distribution revenue +4% YoY to $575.3M; bookings +3% YoY to 95.1M; average booking fee up to $6.05; hotel distribution bookings +6% YoY with higher attachment.
    • Strategic differentiation: 41 live NDC integrations and agentic AI APIs; payments business gross spend >40% YoY with ~100k hotels targeted by year-end (Conferma). CEO: “We were first in the industry to announce agentic APIs for travel...enable a new era of AI-driven retailing”.

  • What Went Wrong

    • EPS miss vs. consensus: Adjusted EPS $(0.01)* vs $0.06*; gross margin down ~130 bps YoY on weaker USD FX and lower-than-expected high-margin product sales. Values retrieved from S&P Global.
    • Government shutdown reduced Q4 bookings outlook midpoint by ~3 ppt and impacts ~$10–$12M to Q4 Adjusted EBITDA; also caused Q3/Q4 receipts timing headwinds for FCF.
    • FY25 Pro Forma FCF cut to ~$70M (from $100–$120M scenario midpoint prior) given working capital disbursement timing and shutdown effects; Q3 Pro Forma FCF of $13M was below plan.
View the full earnings report

Transcript

Operator (participant)

Good morning and welcome to the Sabre third quarter 2025 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 Finance, Roshan Kancharla. Please go ahead, sir.

Roshan Kancharla (SVP of Finance)

Good morning and welcome to our third quarter 2025 earnings call. This morning, we issued an earnings press release, which is available on our website at investors.sabre.com. A 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. We advise you that our comments contain forward-looking statements that represent our beliefs or expectations about future events, including results of our growth strategies, transactions and bookings growth, commercial and strategic arrangements, the effects of the sale of our Hospitality Solutions business, and our financial guidance, outlook and expectations, performance financial information, free cash flow, net leverage, and liquidity, among others. 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-Q for the quarter ended September 30, 2025. 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, normalized adjusted EBITDA, and normalized adjusted EBITDA margin have been adjusted to exclude certain items. The most directly comparable GAAP measures and reconciliations for non-GAAP measures are available in the earnings release and other documents posted on our website at investors.sabre.com. Normalized amounts have been adjusted for estimated costs historically allocated to our Hospitality Solutions business, which was sold on July 3, 2025. We are also presenting certain financial information on a pro forma basis to give effect to the sale of the Hospitality Solutions business.

We have removed the impact of the $227 million payment in kind interest that was recorded in conjunction with the refinancing activity in the second quarter of 2025 from pro forma free cash flow. Unless otherwise noted, results presented are based on continuing operations. Participating with me are Kurt Ekert, President and CEO, and Mike Randolfi, CFO. With that, I will turn the call over to Kurt.

Kurt Ekert (President and CEO)

Thanks, Roshan. Hello everyone, and thank you for joining us. Earlier today, we reported third quarter results and provided an updated outlook for the remainder of the year. 2023 has been a dynamic year, and I'm encouraged by recent positive commentary from airlines and believe the broader travel environment is stabilizing compared to what we saw earlier this year. Third quarter operational results met our expectations. As we focused on controlling what is within our control, I commend our team members for their continued progress against our strategic priorities: generating free cash flow, deleveraging the balance sheet, and driving sustainable growth through innovation. We delivered positive air distribution bookings growth in the third quarter, driven primarily by strong performance in September. Based on our progress around the implementation of new business.

Our outlook for the remainder of the year, we remain confident in our ability to continue to drive air distribution bookings growth going forward. We have strengthened our balance sheet by growing adjusted EBITDA, generating free cash flow, extending debt maturities, and proactively using cash to reduce debt. We have made significant progress over the last two years on our strategy for delivering. We anticipate reducing our net leverage by approximately 50% by year-end 2025 compared to year-end 2023. While there is more work ahead to achieve our long-term leverage goal, we are proud of the progress we have made. Innovation is key to Sabre's strategy, and we've been leveraging AI to transform travel. This quarter, we announced two industry firsts: agentic APIs for travel, enabling a new era of AI-driven retailing, and continuous revenue optimizer, an offering within our modular AI-native Sabre Mosaic platform.

