Sabre’s third quarter was marked by operational progress and a mixed market reaction, as revenue came in above Wall Street expectations but forward guidance disappointed. Management emphasized that air distribution bookings grew due to the implementation of new business, particularly in September, and highlighted success in expanding digital payments and AI-driven products. CEO Kurt Ekert noted that softness in July was offset by a strong finish to the quarter, attributing growth to the company’s strategic initiatives in air distribution and technology innovation. However, management also pointed to headwinds related to Sabre’s exposure to U.S. government and corporate travel, which tempered overall growth momentum.
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Sabre (SABR) Q3 CY2025 Highlights:
- Revenue: $715.2 million vs analyst estimates of $706.4 million (3.5% year-on-year growth, 1.2% beat)
- Adjusted EPS: -$0.01 vs analyst estimates of $0.06 (significant miss)
- Adjusted EBITDA: $143.7 million vs analyst estimates of $144.2 million (20.1% margin, in line)
- Revenue Guidance for Q4 CY2025 is $644.9 million at the midpoint, below analyst estimates of $668.3 million
- EBITDA guidance for the full year is $530 million at the midpoint, below analyst estimates of $542.8 million
- Operating Margin: 13.1%, up from 8.4% in the same quarter last year
- Total Bookings: 95.14 million, up 2.34 million year on year
- Market Capitalization: $730.5 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Sabre’s Q3 Earnings Call
- Josh Baer (Morgan Stanley) asked why EBITDA and free cash flow guidance were revised downward. CFO Michael Randolfi explained the change stemmed from government shutdown impacts, continued FX headwinds, and the timing of receipts and disbursements.
- Carla (Bank of America, for Victor Cheng) questioned the proportion of air bookings tied to U.S. government travel and the likely shutdown impact. CEO Kurt Ekert clarified that government and military travel made up about 4% last year, but is currently a smaller share; the company expects a direct impact if the shutdown continues.
- John Halpert (Cantor Fitzgerald) inquired about the pace of recovery in government travel post-shutdown and the payments business outlook. Ekert said normalization could take time, but the payments segment is growing rapidly, though detailed financials are not yet disclosed.
- Alexander Irving (Bernstein) asked how Sabre will monetize its Agentic API and what underpins its mid-single-digit 2026 bookings growth forecast. Ekert said the Agentic API is designed as a leading intermediary solution and expects incremental growth from low-cost carrier platforms and new business wins.
- Dan Wasiolek (Morningstar) sought color on booking fee stability and industry demand. Randolfi pointed to strong non-transactional revenue supporting booking fees, while Ekert described underlying demand as mixed, with leisure robust but corporate volumes still down year-on-year.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the pace at which Sabre’s AI-driven and agentic API solutions gain customer traction, (2) stabilization and potential recovery in government and corporate travel bookings, and (3) further expansion of the payments and hotel distribution businesses. Execution on the low-cost carrier platform launch and the ability to manage margin headwinds will also be critical for tracking progress.
Sabre currently trades at $1.87, down from $2.01 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free for active Edge members).
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