Travel technology company Sabre (NASDAQ:SABR) missed Wall Street’s revenue expectations in Q1 CY2025, with sales flat year on year at $776.6 million. Next quarter’s revenue guidance of $786.4 million underwhelmed, coming in 1.8% below analysts’ estimates. Its non-GAAP loss of $0 per share was in line with analysts’ consensus estimates.
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Sabre (SABR) Q1 CY2025 Highlights:
- Revenue: $776.6 million vs analyst estimates of $794.6 million (flat year on year, 2.3% miss)
- Adjusted EPS: $0 vs analyst estimates of $0.01 (in line)
- Revenue Guidance for Q2 CY2025 is $786.4 million at the midpoint, below analyst estimates of $801 million
- EBITDA guidance for the full year is $630 million at the midpoint, below analyst estimates of $673 million
- Market Capitalization: $1.15 billion
StockStory’s Take
Sabre’s first quarter results were shaped by broad-based softness in air travel bookings, with leadership citing particular weakness in inbound U.S. travel from Europe and Canada, as well as a notable decline in U.S. Government and Military activity. CEO Kurt Ekert explained, “The most acute softness was in two specific areas: inbound travel to the United States from certain European markets and from Canada, and group bookings out of North Asia.” Despite these challenges, the company pointed to year-on-year growth in its hotel B2B distribution and digital payments businesses as key contributors to overall stability during the quarter.
Looking ahead, Sabre’s guidance reflects expectations for accelerating air and hotel B2B distribution bookings growth, underpinned by the ramp-up of new agency agreements and product innovation. CFO Mike Randolfi stated, “We see outperformance in certain elements of our business: more content coming on our platform, continued payments growth, and a more profitable customer mix.” While management reaffirmed its full-year outlook for double-digit distribution bookings growth, they acknowledged that execution risk remains around the timing of large agency implementations, and that industry-wide air travel demand will depend on macro trends and airline capacity decisions.
Key Insights from Management’s Remarks
Management attributed the quarter’s results to both macroeconomic pressures and operational changes, while emphasizing the strategic impact of the Hospitality Solutions business sale and new contract wins.
- Hospitality Solutions divestiture: Sabre agreed to sell its Hospitality Solutions business for $1.1 billion, with proceeds earmarked primarily for debt reduction. This move is intended to sharpen the company’s focus on its core airline IT and travel marketplace activities, and management expects a significant improvement in Sabre’s credit profile as a result.
- Bookings softness by region: The company reported that air distribution bookings were most affected by weaker inbound travel to the U.S. from Europe and Canada, reduced group bookings in North Asia, and a 30% drop in U.S. Military and Government travel. Management noted the softness spanned both corporate and leisure segments.
- Hotel B2B and digital payments growth: Sabre’s hotel B2B distribution business achieved 7% bookings growth and an 11% increase in gross booking value, while gross spending in digital payments grew 30% year-on-year. These segments were highlighted as high-yield, low-cost channels with strong customer adoption.
- Technology and AI partnerships: The partnership with Google continues to enable the rapid deployment of AI-powered solutions, supporting Sabre’s multi-source content aggregation and airline IT platforms. The company now has 38 live NDC airline integrations, broadening its reach and improving booking content.
- Cost management and margin dynamics: Adjusted EBITDA margin improved year over year, with management citing technology transformation savings and disciplined SG&A (selling, general, and administrative expenses). However, upfront costs associated with new agency business and lower IT Solutions revenue created temporary gross margin pressure, which is expected to abate as volumes ramp up later in the year.
Drivers of Future Performance
Sabre’s outlook for the remainder of 2025 is driven by the ramp-up of new agency contracts, ongoing product investments, and industry capacity trends.
- Agency contract implementations: Management expects the majority of air distribution bookings growth to come from the implementation of several large agency contracts signed in 2024. These are anticipated to drive a significant step-up in bookings, particularly in the second half of the year, though the timing of full ramp remains a key execution risk.
- Expansion of content aggregation: The company’s multi-source platform, which integrates content from NDC (New Distribution Capability), low-cost carriers, and traditional sources, is expected to increase Sabre’s addressable market and boost customer adoption. Continued innovation in this area is seen as critical to both revenue and margin growth.
- Industry headwinds and capacity: Management noted that overall GDS (Global Distribution System) market growth expectations have been revised downward, largely due to global travel and airline capacity adjustments. While Sabre’s transaction-based revenue model provides some insulation, broader macroeconomic weakness and slower capacity growth could impact the pace of bookings recovery.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will watch (1) the pace and success of large agency contract implementations, (2) the company’s ability to sustain hotel B2B and digital payments segment growth, and (3) how quickly leverage declines following the Hospitality Solutions sale. Additional focus will be placed on any margin improvements tied to operational efficiency and ongoing technology investments.
Sabre currently trades at a forward P/E ratio of 16.1×. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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