Further, our payments business continues to see strong customer demand and is growing at a very healthy rate. We've extended our industry-leading position with 41 live NDC integrations. New agency wins and renewals, first-mover product launches, and continued innovation increase our confidence that we are well-positioned competitively. Moving to slide five, I will provide some detail on our third quarter results. Overall operational and financial results were positive. Total distribution bookings grew 3% year-on-year, and air distribution bookings increased more than 2%. Consistent with broader airline commentary, we experienced softness in July air bookings and then saw improvement through the balance of the quarter. September finished strong, up 7% year-on-year. The acceleration in air bookings was primarily driven by contributions from newly converted business. As a result of our growth strategies.

In July, air distribution bookings from our growth strategies totaled 2.5 million, and in September that grew to over 3 million. For the third quarter, air bookings from our growth strategies contributed 10 percentage points to total air bookings growth. This growth was partially offset by two notable headwinds. First, GDS industry air distribution bookings declined approximately 1 percentage point year-on-year. Second, Sabre's air booking mix was a headwind in the third quarter. This reflected Sabre's higher exposure to U.S. government and military and corporate business, as well as the impact of regional mix. We continue to believe these headwinds are transitory, and we are encouraged with the improved performance of certain regions as we move into the fourth quarter. Hotel distribution bookings growth increased 6% in the quarter, and the attachment rate to air bookings increased over 100 basis points year-on-year. Within IT solutions, passengers boarded grew 3% year-on-year.

Solid operational execution resulted in third quarter revenue growth of 3%. Top-line growth combined with ongoing expense management resulted in normalized adjusted EBITDA growth of 23%. Normalized adjusted EBITDA margin improved over 300 basis points to 21%. Moving to slide six. We are transforming our broader platform into a modern, open travel marketplace that seamlessly integrates and normalizes content and capabilities from a wide range of sources. In multi-source content, Sabre continues to demonstrate industry leadership. We are leading the industry with 41 live NDC connections, providing seamless shopping, booking, and workflow integration. We are also on track to launch our new low-cost carrier solution in the first quarter of 2026. Our distribution expansion strategy is progressing well. In addition to adding new agencies and significant conversion volumes, we recently announced that WorldTravel Inc

has expanded its strategic partnership with Sabre and is converting substantially all of their volumes onto the Sabre platform. This momentum further advances Sabre's position as a strategic technology partner to leading agencies around the world. Hotel B2B distribution gross booking value transacted through the platform continues with an annualized turnover of over $20 billion. A 7% increase year-on-year. Our digital payments business also continues to scale rapidly, and I will provide a deeper look into this business on the next slide. We are also making considerable advances related to AI, which I will touch on shortly. Overall, we are making significant progress against our strategy and transforming the business to capture long-term value in a dynamic and evolving travel marketplace. Moving to slide seven, Sabre Payments is an integrated fintech hub.

It is one of our fastest-growing businesses, processing over $20 billion in annual transactions, and quarterly gross spend grew over 40% year-on-year. Payments provides travel-focused solutions that simplify operations, enable global payment flexibility, and automate risk and fraud management for our customers. The fintech hub is comprised of two key components: Sabre Direct Pay and Conferma. Sabre Direct Pay is our travel payment service that streamlines financial operations across the travel industry. Travel payments and automated chargeback management services run through a single integrated interface. This interface provides customers with greater efficiency, faster dispute resolution, and improved win rates. Conferma is a virtual card and payment platform providing issuers, corporate buyers, and suppliers with real-time control, enriched data, and automated reconciliation. This enables faster, safer, broader business payments. We are scaling this business quickly and seeing strong growth in digital wallets and virtual cards.

