Good morning and welcome to the Sabre Third Quarter 2024 Earnings Conference Call. My name is Riska 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.

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.sabre.com. A slide presentation, which accompanies today’s prepared remarks, is also available during this call on the Sabre Investor Relations web page. 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.sabre.com. Participating with me are Kurt Ekert, President and CEO, and Mike Randolfi, Chief Financial Officer. Scott Wilson, EVP and President of Hospitality Solutions, will be available for Q&A after the prepared remarks. With that, I will turn the call over to Kurt.

Thanks, Brian. Hello everyone, and thank you for joining today’s presentation. I am 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 4, 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 5. 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 6. 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 towards growth. We will discuss many of these achievements throughout today’s presentation. Turning to slide 7. 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 8. 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 Hyatt 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 continued to invest aggressively in our six growth strategies and I am pleased to share with you the progress we have made, starting with SabreMosaic. Please turn to Slide 11. SabreMosaic is designed 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 various additional ancillary and third-party service options. The graphic on the left of this slide provides an overview of the SabreMosaic product suites. Our PSS-agnostic approach means that this is architected to work with both Sabre and non-Sabre PSS platforms, giving 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 SabreMosaic 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 SabreMosaic 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 SabreMosaic's full technology stack. Additionally, Riyadh Air, Saudi Arabia's newest flight carrier, has selected SabreMosaic 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 multisource platform, which seamlessly offers NDC, low-cost carrier, and traditional EDIFACT 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 TAP Air 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 SabreMosaic, 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 SynXis 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.

Thanks, Kurt, and good morning, everyone. Please turn to slide 14. We achieved a number of important financial objectives in the third quarter. As you can see, we generated year-on-year revenue growth and delivered solid cost management that resulted in higher margins and strong flow-through to the bottom line. Adjusted EBITDA in the third quarter was meaningfully higher year-on-year, and we generated positive free cash flow which is a key strategic priority as we focus on improving our capital structure and deleveraging the balance sheet. We delivered these strong financial results while supporting investment in our six growth strategies which we believe will drive sustainable top-line and bottom-line growth. Please turn to slide 15. We achieved solid year-on-year improvement across our key financial metrics. And as you can see in the table these results are roughly in line with our expectations. The $10 million difference between our revenue guide of $775 million and actual revenue of $765 million is attributable to some small differences across various revenue streams versus our internal expectations. Based on early indicators, we see these factors carrying into the fourth quarter that are reflected in our updated guidance. Turning to slide 16. Total third quarter revenue was $765 million, an increase of $24 million or 3% versus last year. Distribution revenue totaled $551 million, a $26 million or a 5% increase compared to $525 million in Q3 2023. Our total distribution bookings were $93 million in the quarter, a 4% increase compared to $89 million in Q3 2023. And our average booking fee was $5.94 in the third quarter, up 1% from Q3 2023. Notably, our Air Distribution bookings year-on-year growth rate demonstrated meaningful acceleration this quarter as compared to prior quarters. IT Solutions revenue totaled $140 million in the quarter. This was a $7 million decline versus revenue of $147 million in the prior year, primarily driven by previously disclosed demigrations. Hospitality Solutions Q3 2024 revenue increased 7% or $5 million to $84 million. Adjusted EBITDA in the third quarter was $11 million, an improvement of $4 million versus prior year. This represents the strongest quarterly adjusted EBITDA for the segment in five years. As Kurt mentioned earlier, we expect accelerating revenue and CRS transaction growth in Hospitality Solutions and believe we are on track to achieve our full year adjusted EBITDA target of nearly $40 million in 2024. Sabre's adjusted EBITDA of $131 million in Q3 2024 versus $110 million in Q3 2023 represented a $20 million improvement year-on-year. Lower unit costs from our technology transformation and strong cost discipline helped drive our adjusted EBITDA margin from 15% in Q3 2023 to 17% in the third quarter this year. Lastly, we generated free cash flow of $8 million in the quarter and ended with a cash balance of $690 million. Turning to slide 17. Regarding guidance for the fourth quarter, we expect revenue of approximately $715 million, and adjusted EBITDA of approximately $115 million. We expect to generate greater than $80 million of free cash flow in the fourth quarter and expect to be positive for the full year 2024. As a reminder, the fourth quarter is typically the lightest quarter for Air Distribution bookings, but the strongest quarter for free cash flow generation due to favorable seasonality in working capital. For the full year 2024, we now expect revenue of approximately $3.03 billion, and adjusted EBITDA of approximately $515 million. As we exit 2024, we have strong momentum in a number of our important business drivers and believe we are on track to achieve our 2025 targets of greater than $700 million in adjusted EBITDA, and greater than $200 million in free cash flow. Turning to slide 18. We believe the path we are pursuing has the potential to create significant long-term shareholder value. The target investments we are making in our six growth strategies, coupled with prudent cost management have driven and we expect will continue to drive meaningful increases in adjusted EBITDA and free cash flow. We believe our anticipated earnings improvement has the potential to increase enterprise value over the long-term. As we prioritize utilizing expected free cash flow to pay down debt, we believe debt over time will comprise a smaller proportion, and equity a larger proportion of our enterprise value, further enhancing shareholder value. And with that, operator, please open the line for questions.

