Good morning. And welcome to the Sabre First Quarter 2025 Earnings Conference Call. My name is Rivka, 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, Investor Relations and Treasurer, Brian Evans. Please go ahead, sir.

Good morning. And welcome to our first 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 the timing and effects of the agreement to sell our Hospitality Solutions business, including pro forma financial information, results of our growth strategies, transactions and bookings growth, commercial and strategic arrangements, and our financial guidance, outlook and expectations, 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 March 31, 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, and free cash flow 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. We are also presenting certain financial information on a pro forma basis to give effect to the sale of the Hospitality Solutions business and the application of the proceeds from the sale to pay down outstanding indebtedness as if the transaction and actions had occurred on January 1, 2025. 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 will turn the call over to Kurt.

Thanks, Brian. Hello, everyone. And thank you for joining us today on our first quarter 2025 earnings call. In addition to discussing our quarterly financial results and outlook, we will also provide details on the agreement to sell our Hospitality Solutions business, which we announced last week. Business performance was solid in the first quarter, and I commend the team for outstanding execution in what was and continues to be a challenging macro environment. It’s important to provide perspective on our resilient business model and why we believe we are well-positioned even in times of economic uncertainty. Our revenues are largely tied to air distribution bookings rather than airline ticket prices. This structural characteristic is important for Sabre, generally enabling more stable and predictable revenue, even in periods of pricing volatility. That said, we are of course not immune from sector dynamics, and as such, we are adjusting our assumption for full year 2025 GDS industry growth from flat to nominal to down 1% to 2%. This update incorporates recent airline traffic softness and planned airline capacity adjustments. As a reminder, in February we provided full year 2025 guidance, which included expectations for double-digit air and hotel B2B distribution bookings growth, driven largely by the realization of volumes from business we have already signed. Mike will provide more details, momentarily and I’m pleased to share that today we are reaffirming our expectations for full year double-digit distribution bookings growth, despite the market backdrop. Further, we expect the revenue impact from the softer market dynamics to be largely offset by outperformance from our growth strategies. Specifically, new airline content being distributed through our multi-source platform that is above our initial expectations, expected momentum in our Payments business, and a more profitable customer mix. Turning to Slide 4, you’ll see an overview…

Thanks Kurt, and good morning everyone. Please turn to Slide 15. I’m pleased to report that Sabre delivered solid financial results in the first quarter and our resilient business continues to perform well. Revenue of $777 million was roughly flat year-on-year. Adjusted EBITDA of $150 million increased 5% year-on-year and was also roughly in line with our guidance. Adjusted EBITDA margin of 19.3% increased 110 basis points year-on-year, as lower technology costs and effective cost management offset lower than expected revenue. We ended the quarter with $672 million of cash on the balance sheet. Free cash flow reflects typical seasonality. Importantly, our full year free cash flow objective remains on track. Before I flip to the next slide, with the agreement to sell Hospitality Solutions, we believe presenting our key financial metrics on a pro forma basis provides the most representative view of Sabre’s anticipated future results when incorporating the impact of the sale. On today’s call when referring to pro forma expectations, the financial metrics are calculated assuming the transaction and associated debt pay down occurred on January 1, 2025. For comparability, we have also provided on our website, normalized financial metrics for the first quarter of 2024 through the first quarter of 2025. Moving to Slide 16, the first quarter results came in generally as expected. Revenue in the quarter was nearly flat compared to our expectation of flat-to-low single-digit growth. Within revenue, IT Solutions was lower by $8 million year-on-year primarily due to the impact of prior demigrations, which we have discussed on prior earnings calls. Consistent with our view on the February earnings call, we expect IT Solutions revenue to resume year-on-year growth during the second half of 2025. Gross margin, as expected, decreased 190 basis points in the first quarter versus the prior year. Roughly…

Thank you. [Operator Instructions] Our first question comes from the line of Jed Kelly of Oppenheimer & Company. Your line is now open.

Hey. Great. Thanks for taking my questions. Just two, if I may, I might have missed some of your opening comments. Can you just expound more on sort of what you’re seeing in the macro? And I guess my question is more related to, I guess, last summer, some of the travel companies were calling out some softness that didn’t materialize. And I guess I’m wondering if this time is different. And then can you just talk about post the Hospitality Solutions and congrats on getting that done? What that allows you to do to potentially accelerate some of the refinance conversation? Thanks.

