Sabre Corp (SABR)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Quarterly Report on Form 10-Q, including this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I, Item 2, contains information that may constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts, such as statements regarding our future financial condition or results of continuing operations, our prospects and strategies for future growth, the development and introduction of new technologies and products, expectations regarding cost reductions, and the implementation of our marketing and branding strategies. In many cases, you can identify forward-looking statements by terms such as “expects,” “outlook,” "intends," "will," "may," "believes," “pro forma,” “plans,” “predicts,” “potential,” “estimates,” “intends,” “should,” “could,” “anticipates,” “likely,” “commit,” “guidance,” “anticipate,” “incremental,” “provisional,” “preliminary,” “forecast,” “continue,” “strategy,” “confidence,” “objective,” “project,” or the negative of these terms or other comparable terminology. The forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions and are subject to risks, uncertainties and changes in circumstances that may cause events or our actual activities or results to differ significantly from those expressed in any forward-looking statement. Certain of these risks, uncertainties and changes in circumstances are described in the “Risk Factors” section of this Quarterly Report on Form 10-Q and in the “Risk Factors” and “Forward-Looking Statements” sections included in our Annual Report on Form 10-K filed with the SEC on February 18, 2026. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, outlook, guidance, results, actions, levels of activity, performance or achievements. Readers are cautioned not to place undue reliance on these forward-looking statements. Unless required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements to reflect circumstances or events after the date they are made.

The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes contained elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K filed with the SEC on February 18, 2026.

Overview

Sabre is an AI-native technology leader, backed by one of the world’s largest travel data clouds. Sabre aims to transform insights into innovation, empowering airlines, hoteliers, agencies and other partners to retail, distribute and fulfill travel worldwide. With the disposition of our Hospitality Solutions business during 2025, we manage and report our business in one reportable segment that constitutes our consolidated results. In 2026, we have updated the terminology used to describe our revenue to better reflect our evolving brand identity and market positioning. Historically referred to as “Distribution” and “IT Solutions”, these revenue streams have been renamed to “Marketplace” and “Airline Technology”, respectively. The specific revenue from products, services, and underlying solutions offered within each category remain unchanged.

A significant portion of our revenue is generated through transaction-based fees that we charge to our customers. We generate revenue from our distribution activities through transaction fees for bookings on our Sabre MosaicTM Marketplace ("Marketplace"), as well as product revenue from agency solutions offerings such as payments and media, and from our Sabre MosaicTM Airline Technology ("Airline Technology") through recurring usage-based fees for the use of our SaaS and hosted systems, as well as upfront fees and professional services fees.

Recent Developments Affecting our Results of Operations

Inflation offset program

In 2026, we continued to implement a program that began in the fourth quarter of 2025, designed to offset normal inflationary pressures over the next two to three years, with the goal of keeping technology costs and selling, general and administrative costs relatively flat when compared to 2025. Since we began this program in the fourth quarter of 2025, we have incurred $62 million in costs primarily associated with our workforce. These restructuring costs are comprised of $58 million that has been or will be paid in cash for severance and related benefits costs and $4 million that has been paid related to other restructuring costs. This program will be implemented through 2027 and may result in additional restructuring charges as we continue to evaluate third-party costs including our geographic and real estate footprints. Total costs associated with this program are expected to be approximately $65 million, with the significant majority of disbursements occurring in 2026.

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Sale of Hospitality Solutions Business

On April 27, 2025, we entered into a definitive agreement with an affiliate of TPG (the “Buyer") pursuant to which the Buyer agreed to purchase our Hospitality Solutions business, an extensive suite of leading software solutions for hoteliers. On July 3, 2025, we closed the transaction (the “Hospitality Solutions Sale”), resulting in cash proceeds of $969 million, net, which was used primarily to repay our outstanding indebtedness. See "Liquidity and Capital Resources—Capital Resources." Cash proceeds are net of estimated taxes and fees, cash acquired by the Buyer and customary closing adjustments. The operating results of our Hospitality Solutions business are presented as discontinued operations on our consolidated statements of operations for all periods presented. The presentation of discontinued operations excludes general corporate overhead and other costs that do not meet the requirements to be presented as discontinued operations. In addition to the sale agreement described above, we entered into transition services agreements with the Buyer, under which we are providing transition services to help provide for an orderly transition and facilitate the ongoing operations of the Hospitality Solutions business following the close in return for compensation from the Buyer with respect to costs incurred. Additionally, at the time of sale, Hospitality Solutions entered into certain long-term agreements with us to continue to utilize our Marketplace for bookings which generates revenue for us. See Note 3. Discontinued Operations and Dispositions to our consolidated financial statements for further details. All amounts reference results from continuing operations unless otherwise indicated.