By the end of this year, we expect to have approximately 100,000 connected hotels. Conferma is developing new API integrations that we expect could accelerate additional virtual card deployments and further adoption. We believe strong ongoing customer demand positions our payments business for continued robust growth. On to slide eight. AI represents an incredible opportunity for the travel industry and for Sabre provides a roadmap for future growth. We have leveraged our deep partnership with Google to embed AI within our platform in three ways. First, optimization AI, which delivers value today. Sabre IQ already powers live AI-driven products, which generate measurable ROI for airlines and agencies today. These include Lodging Cross-sell, which intelligently recommends hotels with air bookings, an Email Parser, which automates traveler requests and agent actions, and Dynamic Pricing, which optimizes fares and ancillaries in real time. Next, generative AI, the current phase of acceleration.

We have built digital assistants and chatbots to make travel planning and servicing more intuitive. As a trusted content provider, Sabre's GenAI solutions help ensure accurate and contextual information across customer touchpoints. Finally, agentic AI and consumer LLMs. This is our innovation horizon. Agentic AI anticipates traveler needs and takes actions on their behalf. We believe this new conversational commerce will be how consumers search, shop, and experience travel servicing in the near future. That is why we have taken a first-mover position. With agentic-ready APIs and a proprietary MCP server. These agentic solutions make the language of travel understandable to any AI agent. Google has spotlighted Sabre's latest AI innovations at its global events, drawing strong industry acclaim. On to slide nine. Moving to our outlook for air distribution bookings for the fourth quarter and full year.

The chart on the right shows reported quarterly air distribution bookings growth for the first three quarters of the year and our outlook for the fourth quarter. Our view for the fourth quarter is largely consistent with what we have said previously. Excluding the anticipated impacts from the government shutdown. We exited September with strength that carried into early October. However, the government shutdown impacted October air distribution bookings by approximately 3 percentage points, and we expect this impact to carry through the fourth quarter. As a result, we now anticipate fourth quarter year-on-year air distribution bookings growth of between 6% and 8%. The commentary around the broader travel industry is encouraging and could signal a normalization of trends going forward. We continue to believe the challenges we have navigated during 2025.

Are largely transitory, and as volumes from our growth strategies accelerate through the end of the year, we are well-positioned for growth. Additionally, we are optimistic that our positive momentum, as well as the launch of our LCC solution in early 2026, positions Sabre for mid-single-digit air bookings growth in 2026. In summary, we are focused on controlling what we can control, namely delivering the balance sheet and driving sustainable growth through innovation. With continued execution, the development of our AI solutions, and opportunities in adjacent spaces such as payments and hotels, we believe Sabre is well-positioned for long-term growth. Thank you, and now over to Mike.

Mike Randolfi (EVP and CFO)

Thanks, Kurt, and good morning, everyone. Please turn to slide 11. For the third quarter, Sabre reported revenue of $715 million, up 3% year-on-year, consistent with our guidance range of low to mid-single-digit growth.

Distribution revenue grew $24 million, driven primarily by an increase in air and hotel distribution bookings, as well as an increase in product revenue. IT solutions revenue of $140 million was flat year-on-year, as growth from passengers boarded was offset by a decrease in license fee revenue. We continue to expect fourth quarter IT solutions revenue to remain in a similar range of $140 million-$145 million. On a normalized basis, gross margin decreased 130 basis points in the third quarter versus the prior year. The decrease in gross margin is due primarily to two items. Lower than expected revenue from certain higher margin product sales and continued FX impacts of a weaker U.S. dollar, where Sabre generates revenue in dollars but pays some agency incentives in local currencies. Looking forward, we expect these gross margin pressures to continue into the fourth quarter.

Third quarter 2025 normalized adjusted EBITDA of $150 million. Increased 23% year-on-year, with normalized adjusted EBITDA margin expanding by 340 basis points to 21%. Pro forma free cash flow was $13 million, and we ended the quarter with $683 million of cash on the balance sheet. Moving to slide 12. As Kurt outlined, third quarter results were largely in line with the expectations we outlined on our second quarter earnings call. Revenue growth of 3% met our guidance for low- to mid-single-digit year-on-year growth. Normalized adjusted EBITDA of $150 million was at the high end of our expectations. Pro forma free cash flow of $13 million was below our expectations. The variance was driven approximately one-third by lower receipts and two-thirds by higher disbursements. Receipts were lower due to the cadence of the quarter. There is roughly a 30-day lag between bookings and receipts.

