Sabre Corporation

Good morning, and welcome to the Sabre third quarter 2024 earnings conference call. My name is Rivka, and I will be your operator. As a reminder, please note that 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.

Thank you, and good morning, everyone. Welcome to Sabre's third quarter 2024 earnings call. 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. We advise you that our comments contain forward-looking statements that represent our beliefs or expectations about future events, including the effects of growth strategies, share growth and distribution volumes, results of our technology transformation, commercial and strategic arrangements, and our financial guidance and targets, free cash flow 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, 2024. 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.saver.com. Participating with me are Kurt Eckert, President and CEO, and Mike Randolphie, Chief Financial Officer. Scott Wilson, EVP and President of Hospitality Solutions, will be available for Q&A after the prepared remarks. With that, I turn the call over to Kurt.

Thank you, Brian. Hello, everyone, and thank you for joining today's presentation. I'm pleased to share that the Sabre team delivered significant commercial, operational, and financial achievements in the third quarter. Earlier today, we reported third quarter results that highlight the progress we are making toward our key strategic and financial priorities. We delivered steady year-on-year revenue growth, a significant increase in adjusted EBITDA, continued margin expansion, and positive free cash flow. We are on track to more than double adjusted EBITDA from 2023 to 2025. supported by the continued execution of our growth strategies, a strong focus on cost management, and the realization of cost savings objectives tied to our technology transformation. I commend our team members around the world for their commitment to innovation and their dedication to our customers. Turning to slide four, you can see an overview of the topics that Mike and I will cover this morning. First, I will review our third quarter business highlights including our financial performance. Then I will provide an overview of the progress that we have made on our growth strategies. Finally, Mike will take you through our third quarter financial results and discuss our updated 2024 guidance. Please turn to slide five. Sabre delivered solid improvement across key financial metrics in the third quarter. Revenue expansion was driven by an acceleration in the growth rate of air distribution bookings high single-digit growth in hotel distribution bookings, an increase in average booking fees, and continued hospitality solutions growth. Our top-line performance combined with effective cost management led to a 19% increase in adjusted EBITDA compared to the same quarter last year. Turning to slide six. During the quarter, we made significant progress on each of our key strategic priorities, which, as a reminder, are to generate positive free cash flow, deliver sustainable growth, drive innovation and enhance our value propositions, and reduce our cost base while repositioning resources toward growth. We will discuss many of these achievements throughout today's presentation. Turning to slide seven. Travel Solutions delivered steady financial progress in the third quarter, driven by solid growth in both air and hotel distribution bookings, higher average booking fees, and continued expansion of air distribution share. Sabre's air distribution bookings grew by greater than 3% year-on-year, outperforming the industry. Roughly half of this came from share expansion and the balance from market growth. Specifically, this acceleration in air bookings growth was fueled by the implementation of commercial wins, continued growth in corporate travel, and an improvement in Asia group bookings. Looking forward, we expect our year-on-year air distribution bookings growth to continue building momentum as we enter 2025, driven primarily by the progress we are making on our growth initiatives. On to slide eight. As we've emphasized throughout 2024, we have consistently grown our share of air distribution bookings. This chart shows that our share has expanded for the seventh consecutive quarter on a year-on-year basis. We are seeing positive trends in the air distribution business, particularly in corporate travel, where we hold a leading position. Sabre's corporate volumes grew between 3% and 4% in the quarter. We will shortly talk about specific commercial wins that are driving these results, and we expect to achieve further air distribution industry share gains from our strong commercial pipeline and contract wins that have yet to be implemented. Turning to slide 9, hospitality solutions revenue increased to $84 million, a 7% year-on-year improvement, representing the highest quarterly revenue in segment history. The increase was driven by higher overall customer deployments, continued growth in CRS transactions, and a favorable mix within our customer base. Strong revenue growth contributed to a 67% improvement in our adjusted EBITDA, to $11 million, with the business expected to continue building momentum in the quarters to come. Our high implementation remains on track. Prospectively, we expect both double-digit transaction and revenue growth, and we expect to achieve our full-year adjusted EBITDA target of nearly $40 million in 2024 and nearly $70 million in 2025. Please turn to slide 10. During Q3, We continue to invest aggressively in our six growth strategies, and I am pleased to share with you the progress we have made starting with Sabre Mosaic. Please turn to slide 11. Sabre Mosaic is designed over time to replace and modernize traditional PSS systems. This AI-powered technology platform designed to modernize travel retailing is open, modular, and flexible. enabling intelligent and personalized offers and orders that extend beyond seat and fare class to include a wide variety of additional ancillary and third-party service options. The graphic on the left of this slide provides an overview of the Saber Mosaic product suites. Our PSS agnostic approach, which means that this is architected to work with both Saber and non-Saber PSS platforms, gives each airline customer the ability to choose the solutions that fit its needs. Feedback from airlines and industry experts has been overwhelmingly positive. We believe Sabre Mosaic is the most advanced offer and order technology platform available in production to the global airline ecosystem. On to slide 12. We are already translating this early enthusiasm for Sabre Mosaic into commercial partnerships. Virgin Australia, one of the global airline industry's leading digital innovators, has selected our platform to modernize its retailing capabilities and will adopt Sabre Mosaic's full technology stack. Additionally, Riyadh Air, Saudi Arabia's newest flag carrier, has selected Sabre Mosaic to power its offer optimization technology and retailing capabilities. On to slide 13. Turning to our other growth strategies, We continue to build out our multi-source platform, which seamlessly offers NDC, low-cost carrier, and traditional artifact content with intelligent algorithms and efficient workflow integration. We are now in production with an early adopter program, connecting content from over 40 new LCCs to approximately 150 agencies, with a broader rollout expected in the coming quarters. Additionally, we have NDC integrations with 23 airlines currently live in the GDS. We also recently expanded relationships with Delta, WestJet, and TapAir Portugal to include NDC content. On distribution expansion, as I mentioned earlier, we achieved additional industry share gains. We recently announced a commercial agreement with World Travel Inc., a leading regional TMC, and one of the North American agency wins we referred to last quarter. We continue to sign new business and are implementing previously announced agency wins and we have a very rich pipeline. Accordingly, we believe we are well positioned to achieve at least 100 basis points of share gains on an annualized basis by the end of 2024 and annually for the foreseeable future. Hotel distribution experienced strong growth in the third quarter with bookings up 9% year on year, and our hotel attachment rate relative to air bookings increased approximately two percentage points year-on-year. We believe there is significant opportunity ahead to drive strong growth in hotel distribution. In our Conferma digital payments business, we realized significant contract wins, including Priceline, a leading OTA, and Furlong Fox, the largest corporate travel agency in Argentina. These wins and continued growth in virtual card deployments support our belief that our payments business will deliver meaningful, long-term revenue growth. Within IT Solutions, in addition to the progress with Sabre Mosaic, we signed and implemented an important agreement with Air Serbia, establishing Sabre as its NDC IT provider. Last, as mentioned earlier, we are gaining momentum in the hospitality solutions business. CRS renewals stand above 90%, and we are driving strong growth in Synexis Retailing, where adoption has doubled since the beginning of the year. In summary, we remain focused on these strategies and are building a strong foundation for long-term sustainable growth. I will now hand the call over to Mike to walk you through our financial performance and forward outlook.