Jed, good morning. This is Kurt. Thank you for the questions. I’ll take the first and then give it to Mike. So, with respect to the macro environment, as I indicated, Sabre certainly is not immune to what’s happening around us. We indicated that for the full year, whereas our prior assumption was flat to nominal GDS market growth, we expect that now to be down 1% to 2 %. So about a 300-basis-point change versus the expectation of a quarter ago. Importantly for our business, our revenue model is largely derived based on transaction volume, not based on the yield or the pricing environment that airlines and hoteliers enjoy. And so it’s very likely that what is happening in the market is there’s price pressure, but there’s still a need to put heads in beds or butts in seats. And so we believe the impact to our business should be relatively less than it is for many of our supplier customers. Secondly, I would just reiterate with respect to both our hotel and air distribution business, we expect to be up double digits year-on-year and that is despite that relatively soft environment. And so, overall, which is very important, is despite the macro, we have reiterated our guide for the full year, and of course, we will -- we’re providing both that, as well as a normalized pro forma result based on the HS sale.

And with regard to Hospitality Solutions and the sale and what that means from a capital structure standpoint, first, we’re very excited about the disposition, and while it’s a great business, definitely we feel is a significant credit enhancing event for Sabre. As we highlighted on the call, it improves our net debt-to-EBITDA by approximately 1 turn. It also reduces our interest expense by $65 million. But associated with that, by improving our credit profile, we believe that ultimately is going to allow for more efficient financings in the future. And so what you should look for, as you’ve seen in the past is, as the credit markets allow and our results get realized in the market, we will continue to be opportunistic to refinance our maturities in an efficient way.

Great. And then just one quick follow-up. If you see fuel costs kind of stay where they are, we really haven’t seen since COVID the airlines sort of lean into price to drive volume. Is there potential where you could see sort of the airlines take advantage of lower fuel costs to drive more volume and then therefore lean into more third party channels? Thanks.

Yeah. Jed, the way I think about it from us, from our perspective at Sabre is, ultimately passenger traffic aligns closely over time with capacity. And so we have pretty good visibility right now with capacity because the airlines have generally indicated what their capacity trends are going to be out there. Generally, what you see is once the capacity is out there, the airlines ultimately price one way or another to fill that capacity. So, certainly a fuel price is lower. Historically, that sometimes has resulted in lower fares to fill the planes. But from our standpoint, ultimately, airlines won’t have lower load factors. Ultimately, they’ll give a little on yield in order to fill the planes, and that will result in bookings, and that’s what we based our forecast on.

Yeah. And the other thing I’d add, importantly, not on fuel per se, but on capacity, is while capacity is going to grow slower than everybody anticipated three months or four months ago, capacity is still growing this year based on what’s projected by almost every key carrier.

Thank you.

One moment for our next question. Our next question comes from the line of James Goodall of Redburn Atlantic. Your line is now open.

Hi, everyone. Thanks for taking my question. So I guess my first question is on the free cash flow guide. How quickly can you use the cash proceeds of the sale to pay down debt to realize the interest cost savings? And I guess what was the free cash flow conversion of the Hospitality segment? I guess I’m just trying to sort of get a steer on where actual free cash flow will land this year rather than pro forma? Thanks.

Yeah. In terms of how quickly you pay down debt, so what will happen is it’ll, ultimately, shortly after the close when we receive the proceeds, in accordance with our credit agreements, we basically pay down the notes as we’ve indicated in our earnings slides within five days of receiving those proceeds. So it’s very, very quick. And what I would say is if you do the math, James, with regards to either free cash flow as it would be reported or pro forma, you get to roughly the same number and we would have roughly the same expectation of greater than $200 million free cash flow this year.

Yeah. Very clear. Thank you. And then I guess just the second one is on sort of some of the SabreMosaic wins. It looks like you’ve had some good conversion of some of your larger airlines. And I was just wondering how far reaching those agreements are. Are any of them sort of full stack OOSD agreements or just sort of portions of offer management as per sort of the Alaskan Airline deal? And then where are you with sort of some of your other airlines that you have contracts with like sort of American or JetBlue? Cheers.

Yeah. James, thank you. With respect to SabreMosaic, we’re winning and we’re winning at a very good pace. A few of those are full stack. The majority are mainly offer components and those airlines have not gone down the order path yet. The pipeline, both with existing clientele and the non-Sabre customers, is very rich. So there’s a number of non-Sabre conversations about full stack conversion or elements of the stack where we’re in there in the final bake-off where we would never have been there in the past. So we’re very optimistic about the medium- to long-term growth prospects this provides for the AirlineIT business.

Brilliant. Thank you so much, guys.

One moment for our next question. Our next question comes from the line of Victor Chang of Bank of America. Your line is now open.

Hi. Thanks for taking my questions. Couple if I may. I guess, first of all, can you give us some more color on Q1? I think there are a lot of maybe moving parts in Q1 thinking about government cutting travel and then maybe some corridors more impacted by the current macro, think the Canada-U.S. corridor. And can you give us some color on the mix by region or corporate versus leisure? And obviously, you gave us some color already on the Q2 progression on APAC group bookings, but the impact you saw in Q1, do you see that still happening in Q2 as well? Thank you.

