Sabre’s AI Push Could Reshape Travel Tech — But Can It Scale?

Date of Call: Feb 18, 2026

Financials Results

• Revenue: $2.8 billion for FY 2025, up 1% YOY; Q4 revenue grew 3% YOY.
• Gross Margin: 57.2% for FY 2025; Q4 gross margin of 58%, down YOY due to revenue mix and FX impacts.
• Operating Margin: Normalized adjusted EBITDA margin of 19% for FY 2025, up 166 basis points YOY; Q4 margin expanded 107 basis points to 18% YOY.

Guidance:

• Full year 2026 revenue growth expected to be in the mid-single digits.
• Full year 2026 normalized adjusted EBITDA expected to be approximately $585 million.
• IT Solutions revenue expected to grow mid-single digits, with quarterly run-rate of $140M-$150M in back half.
• 2026 pro forma gross margin expected in range of 56% to 57%.
• Expect mid-single-digit volume and revenue growth for 2027 as well.
• Positive free cash flow expected in 2027.
• Q1 2026 revenue and volume growth expected in mid-single digits; Q1 pro forma gross margin at lower end of annual range (56%-57%).
• Q1 pro forma adjusted EBITDA expected to be approximately $130 million.

Business Commentary:

Revenue and Financial Performance:

• Sabre Corporation reported revenue of $2.8 billion for 2025, up 1% year-on-year.
• Total normalized adjusted EBITDA grew by 10% year-on-year, and the margin improved by 166 basis points to 19%.
• The growth was driven by increased air and hotel distribution bookings, favorable rate impacts, and strong expense management.

Distribution and Booking Trends:

• Total distribution bookings grew by 1% year-on-year, with air distribution bookings increasing by 4% and hotel distribution bookings by 5%.
• Air bookings growth reached 7% in December 2025.
• The increase was attributed to continued distribution share gains, expansion of the multisource content platform, and improved performance in airline technology.

AI and Technology Strategy:

• Sabre introduced agentic APIs and a proprietary MCP server, positioning itself as an AI-native technology leader.
• The company emphasized its unique ability to provide foundational transaction layers for AI, leveraging its vast data and complex logic in travel workflows.
• AI solutions and partnerships, such as with PayPal and MindTrip, are expected to drive long-term growth and reshape the technology landscape.

Debt Reduction and Capital Structure:

• Sabre paid off over $1 billion in debt, reducing its pro forma net leverage by approximately 25% compared to year-end 2024.
• The company extended its debt maturity profile, with no large maturities until 2029, and over 90% of debt maturing in 2029 or later.
• These actions were part of a proactive strategy to strengthen the balance sheet and provide room for continued investment and business growth.

Sentiment Analysis:

Overall Tone: Positive

• "Despite these challenges, we remain focused on execution and met or exceeded our financial guidance in the fourth quarter and ended the year with positive momentum." "We are well positioned for strong, sustained performance." "We are extremely optimistic and excited for the year and the years ahead."

Q&A:

• Question from Dan Wasiolek (Morningstar Inc.): What still needs to be done on the AI front and what are the upside opportunities?
  Response: Next stage is demonstrating end-to-end conversational commerce via partnerships; AI represents a huge opportunity, potentially reshaping travel channels similar to OTAs, with Sabre's advantage being speed to market.

• Question from Josh Baer (Morgan Stanley): Does gen AI change the economic equation for direct connects from airlines/OTAs?
  Response: Direct connects face high costs; Sabre's scalable marketplace and content aggregation provide a critical advantage, and its utility will become even more important in an agentic AI world.

• Question from Josh Baer (Morgan Stanley): Can you unpack the inflation offset program?
  Response: Program aims to keep tech and SG&A costs flat via efficiency gains (geographic leverage, third-party expertise, AI), allowing revenue growth to flow through to EBITDA; involves restructuring charges.

• Question from John Halpert (Cantor Fitzgerald & Co.): Any opportunity to deepen Google relationship on agentic AI and thoughts on capital allocation?
  Response: In conversations with major AI labs; capital structure is in good place with $910M cash, no large maturities until 2029, and growth investment remains a priority.

• Question from Hin Fung Cheng (BofA Securities): Walk through volume growth cadence and NDC growth drivers.
  Response: Expect mid-single-digit volume growth for 2026/2027, driven by share gains, NDC adoption (currently 4%), and new LCC solution; NDC adoption is broad-based across OTAs/TMCs and regions.

• Question from Hin Fung Cheng (BofA Securities): Will the inflation offset program continue and any cash impact for 2027?
  Response: Total restructuring ~$65M; bulk of cash outflow (~$60M) in 2026, with de minimis impact expected in 2027.

