Travel technology company Sabre (NASDAQ:SABR) met Wall Street’s revenue expectations in Q4 CY2024, with sales up 4% year on year to $714.7 million. Its non-GAAP loss of $0.08 per share was 22% above analysts’ consensus estimates.
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Sabre (SABR) Q4 CY2024 Highlights:
- Revenue: $714.7 million vs analyst estimates of $715.7 million (4% year-on-year growth, in line)
- Adjusted EPS: -$0.08 vs analyst estimates of -$0.10 (22% beat)
- Adjusted EBITDA: $115.4 million vs analyst estimates of $114.2 million (16.1% margin, 1% beat)
- EBITDA guidance for the upcoming financial year 2025 is $700 million at the midpoint, above analyst estimates of $673 million
- Operating Margin: -10.5%, down from 5.4% in the same quarter last year
- Free Cash Flow Margin: 9.3%, down from 11.2% in the same quarter last year
- Total Bookings: 80.98 million, up 2.81 million year on year
- Market Capitalization: $1.31 billion
Company Overview
Originally a division of American Airlines, Sabre (NASDAQ:SABR) is a technology provider for the global travel and tourism industry.
Travel and Vacation Providers
Airlines, hotels, resorts, and cruise line companies often sell experiences rather than tangible products, and in the last decade-plus, consumers have slowly shifted from buying "things" (wasteful) to buying "experiences" (memorable). In addition, the internet has introduced new ways of approaching leisure and lodging such as booking homes and longer-term accommodations. Traditional airlines, hotel, resorts, and cruise line companies must innovate to stay relevant in a market rife with innovation.
Sales Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Sabre’s demand was weak over the last five years as its sales fell at a 5.3% annual rate. This fell short of our benchmarks and signals it’s a low quality business.
We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new property or trend. Sabre’s annualized revenue growth of 9.3% over the last two years is above its five-year trend, but we were still disappointed by the results. 
Sabre also discloses its number of total bookings and central reservation system transactions, which clocked in at 80.98 million and 30.97 million in the latest quarter. Over the last two years, Sabre’s total bookings averaged 10.6% year-on-year growth while its central reservation system transactions averaged 7.4% year-on-year growth. 
This quarter, Sabre grew its revenue by 4% year on year, and its $714.7 million of revenue was in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 5.8% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and implies its products and services will face some demand challenges.
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Cash Is King
Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.
Sabre broke even from a free cash flow perspective over the last two years, giving the company limited opportunities to return capital to shareholders.
Sabre’s free cash flow clocked in at $66.65 million in Q4, equivalent to a 9.3% margin. The company’s cash profitability regressed as it was 1.9 percentage points lower than in the same quarter last year, but it’s still above its two-year average. We wouldn’t put too much weight on this quarter’s decline because investment needs can be seasonal, causing short-term swings. Long-term trends are more important.
Key Takeaways from Sabre’s Q4 Results
We enjoyed seeing Sabre beat analysts’ EPS and EBITDA expectations this quarter. We were also glad its full-year EBITDA guidance exceeded Wall Street’s estimates. On the other hand, its number of total bookings missed. Still, this quarter had some key positives. The stock traded up 4% to $3.54 immediately after reporting.
Indeed, Sabre had a rock-solid quarterly earnings result, but is this stock a good investment here? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