Travel Industry and Liquidity Outlook

The travel ecosystem has shifted over the past few years, resulting in the changing needs of our airline, hotel and agency customers, for which we have established strategic priorities with the goal of achieving sustainable long-term growth. Industry air distribution volume growth has recently come under pressure due to conflict in the Middle East, which may continue into the future and could impact our rate of growth. In the first half of 2026, we have experienced year-on-year bookings growth due to implementation of certain commercial wins from recent years; however, the onset of the conflict in the Middle East and resulting increase in fuel prices created headwinds that impacted air distribution bookings, and those pressures had and may continue to have a negative impact on our bookings. In the near term, we expect these trends to continue into the third quarter of 2026 and anticipate low-to-mid-single-digit air bookings growth for the year.

We believe that we have resources to sufficiently fund our liquidity requirements over at least the next twelve months; however, given the uncertain economic environment and the recent impacts on air distribution volume growth, we will continue to monitor our liquidity levels and take additional steps should we determine they are necessary. See “—Recent Events Impacting Our Liquidity and Capital Resources” and “—Senior Secured Credit Facilities.” During recent years, we refinanced portions of our debt which resulted in higher interest rates than prior years, increasing our current and future interest expense.

Factors Affecting our Results

In addition to “—Recent Developments Affecting our Results of Operations” above, a discussion of trends that we believe are the most significant opportunities and challenges currently impacting our business and industry is included in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting our Results” in our Annual Report on Form 10-K filed with the SEC on February 18, 2026. The discussion also includes management’s assessment of the effects these trends have had and are expected to have on our results of continuing operations. This information is not an exhaustive list of all of the factors that could affect our results and should be read in conjunction with the factors referred to in the sections entitled “Risk Factors” and “Forward-Looking Statements” included in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K filed with the SEC on February 18, 2026.

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Components of Revenues and Expenses

Revenues

We generate revenue through direct billable bookings processed through our Marketplace, adjusted for estimated cancellations of those bookings. Other Marketplace revenue includes product revenue from agency solutions offerings such as payments and media. We also generate revenue from Airline Technology activities from our product offerings including platform product offerings across the full retailing lifecycle from network planning and offer creation to payments, servicing, and disruption recovery. Additionally, we generate revenue through software licensing and maintenance fees. Recognition of license fees upon delivery has previously resulted and will continue to result in periodic fluctuations in revenue recognized.

Cost of revenue, excluding technology costs

Cost of revenue, excluding technology costs, consists primarily of incentive consideration expense representing payments or other consideration to travel agencies for reservations made on our Marketplace which accrue on a monthly basis, amortization of upfront incentive consideration representing upfront payments or other consideration provided to travel agencies for reservations made on our Marketplace which are capitalized and amortized over the expected life of the contract. Cost of revenue, excluding technology costs, also includes costs associated with the delivery and distribution of our products and services and includes employee-related costs for our delivery and customer operations as well as allocated overhead such as facilities and other support costs and costs such as stock-based compensation and restructuring charges (in applicable periods). Depreciation and amortization included in cost of revenue, excluding technology costs, is associated with capitalized implementation costs and intangible assets associated with contracts, supplier and distributor agreements acquired through acquisitions. The technology costs excluded from cost of revenue, excluding technology costs, are presented separately below.

Technology Costs

Technology costs consist of expenses related to third-party providers and employee-related costs to operate technology operations including hosting, third-party software, and other costs associated with the maintenance and minor enhancement of our technology. Technology costs also include costs asso

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ITEM 7.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included in Item 8 of this Annual Report on Form 10-K.