Great. Thank you for the question. I guess, I want to dig in maybe to the revenue and sort of talking about small differences across several lines. Hoping to get a little more color for the revenue miss versus the guidance there. And then, what I'm looking at like IT Solutions growth down after growing last quarter. Just wondering, even though passengers boarded was flat like last quarter you had passengers boarded down, but that segment still grew. So maybe we can start there with overall revenue and IT Solutions dynamics?

Yeah. Thanks for the question. What I would say, in terms of our revenue differences versus the $775 million, there's no discernible trend or anything really notable, specifically to call out versus our internal expectations. It really was an aggregation of what I'd call some very small differences. For example, our Air Distribution bookings fell short of our internal expectations by 200,000 bookings on a $79 million base. And so that's $1.2 million of the $10 million difference. And there's an aggregation, I'd say, of small differences like that that sum to $10 million. Now, with regards to IT Solutions, we've talked about in prior quarters IT Solutions was generally in line with where we expected. We expected it to be as we've talked about in prior quarters roughly in the $140 million to $145 million range this year and that's about where we're landing. And with regard to year-over-year, there was some in-period revenue last year associated with demigrated carriers, not attributable to PBs that didn't necessarily repeat this year. Now, as we look forward, a couple of things that I would say with regards to airline IT specifically. As we've talked about, we believe we've stabilized that business. We think the baseline at this stage is in that $140 million to $145 million range on a quarterly basis. But what I would say is as we are now getting past the impact of the demigrations, two things will happen: you'll start to see the benefit of PB growth come through. But the other thing is, as we've noted, we've had significant commercial wins over the last several quarters and, as far as it goes with airline IT, that goes to Mosaic. You saw Virgin Australia announced the full offer order suite and working with us on that. You see Riyadh on the offer side. And so what I'd say is as you look at the next few quarters going forward, we're probably in the $140 million to $145 million range. But at some point during 2025, I expect it to start to inflect up meaningfully and start to see more growth in that revenue stream.

Great. That is helpful. And then, the other topic I just wanted to ask about is free cash flow. You have EBITDA up considerably year-over-year. CapEx is about the same I think. Just hoping you could talk about some of the moving pieces in working capital and the delta between the trajectory of EBITDA that we've seen this quarter and so far this year and free cash flow? And what gives you confidence in getting to the positive mark for the full year like basically the big Q4? Thanks.

Yeah. First, I would just highlight, Q4 is typically our seasonally strongest free cash flow.

Okay.

And so what we see in terms of Q4 is aligned with our EBITDA, our working capital, and the trends that we're seeing. So it does give us a high degree of confidence. Now I'd remind you, if you go back and you replayed the earnings calls from last year, last year we had generated about $150 million one-time benefit from our working capital initiatives off the balance sheet. So now we are lapping that. And so you don't get that same benefit this year. So those are the big differences year-over-year. But as we move forward I would say and we go into 2025, like I said, for 2024 we expect to be breakeven. We expect to generate greater than $80 million in the Q4 of this year. And next year we feel very, very much on track with our target of greater than $200 million next year.

Hey, great. Thanks for taking my question. You said in your prepared remarks that Air Distribution is building momentum into 2025. Should we expect like a slight reacceleration in that segment going into next year in order to hit that guidance? And then, can you just talk about the overall travel environment where we are and where you think we stand going into the next year? Thanks.

Thank you, Jed. Regarding Air Distribution bookings, I want to remind you that over the past few months, we've announced significant commercial wins, including partnerships with major agencies like World Travel and Interpark in Spain and France. We've made notable progress on NDC as well. However, most of these agreements have not yet impacted our Air Distribution bookings. While I won’t dive deeply into 2025 on this call, I want to express our strong confidence that as we head into 2025, we'll begin to see the benefits of these agreements, resulting in a meaningful acceleration of share gains within our Air Distribution bookings.