July and August air distribution bookings were relatively flat year-on-year, which was lower than our forecast, and virtually all bookings growth in the third quarter occurred in September, which did not benefit third quarter receipts. Regarding higher disbursements, certain payments that were forecasted to be paid in the fourth quarter of 2025 and in 2026 were paid in September. Based on our updated working capital forecast, we now expect free cash flow for the full year 2025 to be approximately $70 million. Turning to slide 13, over the past two years, we have made significant progress on our capital structure, lowering overall debt and extending our maturities. This year, we have paid off over $1 billion of debt. As part of that, in the third quarter, we repaid approximately $825 million of debt from the proceeds of the Hospitality Solutions sale.

We have pushed out maturities as well, with over 60% of our debt maturing in 2029 or later. With our current outlook, by the end of 2025, we expect our pro forma net leverage will be approximately 50% lower versus year-end 2023. We regularly look for opportunities to efficiently refinance our debt and extend our maturities. As we look to 2026 cash interest, we expect 2026 to reflect our projected 2025 full-year interest expense of $441 million. That is included in our GAAP to non-GAAP reconciliation, plus the impact of any potential refinancings, as well as any changes in the forward curve. On to slide 14 and our outlook for the rest of this year. We anticipate fourth quarter air distribution bookings growth of between 6% and 8%, with a midpoint of 7%. This compares to our prior fourth quarter guide of 6%-14%, with a midpoint of 10%.

The 3 percentage point reduction in the midpoint of our guide is driven primarily by the impact of the government shutdown. We expect low single-digit fourth quarter year-on-year revenue growth, and we expect pro forma adjusted EBITDA of approximately $110 million. Our fourth quarter adjusted EBITDA guidance incorporates a $10-$12 million impact from the government shutdown. We expect to generate pro forma free cash flow in the fourth quarter of approximately $130 million. As a reminder, the fourth quarter is typically our highest free cash flow quarter due to the seasonality of working capital. Our full-year outlook for air distribution bookings growth is positive and is within the guidance range we shared on our second quarter call. With our updated outlook for the fourth quarter, we expect full-year air distribution bookings growth to be near the low end of our previously provided range of 0.5%-3.5%.

We expect full-year 2025 pro forma adjusted EBITDA to be approximately $530 million, representing year-on-year growth of 9%. We have not made any changes to our assumptions for either CapEx or cash interest. We expect full-year 2025 pro forma free cash flow of approximately $70 million. We expect to end the year with a strong cash position of approximately $800 million. In closing, we are making progress on our strategy to generate free cash flow and deliver the balance sheet and drive sustainable growth through innovation. We expect the anticipated acceleration of volumes in the fourth quarter will provide solid momentum into 2026. Operator, please open the line for questions.

Operator (participant)

Thank you. Ladies and gentlemen, as a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced.

To withdraw your question, simply press star 11 again. Please stand by while we compile the Q&A roster. Now, first question coming from the line of Josh Baer with Morgan Stanley. Your line is now open.

Josh Baer (Equity Research Analyst)

Great. Thank you for the question. Was hoping we could just run through the updated FY25 guidance again and help bridge from what it was last quarter to this quarter, and really focusing on EBITDA and free cash flow. I know you called out some of the headwinds from government shutdown, but really just wondering why EBITDA is now $20 million lower at the, you know, from the midpoint and free cash flow $50 million. And I know you were talking through some of the receipts and disbursements. I would think some of that would sort of normalize or, you know, those September receipts come in in Q4.

Why the bigger move in free cash flow versus EBITDA?

