Sabre Corp’s Mixed Earnings Call: Debt Down, Challenges Ahead

Sabre Corp ((SABR)) has held its Q2 earnings call. Read on for the main highlights of the call.

The recent earnings call for Sabre Corp presented a mixed outlook, reflecting both achievements and challenges faced by the company. While there were notable successes in debt reduction and advancements in AI-powered solutions, these were counterbalanced by declines in air distribution bookings and setbacks in corporate and military travel sectors. This combination of positive and negative factors suggests a cautious outlook for the remainder of 2025.

Debt Reduction and Balance Sheet Strengthening

Sabre Corp has made significant strides in reducing its total debt by more than $1 billion, approximately 20%, utilizing cash from the balance sheet and proceeds from the sale of Hospitality Solutions. This strategic move aims to reduce the company’s net leverage by approximately 50% by the end of 2025 compared to year-end 2023, showcasing a strong commitment to financial health.

Growth in AI-Powered Solutions

The company’s AI-powered offer management suite of IQ products continues to gain traction in the market. With nine airlines, including Avelo Airlines, adopting SabreMosaic Offer Management products, Sabre is positioning itself as a leader in innovative airline solutions, particularly with the first low-cost carrier adopting Ancillary IQ.

Digital Payments Expansion

Sabre’s digital payments business experienced a robust increase, with Q2 gross spend reaching $5 billion, marking a 44% year-on-year growth. This expansion highlights the company’s successful efforts in enhancing its digital payment capabilities, contributing positively to its overall financial performance.

Hotel Distribution Bookings Growth

There was a modest growth in hotel distribution bookings, which increased by 2% during the quarter. The attachment rate to air bookings also improved by 100 basis points to 34%, indicating a strengthening position in the hotel distribution market.

Air Distribution Bookings Decline

Contrary to expectations, air distribution bookings declined by 1% year-on-year. This underperformance was attributed to a 9-point decline in the base business, which overshadowed the 8-point growth contributed by strategic initiatives.

Challenges in Corporate and Military Travel

The decline in corporate bookings relative to leisure, along with a pullback in government and military travel, posed challenges for Sabre. The company’s higher exposure to these sectors negatively impacted its performance, reflecting broader industry trends.

Delay in Multi-Source Low-Cost Carrier Solution

Sabre announced a 6-month delay in launching its new multi-source low-cost carrier solution, now expected in early 2026. This delay is anticipated to impact the expected growth in air distribution bookings, presenting a challenge for the company’s strategic plans.

Revenue and Earnings Shortfall

The second quarter revenue was reported at $687 million, a 1% decline year-on-year, with normalized adjusted EBITDA of $127 million falling short of expectations. This shortfall was primarily due to lower gross margins and air distribution bookings.

Forward-Looking Guidance

Looking ahead, Sabre provided updated guidance for the remainder of the year. The company anticipates air distribution bookings growth of 4% to 10% in the second half of 2025, with third and fourth-quarter bookings expected to grow by 2% to 6% and 6% to 14%, respectively. Despite a challenging environment, Sabre expects full-year revenue to grow flat to low single digits, with pro forma adjusted EBITDA ranging from approximately $530 million to $570 million.

In summary, Sabre Corp’s earnings call highlighted a balanced mix of achievements and challenges. While the company has made significant progress in debt reduction and digital solutions, it faces hurdles in air distribution and travel sectors. The forward-looking guidance suggests cautious optimism, with expectations for moderate growth in the latter half of 2025.