Sabre Corporation

Saber, fourth quarter and full year 2024 earnings conference call. My name is Deedee and I will 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 fourth quarter and full year 2024 earnings call. This morning, we issued an earnings press release, which is available on our website at investors.saber.com. The 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, transactions and bookings growth, 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-K for the year ended December 31, 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.saber.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'll turn the call over to Kurt.

Thanks, Brian. Hello, everyone, and thank you for joining us today to discuss our fourth quarter and full year 2024 results. Our performance this quarter and our expectations for 2025 highlight the continued progress we are making executing against our strategy and strengthening our balance sheet. 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 2024 business highlights, including our financial performance. Then I will provide an overview of the progress we have made on our growth strategies, how these focused investments address the evolving global travel industry, and how they are reshaping Sabre's growth trajectory. Next, Mike will take you through our fourth quarter and full year 2024 financial results and discuss our 2025 guidance. Please turn to slide six. Sabre had a successful year in 2024. Our team delivered on our strategic technology transformation objectives, including significant product and platform enhancements, positioning us for meaningful growth from commercial wins. Steady revenue growth combined with effective cost management resulted in 550 basis points of margin expansion and a 53% year-on-year increase in adjusted EBITDA, which totaled $517 million for the year, above our initial guidance of greater than $500 million provided last February. I commend our team members around the world for their hard work and dedication towards positioning Sabre for accelerated growth in 2025 and beyond. Turning to slide seven, Travel Solutions achieved solid financial results in 2024 due to higher average distribution booking fees from a richer customer mix, double-digit year-on-year growth in hotel distribution bookings, and contributions from new air distribution business. Notably, our exit rate for GDS industry share was up one percentage point versus the prior year. Looking forward, we expect our year-on-year distribution bookings growth to continue building momentum, driven primarily by the progress we are making on our growth initiatives. Turning to slide eight. Our hospitality solutions team delivered strong results in 2024, as total revenue reached an all-time high, due mainly to increased CRS transactions. This revenue performance was driven by new customer deployments and a favorable mix within our customer base. Overall, strong revenue growth and continued operational focus contributed to a $25 million increase in adjusted EBITDA to $38 million, in line with our target. Revenue growth accelerated into year end, driven by higher transactions, in part due to the Hyatt implementation which is beginning to generate meaningful increases in CRS transaction growth. Please turn to slide nine. And finally, before moving on to our strategy update, please note the successful completion of our technology transformation objectives. Our team, in partnership with Google, has delivered the migration of more than 99% of our compute capacity to the cloud, achieving greater than $150 million of cost benefits versus both 2019 and 2023, and establishing a strong foundation for future innovations. Now, looking ahead, please turn to slide 11. The global travel industry has experienced substantial change in recent years. As the marketplace continues to evolve, our strategic focus to innovate and deliver value to our customers and stakeholders remains unchanged. First, generating free cash flow and de-levering our balance sheet remain our top financial priorities. We are pleased with the progress we are making on this front, and Mike will share greater detail shortly. Second, we are investing to drive sustainable growth. To achieve this, we are prioritizing three areas, a modern technology stack, an open marketplace, and intelligent retailing solutions. We believe these areas, the last two of which encapsulate our growth strategies, are essential in today's dynamic travel marketplace. I will now go into more detail around the promising results that we are already realizing from our growth strategies, which are expected to drive significantly greater volume and revenue growth starting in 2025. On to slide 12. Travelers and businesses increasingly require immediate access to real-time data and information that can only be delivered by powerful modern technology infrastructure. Having achieved the objectives of our technology transformation, Sabre is able to design, build, and deliver advanced solutions that not only address customer and market demands, but also fuel our strategic growth plans. Operating in a modern, open, and cloud-based technology stack means we can deliver products to customers with critical SaaS capabilities, including more seamless integration, excellent performance and scalability, high availability, and enhanced security. In addition, AI-powered capabilities are increasingly differentiating winners from losers. Our partnership with Google harnesses the power of its advanced AI capabilities and infuses high-quality data into our next generation products and solutions. We are also leveraging classical and generative AI that enable our teams to