Sabre Corporation Price & Performance (SABR)

More information on these risks and uncertainties is contained in our earnings release issued this morning and our SEC filings, including our Form 10 ks for the year ended December 31, 2024. Throughout today's call, we will also be presenting certain non GAAP financial measures References during today's call to adjusted EBITDA, adjusted EBITDA margin, and free cash flow have been adjusted to exclude certain items. The most directly comparable GAAP measures and reconciliations for non GAAP measures are available in the earnings release and other documents posted on our website at investors.sabre.com Sabre. Participating with me are Kurt Eckert, President and CEO and Mike Randolfi, Chief Financial Officer Scott Wilson, EVP and President of Hospitality Solutions will be available for Q and A after the prepared remarks. With that, I'll turn the call over to Kirk. Thanks, Brian. Hello, everyone, and thank you for joining us today to discuss our fourth quarter and full year 2024 results. Our performance this quarter and our expectations for 2025 highlight the continued progress we are making executing against our strategy and strengthening our balance sheet. Turning to Slide four, you can see an overview of the topics that Mike and I will cover this morning.

First, I will review our 2024 business highlights, including our financial performance. Then I will provide an overview of the progress we have made on our growth strategies. How these focused investments address the evolving global travel industry and how they are reshaping Sabre's growth trajectory. Next, Mike will take you through our fourth quarter and full year 2024 financial results, and discuss our 2025 guidance. Please turn to Slide six. Sabre had a successful year in 2024. Our team delivered on our strategic technology transformation objectives including significant product and platform enhancements, positioning us for meaningful growth from commercial wins. Steady revenue growth combined with effective cost management resulted in five fifty basis points of margin expansion and a 53% year on year increase in adjusted EBITDA. Which totaled $517,000,000 for the year above our initial guidance of greater than $500,000,000 provided last February. I commend our team members around the world for their hard work and dedication towards positioning Sabre for accelerated growth in 2025 and beyond. Turning to Slide seven, Travel Solutions achieved solid financial results in 2024 due to higher average distribution booking fees, from a richer customer mix double digit year on year growth in hotel distribution bookings, and contributions from new air distribution business.

Notably, our exit rate for GDS industry share was up one percentage point versus the prior year. Looking forward, we expect our year on year distribution bookings growth to continue building momentum driven primarily by the progress we are making on our growth initiatives. Turning to Slide eight. Our Hospitality Solutions team delivered strong results in 2024, as total revenue reached an all time high. Due mainly to increased CRS transactions, This revenue performance was driven by new customer deployments and a favorable mix within our customer base. Overall, strong revenue growth and continued operational focus contributed to a $25,000,000 increase in adjusted EBITDA to $38,000,000 in line with our target. Revenue growth accelerated into year end driven by higher transactions, in part due to the Hyatt implementation which is beginning to generate meaningful increases in CRS transaction growth. Please turn to Slide nine. And finally, before moving on to our strategy update, please note the successful completion of our technology transformation objectives. Our team in partnership with Google has delivered the migration of more than 99% of our compute capacity to the cloud. Achieving greater than $150,000,000 of cost benefits versus both 2019 and 2023 and establishing a strong foundation for future innovations.

Now looking ahead. Please turn to Slide 11. Global travel industry has experienced substantial change in recent years. As the marketplace continues to evolve, our strategic focus to innovate and deliver value to our customers and stakeholders remains unchanged. First, generating free cash flow and delevering our balance sheet. Remain our top financial priorities. We are pleased with the progress we are making on this front and Mike will share greater detail shortly. Second, we are investing to drive sustainable growth. To achieve this, we are prioritizing three areas: a modern technology stack, an open marketplace, and intelligent retailing solutions We believe these areas the last two of which encapsulate our growth strategies, are essential in today's dynamic travel marketplace. I will now go into more detail around the promising results that we are already realizing from our growth strategies. Which are expected to drive significantly greater volume and revenue growth starting in 2025. On to Slide 12, Travelers and businesses increasingly require immediate access to real time data and information that can only be delivered by powerful, modern technology infrastructure. Having achieved the objectives of our technology transformation, Sabre is able to design, build and deliver advanced solutions that not only address customer and market demands, but also fuel our strategic growth plans.