• Question from Jed Kelly (Oppenheimer & Co. Inc.): Update on debt holder discussions regarding free cash flow.
  Response: Recent refinancing at 11.8% interest; free cash flow profile unchanged, focused on generating positive free cash flow in 2027.

• Question from Jed Kelly (Oppenheimer & Co. Inc.): What's driving corporate travel strength and how does agentic AI differ from search?
  Response: Corporate travel is positive broadly across traditional and new players; agentic AI aims for end-to-end booking/service experience, unlike Metasearch, with minimal downside risk to Sabre.

• Question from Jed Kelly (Oppenheimer & Co. Inc.): Can you expound on the MindTrip/PayPal partnership?
  Response: Partnership creates end-to-end consumer travel experience via MindTrip app for discovery/planning, integrated with Sabre's booking and PayPal's payment/flexibility capabilities, launching Q2 2026.

Contradiction Point 1

Impact and Recovery Timeline from Government Shutdown

Contradiction on the scale of current impact versus future recovery expectations.

What are your expectations for revenue growth in the next quarter? - Jed Kelly (Oppenheimer & Co. Inc.)

2025Q4: The U.S. military/government segment is about **4% of air trading volume** (2024 figure), but it's **currently a minor part of active trading**. - Kurt Ekert(CEO)

What is driving the current strength in corporate travel—is it a comparison effect, or are traditional travel agencies or new self-service players the primary drivers? - Josh Baer (Morgan Stanley)

2025Q3: The impact to date is **almost entirely travel by U.S. government employees and/or military**. While this segment was about **4% of global air distribution volumes in 2024**, its current impact is 'de minimis' relative to overall trading volumes. - Kurt Ekert(CEO)

Contradiction Point 2

Monetization and Positioning of the Agentic AI Channel

Contradiction on whether Agentic AI is a new distribution channel or an enhanced API layer.

What were Morningstar Inc.'s key earnings highlights, Dan Wasiolek? - Dan Wasiolek (Morningstar Inc.)

2025Q4: Sabre's existing data and content make adding an **agentic front layer** relatively straightforward." "He compares the **agentic travel channel emergence** to the OTA rise, expecting it to happen rapidly. - Kurt Ekert(CEO)

What remains to be done on the AI front, what should we focus on, and what details can you share about the AI opportunities? - Alexander Irving (Sanford C. Bernstein)

2025Q3: Agentic AI: it represents a **new distribution channel** that may take share from intermediaries and suppliers. Sabre's API is the **leading intermediary solution** for this technology. - Kurt Ekert(CEO)

Contradiction Point 3

Volume and Cost Growth Outlook

Contradiction on expected 2026 cost line flatness vs. cost discipline leading to savings.

What factors are driving current revenue growth and how sustainable is it? - Josh Baer (Morgan Stanley)

2025Q4: The program aims to keep key cost lines (technology and SG&A) relatively flat over 2-3 years... This is achieved through efficiency initiatives, leveraging best-in-class locations, third-party expertise, and embedding AI. - Michael Randolfi(CFO) and Kurt Ekert(CEO)

Explain the "inflation offset program"—what factors are causing inflation, and how is the program offsetting them? - Jed Kelly (Oppenheimer & Co. Inc.)

2025Q2: For 2026, the goal is to maintain **strong cost discipline**, with **cost savings flowing to the bottom line** as air distribution bookings grow. - Michael O. Randolfi(CFO)

Contradiction Point 4

GDS Market Growth Outlook

Contradiction on whether the traditional GDS market is expected to grow or decline.

Could you provide your key takeaways from the earnings call? - Hin Fung Cheng (BofA Securities)

2025Q4: Sabre expects mid-single-digit volume growth for 2026 and 2027, driven by share gains, NDC scaling, and the LCC initiative. - Kurt Ekert(CEO)

What is the cadence for 2026 volume growth, and how does the LCC initiative relate to H2 sustainability and NDC growth trends? - Jed Kelly (Oppenheimer & Company)

2025Q1: Revised full-year GDS industry growth assumption from flat/nominal to down 1-2% due to softer airline traffic and capacity adjustments. - Kurt Ekert(CEO)

Contradiction Point 5

Timeline for Positive Free Cash Flow

Contradiction on the expected year for the first positive free cash flow.

What are your key takeaways from the earnings report? - Jed Kelly (Oppenheimer & Co. Inc.)

2025Q4: The focus is on generating positive free cash flow, which is expected in 2027. - Michael Randolfi(CFO)

What's the priority for capital allocation in 2026 and beyond: maintaining the debt profile or investing in growth? - Victor Chang (Bank of America)

2025Q1: Free cash flow expectation remains >$200M for the year... The guide is reaffirmed due to... momentum in the Payments business... - Mike Randolfi(CFO)