Mike Randolfi (EVP and CFO)

Yeah. I'll take that question. If you go from the midpoint of our guide last time at $550 million to $530 million, the biggest component of that is going to be the $10-$12 million impact from the government shutdown. The other difference is, as you look from Q3 to Q4, as we highlighted in our prepared remarks, we did have lower margin from FX and lower high margin product sales. We do expect that to continue into the fourth quarter. That is essentially your difference between your $550 million and $530 million. If you recall, what correlated in terms of free cash flow to $530 million of EBITDA was $100 million of free cash flow last quarter. As I articulated this quarter, there was a difference between our expectations of around $27 million.

We expected to come in around $40 million of free cash flow. Instead, we came in around $13 million. And to be clear, about a third of that was due to receipts. Two-thirds was due to disbursements. On the receipts, the way to think about that is, as we came through the third quarter, as we articulated, receipts are essentially determined by the prior couple of months in the quarter. And August in particular fell short. And we had a strong September, which would bode well for receipts in October. However, we had a step down in bookings that was not in our original projection because of the government shutdown. So that gets offset in the fourth quarter.

When you get into early next year, because we would expect this quarter to be back-end loaded, we would expect to have slightly higher receipts than we would have otherwise, but it will not necessarily show up in the fourth quarter. On disbursements, essentially, there were elements there that were timing. Of the disbursements, the way I would think about it is there is a portion of our disbursements that were made in September that we either contemplated and forecasted for Q4 or early 2025. However, because of timing of work, because of timing of combination of invoices, commercial negotiations, disbursements were slightly different. For example, we had a $7.5 million disbursement in the September month that we originally had forecasted for Q1 of 2026, and it was tied to an agency commercial agreement.

Because of, you know, what was best for the commercial agreement overall, the payment was made in September. You do not necessarily get that back this year, and that is what drives you from the $100 million to the $70 million.

Josh Baer (Equity Research Analyst)

Okay. That is really helpful. Just to clarify on the government shutdown impacts, maybe everyone else knows this, but is this because of, like, staffing, airport, and safety? Is it actual government travel spend that is impacted, or is it more related to, you know, the impacts to the consumer and the macro when you quantify that?

Roshan Kancharla (SVP of Finance)

Yeah. Thanks, Josh. To date, the impact is almost entirely travel by government employees and/or U.S. military. We have a high concentration of the U.S. military and government as a component of our business. Just for clarity, for example, in 2024, U.S.

Military and government represent about 4% of our global air distribution volumes. That number is quite de minimis in terms of current trading volumes. To date, we've not seen a material impact in terms of the overall industry. Obviously, if you look at operating issues in airports with air traffic control, that is a risk going forward, but not something that's, again, material to date. Thank you.

Operator (participant)

Thank you. Our next question coming from the line of Victor Cheng with Bank of America. Your line is now open.

Hi. This is Scarla for Victor Cheng at Bank of America. Two questions from my side. The first one is, what's the mix of your air bookings that is tied to the U.S. government travel, and how can we think about the impacts of bookings in Q4 if the shutdown continues?

Second question, do you have any updates on your current NDC mix? Is it still in the low single digits? Thank you.

Roshan Kancharla (SVP of Finance)

Yeah, thank you, Kell. For clarity, when you say what is the mix of U.S. military and government, can you clarify what you're asking there?

Yes, so just the mix of your air bookings that is tied to the U.S. government, and how can we kind of forecast our bookings estimates based on the shutdown?

Okay. We do not break out the details of our military and government if you're asking domestic versus long haul, for example. Again, if you go back to last year, that was about 4% of our air trading volume in the distribution business. That number is quite de minimis in terms of current trading right now. NDC remains a low single-digit number.

For us, that's between 2% and 3% of our air distribution volumes. It is growing at a rapid rate. We do expect it to scale as we go forward. I will emphasize, as we noted during our prepared remarks, we now have 41 live NDC connections. These are the same API connections that you would get if you were a Direct Connect or any other provider. We have leading functionality that is facing buyers and travel agencies. We feel we are very well positioned in this two-sided market as NDC scales, to be a grower.