Operating in a modern, open and cloud based technology stack, means we can deliver products to customers with critical SaaS capabilities including more seamless integration excellent performance and scalability, high availability, and enhanced security. In addition, AI powered capabilities are increasingly differentiating winners Our partnership with Google harnesses the power of its advanced AI capabilities and infuses high quality data into our next generation products, and solutions. We are also leveraging classical, and generative AI that enable our teams to write better code at faster pace, to diagnose and resolve problems swiftly, and improve engineering productivity, and throughput. Now I will review our specific strategies starting with OpenMarketplace. On to Slide 13. Sabre is transforming our historical distribution offering namely the GDS, into a broader modern open marketplace. The foundational elements are four of our previously articulated growth strategies. Multisource platform, distribution expansion hotel B2B distribution, and digital payments. Sabre's Sabre source platform provides a ubiquitous [indiscernible] open marketplace for buyers and travelers by standardizing and consolidating fragmented air content sources including NDC, low cost carrier and traditional Edeffect. Our early adopter program already connects content from over 50 LCCs to approximately 500 agencies, and we now have NDC integrations with 27 airlines currently live on our platforms, including recent expanded relationships with Emirates, Qantas, Tap Air Portugal, and Air India.

Our distribution expansion initiative focuses on growing our share in key geographic and market segments. In 2024, our commercial team signed new business totaling between 30,000,000 to 40,000,000 air distribution segments from global agencies.

From this, we expect to realize significant volume growth in 2025 which I will touch on shortly. Sabre's enhanced hotel B2B distribution platform is on a strong growth trajectory as we continue to build on our leading position. Our success in adding new global hotel partners and our investments in product enhancements are driving higher attachment rates. As I mentioned earlier, hotel distribution bookings were up double digits year on year in 2024 driving a 16% increase in global booking value moving through our platform. Totaling $21,000,000,000 We believe there are significant growth opportunity ahead. Last, our digital payments business contributes to our open marketplace, by reducing friction, and bringing efficiency to sellers and buyers. The digital payments team continues to win new business and drove a 12% year on year increase in gross spending through the platform to $14,000,000,000 resulting in a 45% increase in Payment Solutions revenue. On to Slide 14. The third key area of our strategy is delivering intelligent retailing solutions to our airline, and hotel customers. Sabre Mosaic, our modernized and enhanced travel platform, that over time will replace traditional PSS systems is by design open modular and flexible. With AI powered revenue optimization solutions, that are already delivering results for our customers.

Notably Sabre Mosaic is also PSS agnostic. In 2024, we signed Sabre Mosaic commercial agreements with Virgin Australia Riyadh Air and Sabre Serbia providing momentum and strong market interest. Additionally, in the fourth quarter, we were pleased to announce a renewal of our technology partnership with American Airlines. Including a multiyear extension of the PSS. In Hospitality Solutions, we have a leading CRS platform, Synexis. And a growing presence in property management. And Synixa's Retail Studio brings accretive retailing capabilities on top of these existing platforms. This retailing offering enables our tellers to optimize revenue with greater personalization of offers including ancillaries and third party content and improved selling conversion rates. Based on early results, properties utilizing SYNNEXUS Retail Studio experienced a greater than five times increase in hotel ancillary sales year on year. On to Slide 15. Sabre's open marketplace and retailing solutions are resonating with customers. And are reshaping our growth trajectory. In 2025, we expect double digit growth for air distribution bookings, hotel distribution bookings, and hospitality solutions CRS transactions. We expect the majority of growth in air distribution bookings will come from a number of signed, but not yet fully implemented agreements. Including the largest Korean OTA as well as World Travel Inc.

And another large win we signed in 2024. While we are not at liberty to disclose this customer's name, they are a rapidly growing top five agency in North America focused on the loyalty and credit card space. This agency generated nearly 25,000,000 airline segments in 2024.

