Sabre Corporation

Sabre had a challenging Q3 and failed to meet the revenue expectations of Wall Street while delivering wider-than-expected losses. Sabre generated total revenue of $441 million in the quarter, a substantial improvement compared to $278 million in Q3 2020. The recovery of global air, hotel, and other travel bookings was the driving force behind this improvement. The distribution revenue of Sabre increased by $140 million year-on-year, and the IT Solutions revenue increased to $145 million in Q3. Despite an increase in the average booking fee, the booking volumes declined sequentially this quarter due to seasonal trends and the COVID-19 Delta variant. Although Sabre’s EBITDA remained negative in the quarter, reflecting the continued impact of the pandemic, the company’s operating income, net income, and EPS showed improvement compared to the prior year’s quarter. Sabre had a cash balance of $1 billion at the end of the quarter and no significant near-term cash requirements. The management intends to continue investing in its business, focusing on product areas with the highest returns across a more streamlined portfolio. We give the company a ‘Hold’ rating with a revised target price.