Overview

At Sabre, we make travel happen. We are a global technology company that provides a global business-to-business travel marketplace for travel suppliers and travel buyers, including a broad portfolio of software technology products and solutions for airlines. With the disposition of our Hospitality Solutions business during 2025, we manage and report our business in one reportable segment that constitutes our consolidated results.

A significant portion of our revenue is generated through transaction-based fees that we charge to our customers. We generate revenue from our distribution activities through transaction fees for bookings on our GDS, as well as product revenue from agency solutions offerings such as payments and media, and from our IT solutions through recurring usage-based fees for the use of our SaaS and hosted systems, as well as upfront fees and professional services fees.

Recent Developments Affecting our Results of Operations

Travel Industry and Liquidity Outlook

The travel ecosystem has shifted over the past few years, resulting in the changing needs of our airline, hotel and agency customers, for which we have established strategic priorities with the goal of achieving sustainable long-term growth. Recent industry air distribution volume growth has generally leveled off, which may continue into the future and could impact our rate of growth. Passengers boarded for IT solutions has been negatively impacted by de-migrations from carriers who de-migrated prior to 2024; however, beginning in the second half of 2025, following the anniversary of the impact of these de-migrations on our revenue, revenue for IT solutions has leveled-off relative to prior year amounts.

We believe that we have resources to sufficiently fund our liquidity requirements over at least the next twelve months, including the aggregate payment of approximately $248 million of principal due or committed to be redeemed early under our current debt facilities; however, given the uncertain economic environment and the leveling off of industry air distribution volume growth, we will continue to monitor our liquidity levels and take additional steps should we determine they are necessary. See “—Recent Events Impacting Our Liquidity and Capital Resources” and “—Senior Secured Credit Facilities.”

We have announced that we are implementing a program in 2026, designed to offset normal inflationary pressures over the next two to three years, with the goal of keeping technology costs and selling, general and administrative costs relatively flat when compared to 2025. In connection with these efforts, we accrued a restructuring charge of $51 million within our consolidated statement of operations during the year ended December 31, 2025, primarily associated with our workforce. We expect to record additional restructuring charges associated with these activities in 2026 and currently estimate the total costs to be approximately $65 million, primarily associated with our workforce.

Sale of Hospitality Solutions Business

On April 27, 2025, we entered into a definitive agreement with an affiliate of TPG (the “Buyer") pursuant to which the Buyer agreed to purchase our Hospitality Solutions business, an extensive suite of leading software solutions for hoteliers. On July 3, 2025, we closed the transaction (the “Hospitality Solutions Sale”), resulting in cash proceeds of $965 million, net, which was used primarily to repay our outstanding indebtedness. See "Liquidity and Capital Resources—Capital Resources." Cash proceeds are net of estimated taxes and fees, cash acquired by the Buyer and customary closing adjustments. The assets and liabilities associated with the Hospitality Solutions business are presented as discontinued operations on our consolidated balance sheet as of December 31, 2024, and the operating results of our Hospitality Solutions business are presented as discontinued operations on our consolidated statements of operations for all periods presented. The presentation of discontinued operations excludes general corporate overhead and other costs that do not meet the requirements to be presented as discontinued operations. In addition to the sale agreement described above, we entered into transition services agreements with the Buyer, under which we are providing transition services to help provide for an orderly transition and facilitate the ongoing operations of the Hospitality Solutions business following the close in return for compensation from the Buyer with respect to costs incurred. Additionally, at the time of sale, Hospitality Solutions entered into certain long-term agreements with us to continue to utilize our GDS for bookings which generates revenue for us. See Note 3. Discontinued Operations and Dispositions to our consolidated financial statements for further details. All amounts reference results from continuing operations unless otherwise indicated.

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Factors Affecting our Results

In addition to the "—Recent Developments Affecting our Results of Operations" above, the following is a discussion of other trends that we believe are additional significant opportunities and challenges currently impacting our business and industry. The discussion also includes management’s assessment of the effects these trends have had and are expected to have on our results of continuing operations. This information is not an exhaustive list of all of the factors that could affect our results and should be read in conjunction with the factors referred to in the sections entitled “Risk Factors,” “Forward-Looking Statements,” and "—Recent Developments Affecting our Results of Operations" included elsewhere in this Annual Report on Form 10-K.