We were pleased to win a commitment of strong majority share of this business and are steadily progressing through the migration process, which we expect to complete in 2025. In addition, we expect our multi source strategy to drive incremental NDC and LCC volumes. Regarding industry share, to better represent the growing total addressable market for air distribution bookings, that we are targeting with our multi source platform. Including NDC, LCC and Edifact content, Moving forward, we will focus on total distribution bookings growth rather than solely GDS industry share. We believe this approach more accurately reflects the evolving distribution marketplace and we are confident that our projected double digit growth in air distribution bookings in 2025 demonstrates our strengthening competitive position. In Hospitality Solutions, we expect double digit CRS transaction growth in 2025 driven by existing business and the implementation of signed new business, including Hyatt. Mike will provide additional details on the drivers of our air distribution and hospitality CRS volume growth expectations, for 2025 shortly. In summary, we are confident that we have the right strategies and solutions in place to drive significant acceleration in volume, and revenue growth for Sabre Sabre. In 2025 and beyond. Will now hand the call over to Mike to walk you through our financial performance and forward outlook.

Thanks, Kurt, and good morning, everyone. Please turn to Slide 17. The Sabre team delivered strong financial results in 2024. We generated year on year revenue growth invested strategically to support innovation, and effectively manage cost. All of which resulted in higher margins and strong flow through to the bottom line. Adjusted EBITDA increased by more than 50% in 2020 to $517,000,000 above our initial guidance of greater than $500,000,000 provided last February On the strength of this financial performance, achieved our free cash flow objective for the year, improved our capital structure and made significant advancements on each of our long term strategic priorities. Turning to Slide 18, Total fourth quarter revenue increased 4% versus last year, to $715,000,000 Distribution revenue totaled $500,000,000 a 5% increase compared to $476,000,000 in Q4 twenty twenty three, Total distribution bookings were $81,000,000 in the quarter, a 4% increase compared to $78,000,000 in Q4 Our average booking fee was $6.17 in the fourth quarter up 1% year on year. IT solutions revenue was roughly flat year on year in the fourth quarter and totaled $145,000,000 Hospitality Solutions Q4 twenty twenty four revenue increased 8% to $81,000,000 primarily driven by an 8% increase Segment adjusted EBITDA in the fourth quarter was $9,000,000 an improvement of $4,000,000 Sabre's adjusted EBITDA of $115,000,000 Sabre Q4 twenty twenty four versus $96,000,000 in Q4 twenty twenty three represented a $20,000,000 Strong cost discipline helped drive our adjusted EBITDA margin from 14% in Q4 twenty twenty three to 16% in the fourth quarter of twenty twenty four.

Moving to our full year financial performance. We achieved our revenue, adjusted EBITDA and free cash flow objectives for 2024. We delivered revenue of $3,300,000,000 up 4% and adjusted EBITDA of $517,000,000 up 53%.

Additionally, Hospitality Solutions delivered $38,000,000 of segment adjusted EBITDA growth of $25,000,000 in line with our targeted objectives. Free cash flow for the year was negative $14,000,000 including $19,000,000 in debt modification costs related to the opportunistic refinancing we completed in November. Excluding the accounting treatment of this opportunistic refinancing, we generated positive free cash flow in 2024. We ended the year with a cash balance of $746,000,000 Now looking to 2025.

Please turn to Slide 20, As Curt mentioned, our targeted strategies are resonating with customers and position us to grow revenue and transactions significantly faster in 2025 As compared I'll now take a moment to provide more clarity on the key contributors Starting with Air Distribution, as you can see in the chart to the left highlighted in green, the vast majority of our expected double digit bookings growth this year will will come from already signed commercial wins that are being implemented over the course of the year. These deals include the two North America wins that we announced during the third quarter last year along with significant contributions from agency wins in Europe, and Asia. Importantly, we continue to assume only a nominal contribution from overall industry growth in 2025. Based on recent airline and industry commentary, the outlook for both corporate and international travel where Sabre is more heavily indexed remains positive. The chart on the right outlines our quarterly expectations for Air Distribution's bookings growth.

Beginning with the second quarter, we expect to see the sequential pace of year over year bookings growth accelerate through the balance of the year as these implementations come online. Overall, we expect more than 30,000,000 incremental air bookings in 2025 as compared to 2024. Turning to Slide 21. In Hospitality Solutions, we also expect double digit year on year growth in CRS transactions with the vast majority of incremental volumes coming from signed, but not yet implemented business. Hyatt is expected to approximate roughly half of CRS transactions growth in 2025. Moving to the chart on the right. We expect mid to high single digit year on year growth in CRS transaction in the first quarter followed by a steady acceleration throughout the remainder of the year.