Thank you.

Operator (participant)

Thank you. Our next question coming from the line of Jack Halford with Kents Office Gerald. Your line is now open.

Hey, guys. Thanks for taking my question. Just two quick ones, please.

Kind of coming back to the government travel piece of this, I think you're pretty clear about the headwinds for Q4. I guess historically, when there's been government shutdowns and they kind of come to an end, do you typically see an immediate payback in demand, or is there sort of a bit of a lagged recovery? That's kind of the first one. Second one, just quickly on payments, obviously growth there has been pretty solid the past couple of quarters, and you had the slide about it in the deck. Can you talk a little bit more about the strategy here and how incrementally you think this can be to your business going forward, and then maybe talk about sort of the margin profile of the business as well? Thank you.

Kurt Ekert (President and CEO)

Thanks, Jack.

On the government, we do not know obviously when the shutdown will be resolved. We imagine it will happen in the fourth quarter, but who knows? We anticipate being back to normalcy in the first quarter, but it will probably phase its way between here and there. With respect to payments, the payments business, again, which is comprised of Sabre Direct Pay, which is a set of product capabilities that we have both in our distribution and our IT business, as well as our Conferma virtual payments business. That business is scaling at a 40% top line rate. Really, it is very compelling what we have there. We have not at this point broken out the revenue or the margin details of that business. That may be something that we do prospectively. We think the value opportunity and the scale opportunity there is tremendous versus our current position.

Great. Thank you.

Operator (participant)

Thank you. As a reminder, to ask a question, please press star 11. Our next question coming from the line of Alex Urban with Bernstein. Your line is now open.

Thanks and good morning. Two for me, please. First on Agentic API. Could you please help us to understand how you intend to monetize this? Specifically, are airlines unable to do their own agentic API to do the same thing essentially for free? Who's going to pay you and for what specifically? Second on booking growth for 2026, I think you mentioned earlier about being positioned for mid-single digit bookings growth. What assumptions underpin that? If you could please break that down between, say, known new business migrations, specific headwinds lapping, and your expectations for underlying industry growth. Thank you.

Kurt Ekert (President and CEO)

Thank you, Alex. Let me deal first with the booking growth for 2026.

As we indicated, we expect mid-single digit bookings growth in 2026. That assumes a flattish GDS or distribution marketplace and then strong organic performance by Sabre with continued converted business, as well as the implementation of our incremental low-cost carrier solution. With respect to Agentic AI, it is very early. I think you're going to see, number one, Agentic AI emerge as a new channel in and of itself, maybe similar to the way online travel agents emerged starting about 30 years ago. I think that will take share away from both intermediary and supplier direct channels. What we have developed in terms of our API solution is, we think, the leading intermediary API solution for the marketplace. This can sit directly behind an API, Agentic AI, API agent, and/or large tech platform.

It is also fit for purpose that it can be used by our travel agency and our airline or hotel customers to help them power their Agentic AI profile going forward. In terms of what is the commercial model, obviously, we think the largest opportunity is for us to be an intermediary distribution player, but there may be an IT element to this as well. That will become more apparent in the quarters as we go forward.

Operator (participant)

Thank you. Our next question coming from the line of Denver Seal with Morningstar. Your line is now open.

Hi, good morning. Thanks for taking my questions. So two, if I may, the first year, booking fee looked like it was pretty strong and stable this quarter at, you know, I think around $6.06. Just wondering how we should think about that as we look into 2026.

Wondering if you could maybe provide some more detail in your prepared comments. You kind of talked about a stabilization in the overall industry and industry demand, just the conversations maybe you're having with your partners and customers to kind of arrive at that. Thank you.

Mike Randolfi (EVP and CFO)

I'll take the booking fee. If you look at the strength in our booking fee year-over-year, it was driven by significant non-transactional revenue that's benefiting us. So it's not necessarily tied to a specific booking. We expect that to continue to be additive over time. With regards to 2026 booking fee, at this stage, we're not going to provide any other commentary beyond what was in our prepared remarks with 2026, but we'll give you a lot more context on that in the February call.