write better code at faster pace, to diagnose and resolve problems swiftly, and improve engineering productivity and throughput. Now I will review our specific strategies starting with Open Marketplace. On to slide 13. Sabre is transforming our historical distribution offering, namely the GDS, into a broader, modern, open marketplace. The foundational elements are four of our previously articulated growth strategies. Multi-source platform, distribution expansion, hotel B2B distribution, and digital payments. Sabre's multi-source platform provides a ubiquitous, efficient, open marketplace for buyers and travelers by standardizing and consolidating fragmented air content sources, including NDC, low-cost carrier, and traditional ed effect. Our early adopter program already connects content from over 50 LCCs to approximately 500 agencies, and we now have NDC integrations with 27 airlines currently live on our platforms, including recent expanded relationships with Emirates, Qantas, Tap Air Portugal, and Air India. Our distribution expansion initiative focuses on growing our share in key geographic and market segments. In 2024, our commercial team signed new business totaling between 30 to 40 million air distribution segments from global agencies. From this, we expect to realize significant volume growth in 2025, which I will touch on shortly. Sabre's enhanced hotel B2B distribution platform is on a strong growth trajectory as we continue to build on our leading position. Our success in adding new global hotel partners and our investments in product enhancements are driving higher attachment rates. As I mentioned earlier, hotel distribution bookings were up double digits year on year in 2024, driving a 16% increase in global booking value moving through our platform. totaling $21 billion. We believe there is significant growth opportunity ahead. Last, our digital payments business contributes to our open marketplace by reducing friction and bringing efficiency to sellers and buyers. The digital payments team continues to win new business and drove a 12% year-on-year increase in gross spending through the platform to $14 billion, resulting in a 45% increase in payment solutions revenue. On to slide 14. The third key area of our strategy is delivering intelligent retailing solutions to our airline and hotel customers. Sabre Mosaic, our modernized and enhanced travel platform that over time will replace traditional PSS systems, is by design open, modular, and flexible with AI-powered revenue optimization solutions that are already delivering results for our customers. Notably, Sabre Mosaic is also PSS agnostic. In 2024, we signed Sabre Mosaic commercial agreements with Virgin Australia, Riyadh Air, and Air Serbia, providing momentum and strong market interest. Additionally, in the fourth quarter, we were pleased to announce a renewal of our technology partnership with American Airlines, including a multi-year extension of the PSS. In hospitality solutions, we have a leading CRS platform, Synexis, and a growing presence in property management. And Synexis Retail Studio brings a creative retailing capabilities on top of these existing platforms. This retailing offering enables hoteliers to optimize revenue with greater personalization of offers, including ancillaries and third-party content, and improve selling conversion rates. Based on early results, properties utilizing Synexis Retail Studio experienced a greater than five times increase in hotel ancillary sales year-on-year. On to slide 15. Sabre's open marketplace and retailing solutions are resonating with customers and are reshaping our growth trajectory. In 2025, we expect double-digit growth for air distribution bookings, hotel distribution bookings, and Hospitality Solutions CRS transactions. We expect the majority of growth in air distribution bookings will come from a number of signed but not yet fully implemented agreements, including the largest Korean OTA, as well as World Travel Inc., and another large win we signed in 2024. While we are not at liberty to disclose this customer's name, they are a rapidly growing top five agency in North America focused on the loyalty and credit card space. This agency generated nearly 25 million airline segments in 2024. We were pleased to win a commitment of strong majority share of this business and are steadily progressing through the migration process, which we expect to complete in 2025. In addition, we expect our multi-source strategy to drive incremental NDC and LCC volumes. Regarding industry share, To better represent the growing total addressable market for air distribution bookings that we are targeting with our multi-source platform, including NDC, LCC, and EDIFACT content, moving forward, we will focus on total distribution bookings growth rather than solely GDS industry share. We believe this approach more accurately reflects the evolving distribution marketplace, and we are confident that our projected double-digit growth in air distribution bookings in 2025 demonstrates our strengthening competitive position. In hospitality solutions, we expect double-digit CRS transaction growth in 2025, driven by existing business and the implementation of signed new business, including Hyatt. Mike will provide additional details on the drivers of our air distribution and hospitality CRS volume growth expectations for 2025 shortly. In summary, we are confident that we have the right strategies and solutions in place to drive significant acceleration in volume and revenue growth for Sabre in 2025 and beyond. I will now hand the call over to Mike to walk you through our financial performance and forward outlook.