Sabre (SABR) - Q3 2025 Earnings Call
Concise AI-driven summaries of earnings and conference calls, highlighting the numbers, context, and signals that matter most.
Call Details
Call Title: Sabre Third Quarter 2025 Earnings Conference Call
Date held: November 5, 2025
Management team members present with their titles:
Rashaun Dhanus - Senior Vice President of Finance
Kurt Eckert - President and Chief Executive Officer
Mike Randolfi - Chief Financial Officer
Call Summary
Financial Performance
Sabre reported revenue of $715 million, marking a 3% year-on-year growth, which was consistent with previously provided guidance for low to mid-single-digit growth.
Distribution revenue experienced a growth of $24 million, primarily driven by an increase in both air and hotel distribution bookings as well as enhanced product revenue.
Normalized adjusted EBITDA for the third quarter reached $150 million, showing a remarkable 23% increase year-on-year, while the normalized adjusted EBITDA margin expanded by 340 basis points to 21%.
The company noted a pro forma free cash flow of $13 million for the quarter, which was lower than anticipated, driven by a combination of lower receipts and higher disbursements.
Air distribution bookings grew 2% year-on-year, with a notable performance improvement observed in September, where growth reached 7% year-on-year.
“In July, air distribution bookings from our growth strategies totaled 2.5 million, and in September that grew to over 3 million,” highlighting the positive traction in recent months.
Hotel distribution bookings experienced a 6% growth for the third quarter, accompanied by an improved attachment rate to air bookings.
Despite softness in July bookings, the overall trend exhibited a recovery through the quarter due to strong performances in September.
Guidance
For the fourth quarter, Sabre anticipates an air distribution bookings growth range of 6% to 8%, taking into account the anticipated impacts of the government shutdown.
The full-year forecast is projected to be near the low end of a previously provided range of 0.5% to 3.5% for air distribution bookings.
“With our updated outlook for the fourth quarter, we expect full-year 2025 pro forma adjusted EBITDA to be approximately $530 million, representing year-on-year growth of 9%.”
The company expects to generate a pro forma free cash flow of approximately $70 million for the full year, while also endingQ4 with a strong cash position of around $800 million.
“The anticipated acceleration of volumes in the fourth quarter will provide solid momentum into 2026,” emphasizing cautious optimism for the future.
Sabre’s outlook for 2026 suggests mid-single-digit bookings growth, supported by a combination of new business acquisitions and minimal industry headwinds.
Capital Allocation
Over the past two years, Sabre has made strides in improving its capital structure, paying off over $1 billion in debt and significantly extending its debt maturities.
In Q3 alone, the company repaid approximately $825 million of debt from the proceeds of its hospitality solution sale.
“We anticipate reducing our net leverage by approximately 50% by year-end 2025 compared to year-end 2023,” which illustrates the commitment towards financial health.
The firm continues to seek opportunities for efficient debt refinancing, projecting a cash interest expense of approximately $441 million for 2026.
Sabre is focused on controlling its expenses and improving operational efficiency as it strategically allocates resources towards growth initiatives.
AI Trends
Sabre has been leveraging AI technologies to enhance user experiences, announcing two industry firsts: agentic APIs for travel and a continuous revenue optimizer within its Sabre Mosaic platform.
The firm sees a significant opportunity in AI, noting “Agentic AI anticipates traveler needs and takes actions on their behalf,” which could redefine customer interactions in the travel sector.
“With our deep partnership with Google, we have embedded AI within our platform,” indicating that current AI-driven products already deliver measurable ROI for airlines and agencies.
The company is focused on expanding its AI features, with Generative AI aimed at improving data accuracy and contextual information across customer touchpoints.
By the end of the year, Sabre plans to have nearly 100,000 connected hotels integrated into its platform, capitalizing on the demand for digital payments.
Investments in AI are expected to further enhance the company’s position by creating guided traveler experiences and improving sales conversions.