Victor, thank you. Good morning. So the softness we saw in Q1 was a broad softness globally. It spanned corporate, leisure, pretty much all channels. The most acute softness was in two specific areas. Inbound travel to the United States from certain European markets and from Canada. And then secondly, as we mentioned, group bookings out of North Asia. The last component is U.S. Military and Government was down in the range of 30% on a unit basis in Q1 versus last year. If you look at that project into Q2, what I can tell you is, we’re seeing recent improvements in general market trends. And remember, we’re looking at things largely on a unit basis, not on a yield basis.

Got it. And then if I think about the full year guide where it’s been reaffirmed on the double-digit bookings growth and the high single-digit revenue growth, is it a function of maybe previously you have a bit more headroom to when you provide that guide and you’re still that’s why confident on it given Q1 was a bit soft or is it some incremental wins that you have between when you previously died to today?

Yeah. I mean, look, at the end of the day, I would just say, our team’s performing amazingly well and kudos to our Sabre team members. What I would say is, we’re seeing outperformance in certain elements of our business. We’re seeing a greater degree of content come on our platform than we originally expected. Our payments business, which outperformed this quarter, and we see that continuing to outperform, is certainly additive both from revenue and even now to a little bit more from an EBITDA standpoint. And then we’re also seeing a more profitable customer mix than we originally contemplated. So, while there’s definitely some macro weakness there and maybe within distribution bookings, our distribution bookings may be still double-digit, but maybe slightly lower double-digit than we originally anticipated. We see that from a revenue standpoint being offset by the three things that I just mentioned.

Got it. Thank you. And if I can squeeze one in, the GDS outlook, you said it’s down 1% to 2%. Is that included?

That something that…

Yeah. That’s for the industry. My question is, is that definition including the NDC, the low-cost carrier multi-source, that kind of stuff or that’s separate?

Yeah. Thanks, Victor. For clarity, we expect to be down 1% to 2% for GDS industry for the year. That’s really an EDIFACT measurement, which, as you know, is over time a relatively smaller piece of the addressable market that we’re going after. So, when you look at NDC, there’s not full transparency on NDC shared across the industry. And then, two, what we’re launching in Q3, which is the Sabre AirConnect platform, which is part of multi-source, which is the addition of long-tail LCC volumes that we have not played in traditionally, that’s separate as well. So, when we speak about the double-digit air distribution volume growth, the vast majority of that is business that we’ve signed and will be implementing, but the addition of new content will drive that as well. So, the negative 1% to 2% is an apples-to-apples comparison largely of EDIFACT traffic.

Got it. Very clear. Thank you.

One moment for our next question. Our next question comes from the line of Josh Baer of Morgan Stanley. Your line is now open.

Thanks for the question. Congrats on the Hospitality sale. Just thinking about the shape of the air bookings through the year, it was down in Q1. We have low-single-digit growth in Q2, getting to double digits for the year and ramping. So, like, I mean, like, it seems like that could mean high-teens in Q3 and as much as 30% year-over-year growth in Q4. First question is, does that make sense? Yeah, and then I have a follow-up.

Yeah. So you are directionally correct. We expect to be in the high-teens, mid- to high-teens in Q3 and above 20% in Q4 and at or above 20% for the back half of the year.

Yeah. Great. And so, the incremental $30 million bookings is from 2024. That’s what you’ll actually realize in 2025. But if we just zoom in on Q4, bookings could be up $20 million potentially year-over-year. So, I guess, is that the right takeaway and that type of market share gain carrying over to 2026? I mean, could we be…

Yeah.

… looking at teens growth in 2026 as well?

Yeah. We have not provided guidance for 2026, but if you look at the acceleration in air and hotel distribution bookings growth through the year and how strong we expect it to be in the second half of this year, that implies very strong carryover into 2026 and very strong growth rates for next year.

Got it. Right. So, the $30 million is not annualized?

$30 million is a realized number this year.

Right. That’s correct. Perfect. Thanks.

Most of that will be realized. Most of that, of course, will be realized in the second half.

Yeah. Thank you.

One moment for our next question. Our next question comes from the line of Jeff Harlib of Barclays. Your line is now open.

Hi. Good morning. Most of my questions are answered, but can you say how the implementation is going of the new business you’ve won? And do you see much risk of slippage given that everything is pretty weighted to 3Q and 4Q?

Yeah. Thanks, Jeff. We are right on track with where we thought we’d be at the beginning of the year and what we talked about last quarter. And so, we’ve got good line of sight and fidelity into being able to realize that. We don’t see a lot of execution risk there. Obviously, we’re assuming what we know today about current trading environment and what we’ve heard from carriers in terms of capacity for the balance of the year. We’ve not assumed that that environment either improves nor deteriorates any further.