Yeah. And with respect to the environment, Jed, obviously there's been sort of mixed macroeconomic news globally. Demand both in corporate and leisure remains pretty strong across all geographies. We're not seeing any real meaningful downward pressure. There obviously are some supply constraints on air. That's not meaningfully impacting our business, just a very small impact.

Got it. And then just as a follow-up, just with the new wins it kind of looks like if we look at it, cost of revenue is about, call it, 57.5% of distribution revenue? Are these new wins? Are they more high volume where they might put a little bit of pressure on the gross margins? Can you just talk about that dynamic? Thank you.

Yes, thank you, Jed. As I mentioned, the new wins we've achieved are mostly not reflected in our Air Distribution bookings or our results yet. I would say that if you examine the gross margin over time or the cost of revenue, it tends to hover around the 40% mark. Looking ahead, I expect the gross margin to stay around 60% and the cost of revenue around 40%. However, when analyzing the quarters individually, there's some variability due to different incentives and thresholds that come into play. In the last two quarters, our revenue growth has outpaced the cost of revenue. Therefore, it's important to consider these numbers over an extended timeframe. If I had to predict, I would still anticipate the cost of revenue to be roughly around 40% as we progress in the long term.

Thank you.

Hi. Good morning. Thanks for taking my questions. I have a couple. Can you provide some insight into your guidance for Q4, considering the lower revenue growth and the current bookings performance for Q4? It appears there might be losses related to Turkish and Frontier. Is there a specific reason for this? Is it due to unfavorable economic conditions? I have more follow-ups.

Yes. Thank you, Victor. With respect to Q4 and booking trends so far, I would say what we're seeing are trends that are relatively consistent with what we reported for Q3, nothing substantially different. As we look at Turkish and content generally, we obviously did not reach an agreement on mutually beneficial terms with Turkish. And therefore, as you indicated, we don't have the content of Turkish currently. As we have said previously, we went to great lengths in our discussion with Turkish to reach a new agreement for both Traditional and NDC content. We're disappointed that they were unwilling to consider terms that would allow us to meet the needs of the ecosystem, travel agencies, et cetera, to compete fairly for their business. And so, we regret the challenges that this brings to the ecosystem. That said, we believe that the fully integrated breadth and depth of travel content that we have brings immense value to all parties in the ecosystem. And we hope to reach an agreement with Turkish in the near future. I would mention that Turkish is a carrier with a relatively smaller home market. So the value of the distribution we bring, we feel, is tremendous. But we feel very good about our competitive position overall.

It's clear that revenue per booking is still growing, albeit at a slower pace than before. Should we anticipate a more normalized revenue per booking moving forward? How might pricing, mix, or NDC affect this? Additionally, regarding the 2025 outlook, you mentioned confidence in exceeding $700 million EBITDA in 2025. However, considering the GDS volume growth we are currently seeing, could this bring you closer to $750 million or $800 million depending on your market share gains? Is this still an achievable target?

Regarding the average booking fee, I anticipate that in the fourth quarter, the average booking fee will rise above $6. This expectation is influenced by two factors. First, a portion of our revenue and distribution is relatively fixed, and seasonally we see reduced bookings in the fourth quarter, which tends to create a seasonal upward trend. Additionally, there are significantly fewer Asia group bookings, which generally have lower booking fees. Thus, I expect the average booking fee in Q4 to be comfortably over $6. Looking ahead to 2025, I also expect our average booking fee to remain in the $6 range. In relation to our outlook for 2025, I want to remind you that during our February earnings call, we outlined our projections, estimating about $250 million in cost efficiencies driven by our tech transformation and other cost-saving measures, along with $115 million from our growth strategies. For 2025, we're confident that we are on track to achieve more than $700 million in adjusted EBITDA and over $200 million in free cash flow. The commercial successes we've achieved are part of our six growth strategies, contributing to that $115 million in strategic growth initiatives. It’s important to note that our baseline assumption, apart from our growth initiatives, is for flat to moderate growth in industry air bookings. If the growth in bookings exceeds expectations, as noted, each point of growth could add approximately $13 million to adjusted EBITDA. Thus, there is certainly potential to surpass the $700 million target, but for now, we remain focused on reaching that goal.

Thank you.

Thank you very much, operator. First of all, I'd like to have a moment of silence on behalf of my New York Yankees, a tough game last night. Seriously, we're happy with the progress we're making. As Mike indicated, we feel very much on track for the strategic transformation of Sabre and we look forward to continuing to talk to you in future quarters about this. So thank you and Happy Halloween.

Thank you for your participation in today's conference. This concludes the program. You may now disconnect.