Turning to Slide '22 and our guidance. In the first quarter, we expect flat to low single digit year on year revenue growth with adjusted EBITDA of greater than $150,000,000 Based on our timing and implementation of our new commercial wins, we expect our quarterly revenue and adjusted EBITDA will likely not follow historical seasonal patterns. As we move through 2025, we expect the ramp of our commercial wins will result in significant increases in year on year quarterly revenue and adjusted EBITDA. Unlike previous years, we expect the first quarter to represent the lowest revenue at adjusted EBITDA. Of the year. With regards to free cash flow, as a reminder, we typically experience higher working capital and cash outflows in the first quarter due to seasonality of our business. This is generally due to the timing of when we receive airline collections versus when we make agency incentive payments in the first quarter. We also pay annual incentive compensation payments during this period. As a result, we expect first quarter free cash flow to be similar to last year and positive in the remaining quarters of 2025. For the full year 2025, we expect high single digit year on year revenue growth adjusted EBITDA of greater than $700,000,000 and free cash flow of greater than $200,000,000 In addition, we expect capital expenditures of approximately $85,000,000 to support our strategic investments and cash interest expense of about $375,000,000 Given the atypical seasonal pattern of revenue and adjusted EBITDA I will provide additional color on how we expect our primary financial metrics to move in 2025.

For the full year, we expect to achieve high single digit revenue growth primarily from the hotel distribution bookings and hospitality solutions CRS transactions as well as revenue growth in IT solutions that we expect to resume in the second half of twenty twenty five. We also expect average booking fee and gross margin as a percentage of total revenue to be marginally down year on year as a portion of the expected new bookings in 2025 will have a lower average booking fee driven by geographic mix NDC and LCC growth Further, the completion of Sabre's technology transformation objective is expected to drive adjusted technology costs lower versus 2024. We expect the lower cost to compute from operating in the cloud and the elimination of the bubble costs required in 2024 to complete the cloud migration will be partially offset by increased hosting costs related to higher volumes and further investments to support our strategy. On SG and A for the full year 2025, we expect a slight year over year increase. Overall, we expect accelerating revenue growth coupled with expense management will drive robust flow through of gross profit dollars to the bottom line. Turning to Slide 23.

We advanced each of our strategic priorities in 2024. With the actions taken over the last couple of years to realign resource and cost disciplined organization As Curt highlighted, the momentum within our gross strategies is expected to drive significant contributions and top line revenue growth. As a result, we remain on track and expect to achieve the greater than $700,000,000 of adjusted EBITDA we communicated last February and as part of our 2025 guidance. Turning to Slide 24.

We completed several refinancing transactions in 2024 to strengthen Sabre's balance sheet, while also better aligning projected free cash flow generation with upcoming debt maturities. As mentioned earlier, opportunistically extended $1,600,000,000 in debt maturities to the fourth quarter of twenty twenty nine, significantly improving Sabre's Sabre [indiscernible] Our next large maturity will not come due until June 2027. As a result of the refinancing activities during 2024, and the financial improvements achieved, we are well positioned to repay our 2025 debt maturities with cash on hand as they come due. Turning to Slide '25, In closing, our strategic focus remains unchanged. To generate free cash flow and delever the balance sheet through sustainable growth and innovation. We believe our accomplishments in 2024 have reshaped Sabre's growth trajectory and positioned us well to deliver shareholder value in 2025 and beyond. And with that, operator, please open the line for questions.

Thank you. And our first question comes from Josh Baer of Morgan Stanley. Your line is open.

Great. Thank you for the question. I was hoping you could walk me through the process of implementing new agency just as far as the commercial win, I'm wondering like how that ramp looks come online over [indiscernible] you talk through any risks to that? And then just like a little more insight into the process of Josh, thank you. This is Kurt. So we have a tremendous amount of historical knowledge and experience in implementing new business, whether it's with an existing client, or whether it's with a new client that we have won. There's not a single one size fits all Typically, for example, with an online travel agent, there may be specific functionalities that you have to develop that they may have had with somebody else or they may have uniquely geographically. Once you develop those, it's a fairly seamless and I'd say easier integration with an OTA and then it's up to them on their side in terms of how quickly that ramps. By comparison with brick and mortar leisure agencies or TMCs, Given that they typically run either single auto meeting, meaning a single GDS or multi automated but they run multi automated typically by geography.