Kurt Ekert (President and CEO)

Thanks, Dan.

With respect to industry demand, it's a bit of a mixed bag. What you're hearing and seeing from commentary from many different intermediaries and then supplier customers, and this is underpinned by a lot of private conversations that we've had with our clientele, is leisure demand is positive year-on-year, fairly robust. Corporate demand, what you're seeing is prices elevate or strong yield, and you've seen some improvement on a sequential basis in corporate demand, but it is still negative year-on-year on a unit basis. A lot of the commentary you hear from suppliers is around yield decrease or yield improvement relative to where we were six months. The volume environment has improved, but is still, when you look at the mix of corporate plus leisure, is mixed. It's not that positive. As we go forward, our expectation is

typically what you see in this industry is GDP growth and airline volumes tend to approximate one another. If that is the assumption next year, you're at low single digit passenger growth in the United States and globally. The question will be what the mix is, and we're going to learn our way into that. Again, our expectation for our volume assumptions next year in distribution are that the intermediary industry is relatively flat and that we're growing share against that metric.

Thank you.

Operator (participant)

Thank you. Now, our next question coming from the line of James Goodall with Ross Charles and Cole Rutbird. Your line is now open.

Hi everyone. Thanks for taking my question. So firstly, just coming back to slide nine and focusing on the Q3 air booking growth of 2%.

I think your original guide was 2-6, which was based on a negative 9-point impact from mixed industry and plus 13 from growth strategies. Just given that the industry improved to down one from down four through Q3, what caused Q3 to be at the bottom of the range despite the fact that industry got better through the quarter with it, you know, that plus 13 of new wins coming on more slowly? In terms of my second question, just coming to the low-cost carrier launch for next year, can you give us a flavor of how many incremental bookings you're expecting that to drive on an annual basis and how many LCCs you currently have signed up or in the pipes to be signed up? Thank you.

Kurt Ekert (President and CEO)

Yeah. Thank you, James.

When you look at Q3 volumes, what we saw was that both July and August were relatively flat in terms of our intermediary bookings. September was actually up 7%. The very good news there is that when you look at the quarter, there was positive 10 points of volume performance tied to the implementation of new business that was converted this calendar year. In fact, that number was 12% in September, so that continues to ramp and accelerate. We indicated that was 3 million bookings during the month. Why was that below the prior estimate? Despite the improvement in the GDS number, it comes down to the mix of our business. Number one is we are adversely impacted as compared to the industry by our exposure to both the U.S. military and government. We have nearly a full share there.

Two is a vast majority of corporate and TMC business globally goes through Sabre. That was still down several % year-on-year in the quarter. Then the impact of regional mix as well. With the launch of the low-cost carrier platform, there are two important components here. One is similar to, if you're familiar with Travel Fusion, which is a non-GDS aggregated solution in the market, and there are a number of these kinds of solutions. What we are launching is a new platform that integrates 50-plus new low-cost carriers. That is with a bit of a different technical and commercial model. We'll be in full production launch in the first quarter of next year.

Separately, we've also signed up a significant number of new low-cost carriers that we did not have in our system previously that are participating in more traditional means, either Edifact or Direct Connect versus this new low-cost carrier solution. Long-term, we expect this could contribute multiple tens of millions of transactions to our business. It'll be a subset of that for next year as we ramp this up. We're not going to go into detail on this specific number.

Thank you very much.

Operator (participant)

Thank you. There are no further questions in the queue at this time. I will now turn the call back over to Mr. Ekert, CEO, for any closing remarks.

Kurt Ekert (President and CEO)

Thank you so much, everyone, for the continued interest. We look forward to sharing additional progress next quarter and in the years ahead. Thank you.

Operator (participant)

Ladies and gentlemen, this concludes today's conference call.

Thank you for your participation, and you may now disconnect.

View Q3 2025 Earnings Summary