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Sabre Corp (SABR)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue was $687.15M, down 1% YoY; GAAP diluted EPS was $(0.51), and Adjusted EBITDA was $118.26M (+7% YoY). Operating margin expanded by 600 bps to 13% on lower technology and labor costs from cloud migrations and prior cost programs .
  • Results missed Wall Street consensus: revenue missed by ~$31M, normalized EPS missed (–$0.02 vs –$0.003), and EBITDA was below consensus (actual S&P Global EBITDA $108.74M vs $138.95M). Free cash flow was –$240.16M due to $227M payment-in-kind interest recorded in CFO; pro forma FCF was –$1.66M . Values retrieved from S&P Global.*
  • Sabre closed the $1.1B sale of Hospitality Solutions in July, used ~$825M of proceeds to delever, and refinanced $1.325B to extend maturities to 2030; >$1B of debt repaid YTD with improved debt maturity profile .
  • Guidance reset: management introduced scenario-based Q3 and FY 2025 pro forma outlooks now implying FY Adjusted EBITDA of ~$530–$570M and FCF of ~$100–$140M vs prior >$630M and >$200M, reflecting weaker air distribution volumes but expected transitory pressure and continued execution on growth initiatives .

What Went Well and What Went Wrong

What Went Well

  • Operating margin rose to 13% (+600 bps YoY) as technology and labor costs declined with cloud migration savings and prior cost reduction actions; Adjusted EBITDA grew 7% YoY to $118.26M and Normalized Adjusted EBITDA grew 6% to $127.20M .
  • Strategic portfolio action closed: Hospitality Solutions sale for $1.1B completed July 7, enabling ~$825M debt repayment and lower net leverage; deleveraging and extended maturities strengthen balance sheet and flexibility .
  • Commercial momentum continued in air distribution with new agency wins (e.g., Christopherson Business Travel), supporting multi-source content strategy and NDC integration trajectories; management highlighted focus on innovation and long-term value creation .

What Went Wrong

  • Revenue declined 1% YoY on weaker-than-anticipated air distribution bookings; total bookings fell 1% YoY to 90.30M and average booking fee slipped to $6.04 (vs $6.05) .
  • Free cash flow sharply negative (–$240.16M) driven by $227M payment-in-kind interest recorded to CFO in conjunction with refinancing; GAAP net loss widened to $(256.36)M on higher tax provisions and an $85.18M loss on debt extinguishment .
  • Guidance cut vs Q1 framework: FY 2025 pro forma Adjusted EBITDA now ~$530–$570M and pro forma FCF ~$100–$140M (prev. >$630M and >$200M), signaling softer volume assumptions and transitory pressure despite execution on growth programs .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$714.72 $776.62 $687.15
GAAP Diluted EPS ($)$(0.19) $0.09 $(0.51)
Operating Income ($USD Millions)$57.09 $103.40 $89.13
Operating Margin (%)8.0% 13.3% 13.0%
Adjusted EBITDA ($USD Millions)$115.38 $149.58 $118.26
Adjusted EBITDA Margin (%)16.1% 19.3% 17.2%
Normalized Adjusted EBITDA ($USD Millions)——$127.20
Net Loss Margin (%)(10.5)% 4.5% (37.3)%
Free Cash Flow ($USD Millions)$66.65 $(98.49) $(240.16)
Estimates Comparison (S&P Global)Q2 2025 ConsensusQ2 2025 Actual
Revenue ($USD Millions)$718.16*$687.15
Primary/Normalized EPS ($)$(0.0033)*$(0.02)
EBITDA ($USD Millions)$138.95*$108.74*

Values retrieved from S&P Global.*

Segment breakdown (Q2 2025):

Segment/MetricQ2 2024Q2 2025YoY Change
Distribution Revenue ($USD Millions)$550.59 $545.77 (1)%
IT Solutions Revenue ($USD Millions)$144.46 $141.38 (2)%
Total Bookings (Millions)90.98 90.30 (1)%
Air Bookings (Millions)76.23 75.53 (1)%
Lodging, Ground & Sea Bookings (Millions)14.76 14.76 0%
Average Booking Fee ($)$6.05 $6.04 (0.2)%
Passengers Boarded (Millions)168.91 171.35 +1%

KPIs trajectory:

KPIQ4 2024Q1 2025Q2 2025
Total Bookings (Millions)80.98 96.36 90.30
Air Bookings (Millions)67.47 82.44 75.53
Lodging/Ground/Sea Bookings (Millions)13.51 13.92 14.76
Average Booking Fee ($)$6.17 $5.91 $6.04
Passengers Boarded (Millions)170.03 165.83 171.35

Guidance Changes

MetricPeriodPrevious Guidance (Q1 2025 release)Current Guidance (Q2 2025 release)Change
Air Distribution Bookings GrowthQ2 2025Low single-digit Not restated; scenarios introduced for Q3 Maintained for Q2; shifted to Q3 scenarios
Pro Forma Revenue GrowthQ2 2025Low single-digit Q3: Low to mid-single-digit (scenario-based) Shifted to Q3 scenarios
Pro Forma Adjusted EBITDA ($M)Q2 2025~$140 Q3 2025: ~$140–$150 Maintained trajectory
Pro Forma Free Cash Flow ($M)Q2 2025Positive Q3 2025: ~$40–$50 Maintained positive run-rate
Pro Forma Adjusted EBITDA ($M)FY 2025>$630 ~$530–$570 Lowered
Pro Forma Free Cash Flow ($M)FY 2025>$200 ~$100–$140 Lowered
End-of-year Cash ($M)FY 2025Not provided>$750 New disclosure