Continued focus by travel suppliers on distribution methods and cost cutting

Changes in how airlines choose to distribute their content and pricing pressure during contract renegotiations may continue to subject our business to challenges. Travel suppliers continue to look for ways to decrease their costs and to increase their control over distribution. For example, certain travel suppliers have exerted influence on travel agencies with surcharges on bookings that are made through indirect channels, such as our GDS and/or have withheld ancillary fees data from their content available in our GDS. Additionally, the pricing strategy in some global regions for NDC bookings differs from historical patterns, which may impact our revenue growth, as well as incentive consideration, as the number of relative NDC bookings increase over the next few years. These changes may adversely affect our contract renegotiations with suppliers that use alternative distribution channels. See "Risk Factors—Our business is exposed to pricing pressure from travel suppliers." and "—Our travel supplier customers may experience financial instability or consolidation, pursue cost reductions, change their distribution model or undergo other changes."

These items have impacted our revenue, as we recognize revenue for airline ticket sales based on transaction volumes. Simultaneously, this focus on cost cutting and alternative distribution has also presented opportunities. Many airlines have turned to outside providers for key systems, process and industry expertise and other products that assist in their cost cutting initiatives in order to focus on their primary revenue generating activities. In 2024, we launched SabreMosaicTM Airline Technology, a proprietary offer and order retailing platform for airlines that enables airlines to dynamically create, sell and deliver an array of personalized content to travelers. We are investing resources in developing this product; we believe that it is in the early stages in its growth cycle, and we expect that it will impact our revenue in future years.

Increasing travel agency incentive consideration

Travel agency incentive consideration is a large portion of our expenses. The vast majority of incentive consideration is tied to absolute booking volumes based on transactions such as flight segments booked. Incentive consideration, which often increases once a certain volume or percentage of bookings is met, is provided in two ways, according to the terms of the agreement: (i) on a periodic basis over the term of the contract and (ii) in some instances, up front at the inception or modification of contracts, which is capitalized and amortized over the expected life of the contract.

In 2024 and 2025, consideration on a per booking basis increased as volumes reached and exceeded volume or percentage thresholds, which we expect to continue in 2026. In addition, increased consolidation among travel agencies and TMCs, which may ultimately reduce the pool of travel agencies that subscribe to GDSs, has and may in the future impact our future rate per booking. We compete with other GDSs and other competitors for their business by offering competitive upfront incentive consideration, which, due to the strong bargaining power of these large travel buyers, tend to increase in each round of contract renewals. See "Risk Factors—Our business depends on relationships with travel buyers." We remain focused on managing incentive consideration and expect growth in the near term. Although incentive rate increases may continue to impact margins, we expect these increases to be offset by growth in revenue. This expectation is based in part on anticipated increases in international travel, which would favorably impact our revenue rates, along with our continuing to offer value added services and content to travel buyers, such as the Sabre Red Workspace, a SaaS product that provides a simplified interface and enhanced travel agency workflow and productivity tools.

Geographic mix of travel bookings and recent events impacting revenue

The revenue recognized by our business is affected by the mix between domestic and international travel reservation bookings and the related varying rates paid by airline suppliers. Due to our geographic concentration, our results of operations are particularly sensitive to factors affecting North America. For example, booking fees per transaction in North America have historically been lower than those in Europe. As we continue to invest in our technology and expand our content and product functionality, we anticipate that we will continue to grow global share.

The geographic mix of our Direct Billable Bookings is summarized below. North America has increased as a percentage of the total primarily due to growth from new travel agency customers in the region.

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(1) “Direct Billable Bookings” is the primary metric utilized to measure operating performance and includes bookings made through our GDS and through our equity method partners in cases where we are paid directly by the travel supplier.

Increasing interest rates and interest expense and restrictions on ability to refinance existing debt

During 2024 and 2025, we refinanced portions of our debt which resulted in higher interest rates than in prior years, increasing current and future interest expense. We may decide to further refinance portions of our debt in 2026 and 2027 which, at current interest rates, could additionally negatively impact our interest expense. Although interest rates have decreased recently in response to easing monetary policy, they c

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