Macro & Demand Trends
The company believes the broader travel environment is stabilizing compared to earlier in the year, supported by positive comments from airlines.
“We experienced softness in July air bookings and then saw improvement through the balance of the quarter,” reflecting dynamic market conditions and consumer confidence.
Ongoing conversations with partners reveal “leisure demand is positive year on year, fairly robust,” whereas corporate demand is still showing challenges.
The impact of the government shutdown was highlighted as primarily affecting travel by government employees and the U.S. military, but not significantly impacting overall industry performance yet.
Sabre is committed to capturing growth opportunities by adjusting its strategies to match changing travel demands.
NOTABLE QUOTES
“2025 has been a dynamic year, and I’m encouraged by recent positive commentary from airlines.”
“We remain confident in our ability to continue to drive air distribution bookings growth going forward.”
“Innovation is key to Sabre’s strategy, and we have been leveraging AI to transform travel.”
“Our payments business continues to see strong customer demand and is growing at a very healthy rate.”
“We anticipate reducing our net leverage by approximately 50% by year-end 2025 compared to year-end 2023.”
“The anticipated acceleration of volumes in the fourth quarter will provide solid momentum into 2026.”
“Agentic AI anticipates traveler needs and takes actions on their behalf.”
“We are well positioned competitively with 41 live NDC connections.”
“We expect full-year 2025 pro forma free cash flow of approximately $70 million and to end the year with a strong cash position of approximately $800 million.”
“Our distribution expansion strategy is progressing well, and we feel we are very well positioned in this two-sided market as NDC scales to be a grower.”
Q&A SUMMARY
Q: Josh Baer (Morgan Stanley), asked for a clarification on the updated FY25 guidance and the reductions in EBITDA and free cash flow estimates.
A: Mike Randolfi explained that the reduction is primarily due to the anticipated $10 to $12 million impact from the government shutdown. Additionally, fluctuations in receipts and higher-than-expected disbursements contributed to the lower free cash flow outlook for the quarter.
Q: Carla (Bank of America), inquired about the mix of U.S. government air bookings and expected implications of the ongoing government shutdown.
A: Kurt Eckert noted that government and military travel represents about 4% of their global air distribution volumes, with the current impact primarily observed on bookings tied to government employees.
Q: Jack Halpert (Cantor Fitzgerald), questioned whether there’s typically an immediate recovery in demand following previous government shutdowns.
A: Kurt Eckert acknowledged the uncertainty around the timing of the government shutdown resolution but indicated that they typically see a phase-in of demand rather than an abrupt return.
Q: Alex Irwin (BirdStain), asked how Sabre plans to monetize agentic APIs and the assumptions behind the expected bookings growth for 2026.
A: Kurt Eckert elaborated that the company sees significant potential in agentic AI as a new channel, and they anticipate its growth to synergize with their current distribution strategy.
Q: Dan Wasilek (Morningstar), asked for insights into the stability of the booking fee and demand trends observed in discussions with partners.
A: Mike Randolfi explained that the strength in booking fees was driven by non-transactional revenue and added that leisure demand is up while corporate demand remains mixed.
These summaries are generated using artificial intelligence from publicly available earnings and conference call transcripts. The information presented reflects the author’s interpretation and does not represent the views of any other person or entity, including Altimeter Capital Management, LP (“Altimeter”). While the content is believed to be based on reliable sources, no representation or warranty, express or implied, is made as to its accuracy, timeliness, or completeness, and no liability is accepted for any errors or omissions.
This post and the information presented are intended for informational purposes only. The views expressed herein are the author’s alone and do not constitute an offer to sell, or a recommendation to purchase, or a solicitation of an offer to buy, any security, nor a recommendation for any investment product or service. While certain information contained herein has been obtained from sources believed to be reliable, neither the author nor any of his employers or their affiliates have independently verified this information, and its accuracy and completeness cannot be guaranteed. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, timeliness or completeness of this information. The author and all employers and their affiliated persons assume no liability for this information and no obligation to update the information or analysis contained herein in the future.