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q4 2024)Previous Mentions (Q-1: Q1 2025)Current Period (Q2 2025)Trend
AI/Technology initiatives (SabreMosaic, NDC, LCC)Emphasis on SabreMosaic and new wins; expected 30M incremental air bookings in 2025; lower tech costs from cloud migration Continued traction with AI-powered Offer Management; wins with Aeromexico, Alaska/Hawaiian, Avelo, GOL; hotel B2B distribution GBV +11% YoY; payments gross spend +30% New agency agreements (Christopherson); continued innovation; cost savings from cloud migration driving margins Positive progress; execution continuing
Macro/volume outlook & bookingsAnticipated accelerating volumes through 2025; atypical seasonality; high-single-digit revenue, >$700M Adj EBITDA, >$200M FCF Lower-than-expected Q1 air bookings; reaffirmed double-digit distribution bookings for 2025; Q2 low single-digit growth Weaker-than-anticipated air distribution bookings in Q2; management views pressure as transitory; scenario guidance added Near-term softer; transitory per mgmt
Balance sheet/deleveraging~$1.9B refinancing in Q4’24; plan to pay maturities Plan to use ~$960M net Hospitality proceeds for paydown; ~1 turn deleveraging to ~5.4x Closed sale; repaid >$1B; refinanced $1.325B to 2030; end-year cash >$750M expected Material improvement
Regional trends (APAC group bookings)Not highlightedSequential improvement expected from stronger APAC group booking trends in Q2 Q2 still below expectations; pressure described as transitory; no explicit regional callout in release Mixed; execution continues
Regulatory/legal and taxLitigation reserve increased in 2024; DST/indirect taxes noted 295% tax rate expected; Q1 tax benefit flips to expense later in year Higher tax provisions drove larger GAAP loss; indirect tax/litigation items referenced in non-GAAP footnotes Headwind to GAAP EPS

Note: The Q2 2025 earnings call transcript could not be retrieved due to a database inconsistency; themes rely on Q4/Q1 calls and Q2 release .

Management Commentary

  • CEO Kurt Ekert: “Second quarter results reflect weaker than anticipated air distribution bookings… While we anticipate that current volume pressure is transitory, we are updating our full-year outlook to reflect our latest growth assumptions” .
  • Ekert: “We remain focused on executing our two strategic priorities of reducing leverage and driving sustainable growth through innovation… Over the past year, we have grown Adjusted EBITDA, extended debt maturities, and paid down debt, resulting in a strengthened balance sheet” .
  • On portfolio optimization: “The completion of the sale of Sabre Hospitality Solutions to TPG… provides us the opportunity to pay down debt and reduce our net leverage, optimize our portfolio and continue our focus on positioning the company for sustainable growth” .

Q&A Highlights

  • Q2 2025 call transcript was unavailable due to database inconsistency; below are clarifications provided in the Q2 release:
    • Management provided scenario-based guidance for Q3 and FY 2025 pro forma Adjusted EBITDA and FCF tied to GDS industry bookings growth, indicating sensitivity to volume assumptions .
    • Pro forma FCF explicitly removes $227M PIK interest recorded in Q2 CFO and adjusts for costs previously allocated to Hospitality Solutions to present a go-forward view post-divestiture .
    • Non-GAAP definitions and reconciliation details clarify drivers behind Adjusted EBITDA/Adjusted EPS and their relationship to GAAP results .

Estimates Context

  • Revenue missed S&P Global consensus ($718.16M*) by ~$31M; normalized EPS missed (–$0.02 vs –$0.003*); EBITDA also below consensus ($108.74M* actual vs $138.95M*). The magnitude of the miss reflects softer air distribution volumes and the impact of financing-related items on cash flow. Values retrieved from S&P Global.*
  • Expect estimate revisions lower for FY 2025 EBITDA/FCF after management’s scenario framework implying ~$530–$570M EBITDA and ~$100–$140M FCF vs prior >$630M and >$200M .

Key Takeaways for Investors

  • Near-term volume headwinds drove a multi-metric miss vs consensus and a guidance reset; management asserts pressures are transitory while execution on growth initiatives continues .
  • Balance sheet improved materially: >$1B debt repaid, maturities extended to 2030, and end-2025 cash >$750M targeted; deleveraging lowers risk and enhances optionality .
  • Scenario-based outlook ties earnings power directly to bookings growth; monitoring GDS volume trajectories and agency implementation ramp is critical for H2 inflection .
  • Cloud migration savings and cost discipline supported margin expansion despite softer revenue; normalized Adjusted EBITDA rose 6% YoY, underscoring structural margin progress .
  • Free cash flow optics in Q2 were distorted by $227M PIK interest booked to CFO; pro forma FCF provides cleaner view of underlying cash generation post-divestiture .
  • Strategic wins (e.g., Christopherson) and multi-source content/NDC integrations support distribution mix and fee resilience; watch AI-enabled SabreMosaic adoption for product-cycle tailwinds .
  • Trading stance: expect estimate cuts and narrative focus on H2 bookings acceleration and cash generation; deleveraging is a positive medium-term thesis pillar, while Q3 volume prints are the near-term catalyst .