Sabre (SABR) Q1 2025 earnings summary

Executive summary

• Announced agreement to sell Hospitality Solutions business to TPG for $1.1 billion, with $960 million net proceeds primarily used to pay down debt and strengthen the balance sheet; closing expected by Q3 2025.

• Q1 2025 revenue was $777 million (down 0.8%-1% year-over-year), with Adjusted EBITDA of $150 million (up 5% year-over-year) and net income of $35.5 million, compared to a net loss of $71.5 million in Q1 2024.

• Strategic focus on deleveraging, free cash flow generation, and investment in technology, innovation, and core airline IT and travel marketplace platforms.

• Business model remains resilient, with revenues tied to air distribution bookings rather than ticket prices, providing stability amid market volatility.

• Continued commercial momentum with new agency and airline agreements, and expanded NDC integrations.

Financial highlights

• Q1 2025 revenue: $777 million (down 0.8%-1% year-over-year); Adjusted EBITDA: $150 million (up 5% year-over-year); Adjusted EBITDA margin: 19.3% (up 110 basis points); net income: $35.5 million.

• Free cash flow was negative $98 million, reflecting typical Q1 seasonality; ended Q1 with $672 million in cash.

• Gross margin decreased 190 basis points year-over-year, mainly due to upfront costs for new agency business and lower IT Solutions revenue from prior de-migrations.

• Effective tax rate was a 265% benefit, driven by valuation allowance changes and loss utilization.

• Net debt stood at $4.6 billion at quarter-end.

Outlook and guidance

• FY 2025 pro forma guidance: double-digit air and hotel B2B distribution bookings growth, high single-digit revenue growth, pro forma Adjusted EBITDA over $630 million, and positive Free Cash Flow above $200 million.

• Q2 2025 pro forma guidance: low single-digit revenue growth, Adjusted EBITDA around $140 million, and positive Free Cash Flow.

• Pro forma net leverage expected to decrease from 6.3x to 5.4x by year-end 2025 after debt paydown, with a long-term target of 2.5x–3.5x.

• Acceleration in air distribution bookings growth anticipated in H2 2025, with at least 20% year-over-year growth.

• IT Solutions revenue growth expected to resume in H2 2025 as impact from prior carrier de-migrations anniversaries.