Okay. And just for 1Q, both the technology costs and G&A were down at least decently below what we were looking for. I know you mentioned tech costs. Part of that is the lower bookings. But are there other cost savings actions that you’re implementing? Well, anything else you can point to and what can you say about the cost outlook for the rest of the year below the line?

Yeah. So, no, thank you for the question. We articulated on our February call, if you think about the technology expense line, we would expect to have realized in that line about $100 million from our tech transformation initiative. Now, that’s not a net number. There is some offset both for investment, as well as bookings grow, the hosting costs that are associated with that. So, as you look at the technology line, consistent with what we articulated in the February call, I would expect that line to be down meaningfully. However, I still would expect the largest driver of our EBITDA growth to be gross profit dollar growth and actually the tech savings, while being significant, probably still a distant second to that. On SG&A, our original assumption when we went into February was slight growth. Since, obviously, given what’s happened over the last, you call it, two months, three months, we have tightened that up a little bit. I would say we’d expect SG&A for the year to be roughly flat given our current outlook right now.

Got it. Thanks very much.

One moment for our next question. Our next question comes from the line of Deepak Mathivanan of Cantor Fitzgerald. Your line is now open.

Hey, guys. Thanks for taking our questions. This is Jack [ph] on for Deepak. Just two for you here. So, first, just understanding that the primary use of the proceeds from the Hospitality sale will be used to pay down debt. What areas and initiatives do you plan to use the remaining proceeds? I think you highlighted in the deck about $135 million to invest behind the rest of the business. Secondly, I think in some previous disclosure you’ve given, basically, air bookings, industry share. Can you update us on how that penetration is trended in 1Q? I think, last quarter you said you might not be disclosing that, but just any qualitative color? Thank you.

Yeah. Thank you, Jack. I’ll answer them in reverse order. On the share number, as we indicated last quarter, you have EDIFACT, you have NDC, and now we have long-tail LCC growth as well. And so reporting market share on what is one subcomponent we don’t think makes sense. But in a market where we see the GDS EDIFACT market being down a projected 1% to 2% for the full year and where we’re going to be growing at double digits with air distribution for the full year, I think it’s fair to infer from there that we are growing market share very considerably through 2025. With respect to the remaining proceeds after the pay down debt from the sale of HS, those will be applied mainly to our strategic investment areas, which are the strategic growth initiatives that we are beginning to see some real traction with, and then just continued modernization of our technology.

For clarity, our CapEx -- we would expect our CapEx expenditures this year to be approximately $80 million.

Great. Thank you.

[Operator Instructions] One moment for our next question. Our next question comes from the line of Alex Irving of Bernstein. Your line is now open.

Hi. Good morning. Two for me, please. First of all, the new wins with agencies you’ll be implementing over the course of the year, can you please describe how the gross margin of that volume differs from the gross margin of existing booking volume, if at all? Is there any nuance to call out here? Second question is on Coforge. You’ve signed a partnership since we last spoke. Presently, as I’ve seen talks about that as being worth $1.56 billion over 13 years, which averages out to $120 million per year over the life of that contract. How does the timing look? Is it approaching other costs? Will you be getting an exchange? How else should we think about that agreement in the context of your earnings, please?

Yeah. With regards to gross margin, what I would say is if you look at the new business, we articulated this on the February earnings call. With regards to the new air distribution bookings that we’re anticipating getting, there’s a couple of elements on that. One, we did indicate that we would expect average booking fee to be slightly lower than where we were about a year ago and margin to be slightly lower. I’d say it’s very slightly lower. That’s driven by a few reasons. One is, as we articulated, two of the agencies we won were some of the largest North American agencies. And so there is a geographical mix component there where U.S. domestic air bookings have a slightly lower average booking fee. Then after that, it also incorporates additional NDC volumes and LCC volumes. So, there is some, I would say, very slightly lower margins. But, overall, when you look at our margins in aggregate for the remaining quarters of the year for Q2, Q3, and Q4, I would expect gross margin to be roughly in line for this year where it was last year.

With respect to Coforge, just a reminder, this is a 13-year deal. It is focused on helping us accelerate product delivery and also launching additional innovative AI-embedded solutions. This is all incorporated within our ongoing technology costs and our investments in our growth strategies. Commercially, the new agreement with Coforge has both a fixed-fee component and a gain-share component that is subject to certain commercial outcomes. We’ve not provided additional commercial details beyond that.

All right. Thank you.

I’m showing no further questions at this time. I would now like to turn it back to Kurt Ekert for closing remarks.

Thank you, everybody. We are -- despite a challenging market backdrop, we’re pleased with the execution and the traction that we’re gaining in the business. We’re confident in our ability to deliver against the expectations and the guide that we have provided today and we look forward to talking again next quarter. Thank you.

Thank you for your participation in today’s conference. This concludes the program. You may now disconnect.