Sabre Q1 Earnings Call Highlights

Key Points

• Sabre beat Q1 expectations with revenue up 8% year over year to $760 million and Normalized Adjusted EBITDA up 21% to $169 million, helped by stronger travel marketplace activity, higher booking fees and lower expenses.
• Middle East conflict and fuel prices are pressuring bookings, creating a near-term headwind that management says is weighing on March and April trends and likely keeping second-quarter air distribution bookings near flat.
• Sabre reaffirmed full-year guidance for about $585 million in pro forma Adjusted EBITDA and negative $70 million in free cash flow, while noting growth opportunities in payments, lodging, NDC and AI-enabled travel infrastructure.

Sabre NASDAQ: SABR said first-quarter 2026 results exceeded its expectations, led by stronger travel marketplace activity, higher booking fees and lower-than-expected expenses, while management cautioned that conflict in the Middle East and higher fuel prices are weighing on near-term booking trends.

President and Chief Executive Officer Kurt Ekert said revenue rose 8% year over year and Normalized Adjusted EBITDA increased 21% to $169 million. He said the company achieved its highest rate of air distribution bookings growth in more than two years, with air distribution bookings up 6% from a year earlier.

“We are encouraged by the continued momentum we are seeing from our growth strategies,” Ekert said. He added that Sabre’s data showed its booking growth “materially outpaced the industry” during the quarter.

Middle East Conflict Weighs on March and April Trends

Ekert said about 11% of Sabre’s air distribution bookings either originate in or transit through the Middle East. In March, those bookings declined by roughly 600 basis points, including a roughly 50% decline in flights flying from, to or through the region and a roughly 70% decline in flights originating out of the Middle East.

Management also attributed an additional roughly 100-basis-point impact in March to fuel supply and price dynamics, along with softer leisure travel demand. Taken together, Ekert said those factors created an approximate 7-percentage-point headwind to total air distribution bookings in March.

Despite those pressures, Sabre said March air distribution bookings were roughly flat, supported by strength in the Americas and resilient corporate travel. Ekert said the Americas delivered approximately 7% growth in March, and corporate volumes remained steady through the quarter.

During the question-and-answer session, Ekert said April trends were similar to March but “slightly positive,” with some improvement in the Middle East pattern. He said Sabre assumes hostilities in the region subside by the end of the second quarter, while the fuel impact could take longer to unwind through the rest of the year.

Guidance Reaffirmed Despite Lower Booking Outlook

Sabre now expects full-year 2026 air distribution bookings and revenue to grow in the low- to mid-single-digit range, reflecting Middle East-related disruption, fuel dynamics and airline capacity reductions. The company said it expects second-quarter air distribution bookings to be near flat, followed by phased improvement and a more normalized environment by the fourth quarter.

Chief Financial Officer Mike Randolfi said Sabre is reaffirming its full-year 2026 guidance for approximately $585 million of pro forma Adjusted EBITDA and approximately negative $70 million of free cash flow. He said the free cash flow outlook is driven almost entirely by restructuring costs tied to Sabre’s inflation offset program, and that excluding those costs the company would expect near breakeven free cash flow for the year.

Randolfi said second-quarter revenue growth is expected to be flat to nominal, with pro forma Adjusted EBITDA of approximately $130 million. He added that gross margin for 2026 is now expected to be toward the higher end of the prior 56% to 57% guidance range because of favorable booking mix trends.

Revenue Growth Broad-Based Across Marketplace and Airline Technology

Sabre reported total first-quarter revenue of $760 million, up 8% year over year. Randolfi said Marketplace revenue increased $49 million, or 9%, driven by an approximate 5% increase in distribution bookings and an approximate 3% increase in average booking fee.

Airline Technology revenue was $142 million, up 7% year over year. Ekert said passengers boarded increased 3% to 170 million, and highlighted the recent migration of Hawaiian Airlines back onto Sabre’s platform.

Gross margin was 56.4%, above management’s expectations, primarily due to a favorable mix of bookings. Operating income rose 27% year over year to $116 million, with operating margin expanding 220 basis points to 15%. Normalized Adjusted EBITDA margin expanded 235 basis points to 22.2%.

Randolfi said first-quarter Normalized Adjusted EBITDA exceeded Sabre’s prior guide of approximately $130 million by $39 million. The outperformance reflected $10 million of higher gross income tied to gross margin and $29 million of lower-than-expected expenses, split roughly evenly between adjusted technology and adjusted SG&A. The quarter also benefited from a $6 million favorable impact from the repeal of the Canadian Digital Services Tax.

Payments, Lodging and NDC Remain Growth Areas

Ekert said Sabre’s Payment Suite is one of the company’s fastest-growing areas. First-quarter payment revenue increased more than 25% year over year to $13 million, while gross spend on the platform reached nearly $6 billion, up more than 40%.

In response to an analyst question, Ekert said Sabre’s payments business includes Conferma, its virtual payments business in which Mastercard is a minority shareholder, and Sabre Direct Pay, which he described as a fintech marketplace within Sabre. He said Sabre is focused on acting mainly as an “orchestration layer” for the payments industry with additional services and products being added.

Ekert also said Lodging Expansion recorded its 13th consecutive quarter of year-over-year revenue growth. Total hotel-related revenue increased 10% to more than $80 million in the quarter, and annualized gross booking value of hotel bookings exceeded $20 billion. He said Sabre’s hotel attach rate is consistently above 30%.

On New Distribution Capability, Ekert said NDC bookings represented 4% of total bookings at the end of 2025, grew during the first quarter and are expected to continue accelerating in 2026.

Sabre Positions Itself for Agentic AI Travel

Management emphasized Sabre’s role in emerging agentic AI travel channels. Ekert said Sabre is a cloud-native platform and “super aggregator” that provides infrastructure to shop, book and service travel. He said chatbots can generate itineraries, but booking and servicing travel at scale requires the type of real-time content aggregation and transaction logic that Sabre provides.

Ekert said Sabre recently went live with a ChatGPT OpenAI plugin for Virgin Australia, offering generative AI-based search and flight shopping. He also said Sabre launched the first phase of its Mindtrip and PayPal partnership, with Sabre providing the core air booking layer.

Garry Wiseman, Sabre’s President of Product and Engineering, said travel agencies are initially using AI largely for agent productivity and workflow automation, while also exploring agentic experiences for customers.

Ekert said Sabre does not intend to be a consumer-facing online travel agency or large language model layer. Instead, he said the company is positioning itself as the infrastructure and data layer behind search, booking and servicing for airlines, hotels, agencies and emerging agentic AI platforms.

Sabre ended the quarter with $665 million in cash. Randolfi said the company has no large debt maturities until spring 2029 following refinancing transactions completed last year, with more than 90% of debt maturing in 2029 or later.

About Sabre NASDAQ: SABR

Sabre Corporation is a leading travel technology company that provides software, data, mobile and distribution solutions to the global travel industry. Through its Sabre travel marketplace, the company operates one of the world's principal global distribution systems (GDS), connecting travel buyers and suppliers across airlines, hotels, car rental companies and other travel providers. Sabre's suite of products includes reservation and ticketing systems for travel agencies, comprehensive airline operations and passenger services solutions, as well as hospitality property management and central reservation systems for hotels.

Established in 1960 as a joint venture between American Airlines and IBM, Sabre introduced one of the first computerized airline reservation systems, pioneering the automation of ticketing and inventory control.

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