Sabre Soars 7% on Narrower Q2 Loss, Upbeat FY24 Guidance

Sabre Corporation SABR shares were trading approximately 7% higher today after the travel technology solution provider reported better-than-expected second-quarter results and raised guidance for full-year 2024.

Sabre reported an adjusted loss of 5 cents per share, narrower than the Zacks Consensus Estimate of a loss of 8 cents per share. Moreover, the figure was narrower than the year-ago quarter’s loss of 17 cents per share. The year-over-year improvement in the bottom line reflects the benefits of increased revenues and cost-improvement implementations that lowered the company’s technology and SG&A expenses, partially offset by higher interest expenses.

Sabre reported revenues of $767.2 million, which surpassed the consensus mark of $750.1 million.  The top line was 4% higher than $737.5 million in the year-ago period.

This year-over-year surge in the top line reflects a significant improvement in global air, hotel and other travel bookings. Additionally, the company’s Travel Solutions division benefited from favorable rates as international and corporate bookings continued to improve. The company also registered a higher average booking fee and improved its cost structures.

Quarter in Detail

The Travel Solutions segment’s revenues increased 4% year over year to $695 million. The growth in this segment was led by a rise in global hotel and other travel bookings. The segment also benefited from favorable rates from the travel supplier mix. Our model estimates for Travel Solutions revenues were pegged at $676.4 million, which indicated 0.8% year-over-year growth.

Distribution’s (a sub-division of Travel Solutions) revenues improved 4% to $551 million. The distribution segment registered growth in the number of bookings and benefited from a favorable shift in the booking mix and higher average booking fees. Our model estimates for Distribution revenues were pegged at $532.6 million, which indicated 0.4% year-over-year growth.

IT Solutions’ (a sub-division of Travel Solutions) revenues were $144 million, up 3% year over year. The increase in performance was driven by a rise in other revenues and 5% growth in passengers boarded from existing partners, partially offset by a 7% decline in passengers boarded due to previously announced de-migrations. Our model estimates for IT Solutions’ revenues were pegged at $143.8 million, which indicated a 2.5% year-over-year decline.

The Hospitality Solutions segment’s revenues were $83 million compared with the year-ago quarter’s $77 million. This segment experienced a rise in central reservation system transactions caused by new customer inflow and a favorable mix within the customer base. Our model estimates for Hospitality Solutions revenues were pegged at $85.9 million, which implied 12.1% year-over-year growth.

Sabre reported an adjusted operating income of $107 million, significantly improving from the operating income of $46 million posted in the year-earlier period. Adjusted EBITDA improved from $73 million reported a year ago to $129 million.

Balance Sheet and Cash Flow

Sabre exited the June-end quarter with cash, cash equivalents and restricted cash of $633.7 million compared with the previous quarter’s $650.2 million.

During the first quarter, it generated operating cash flow and free cash flow of $28 million and $8 million, respectively. In the first half of 2024, Sabre utilized cash of $40 million in operating activities and had a negative free cash flow of $88 million.

Revised Financial Outlook

Buoyed by better-than-expected second-quarter results, Sabre raised its guidance for full-year 2024. For the year, it now projects revenues of $3.05 billion, up from the previous guidance of $3.04 billion. The Zacks Consensus Estimate for 2024 revenues is pegged at $3.04 billion.

Adjusted EBITDA is now forecasted to be $525 million for full-year 2024 instead of the earlier projection of $520 million. Moreover, it continues to expect to generate positive free cash flow for the full year.

Additionally, Sabre initiated guidance for the third and fourth quarters. For the third quarter, the company anticipates revenues of approximately $775 million, which is higher than the Zacks Consensus Estimate of $770.8 million. It anticipates adjusted EBITDA of $135 million and also expects to have a positive free cash flow.

For the fourth quarter, SABR anticipates revenues of approximately $725 million. It anticipates adjusted EBITDA of $120 million and also expects to have a positive free cash flow.

Zacks Rank & Other Stocks to Consider

Sabre currently carries a Zacks Rank #2 (Buy). Shares of SABR have plunged 22% year to date (YTD).

Some other top-ranked stocks worth considering in the broader technology sector are Twilio TWLO, NVIDIA and AppFolio APPF. Currently, Twilio sports a Zacks Rank #1 (Strong Buy), while NVIDIA and AppFolio each carry a Zacks Rank #2.

The consensus mark for Twilio’s 2024 earnings has been revised upward by 2 cents to $3.12 per share over the past 30 days, indicating a 27.4% increase from 2023. The stock has plunged 22% YTD.

The Zacks Consensus Estimate for NVIDIA’s fiscal 2025 earnings has been revised upward by a penny to $2.69 per share in the past 30 days, suggesting year-over-year growth of 106.9%. The stock has declined 136.3% YTD.

The Zacks Consensus Estimate for AppFolio’s 2024 earnings has been revised upward by 16 cents to $4.14 per share in the past seven days, indicating an increase of 142.1% on a year-over-year basis. Shares of APPF have jumped 27.9% YTD.

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