So they may run-in one call center or one geography one vendor and then somewhere else another one. And so there's a significant change effort that is required by the brick and mortar or TMC agency on their side because the GDS approximates an operating system in many ways for them. So while there are things that we have to do on our side to drive the implementation, oftentimes, the timeline is predicated on the actions of the customer or the prospect. In terms of the projections that we've given today and the ramp that we've given today, we have great confidence that we will achieve those outcomes because we're well underway with many of those large opportunities. We're in sync and in concert both commercially and technically with those customers and we have a team that specializes in doing this. So we have the experience to do it. So There's a lot of work that has to happen execution wise by us and by our clients. We are well underway toward achieving those objectives.

Thank you. Very helpful. And then was just hoping you could unpack the incremental $100,000,000 in cost [indiscernible] Is that sort of realizing the the completion of the tech transformation? Or is there anything else that's embedded in that bucket? Yes. Thanks for the question, Josh.

So yes, the $100,000,000 if you recall when we had provided a walk last year from 2023 to 2025, we'd indicated there were two big things we were undertaking. We had a cost efficiency program as well as tech transformation, which was all our cost savings in total. $250,000,000 $150,000,000 of that was realized in 2024. The remaining $100,000,000 which is tech transformation, all of which the actions have already been taken and completed as we exit 2024.

Our savings from the original tech transformation initiative we undertook starting around 2019, 2020. And we've achieved the objectives. And so that's what you're seeing in the P and L this year.

Great. Thank you.

Thank you. Our next question comes from Alex Irvine of Bernstein. Your line is open.

Hi, good morning gentlemen. A question from me please are your expectations for revenue per passenger boarded evolution this year? I know the big step up sequentially from Q3 beyond normal seasonality Any color on what's driving that please and how you see that in 2025?

Yes. Thanks, Alex. First, we don't really manage to revenue per passenger boarded. I mean, there's a couple of there's two different constructs there. Part of the revenue in airline IT is based on passenger boarded. Other portions, roughly half the revenue is driven by something other than passengers boarded. What I would say is as we look to the airline IT solutions revenue line, and we look throughout the year. I would expect in the first half of the year, Air IT revenue to be down slightly year over year. That's because we had some revenue in 2024 associated with carriers that had previously demigrated prior to 2024, but there was a small tail of that revenue in the first first half. That's completed in the first half. And then when we get to the second half, we start to see more of the benefits of higher PPEs from existing carriers. And then we're also expecting to see some additional revenue from our Sabre Mosaic. So we would expect revenue in Air IT to be down slightly on a year over year basis in the first half.

And then we'd expect it to resume growth in the second half and we'd expect it to demonstrate growth for the year overall.

Excellent. Thank you.

Thank you. Our next question comes from Jed Kelley of Oppenheimer. Your line is open.

Hey, great. Thanks for taking my questions and nice job reiterating on the guidance. First question, we've seen some capital come into some of these newer types of travel agents that are leaning heavily into NDC. Can you talk about just how you think that impacts Sabre? And then then I was late to joining the call, but can you sort of talk about just what's implied in your full year outlook the corporate side versus leisure? Thank you. Jed, this is Kurt.

Thank you for the questions. First of all, on the capital infusion coming into the sector, I think that speaks to the attractiveness of the sector generally, especially corporate travel. So you're speaking about the likes of NABAN, and TravelPerk and SpotNana we generally have relationships with most or all of these companies. And we believe with our multi source content platform, that we actually provide the best connectivity for them to all sorts of content, NDC, LCC and traditional Edifact. And don't forget that the algorithmic capabilities we put in terms of parsing that shopping is very fundamental in the corporate space because the relevant of shop returns is critical.

So we applaud the capital coming in and whether it is a more traditional or a new entrant player we intend to do business robustly with all of them.

Yes, with regard to as we look at travel expectations and kind of our overall base assumption. First, I would just highlight, Jed, our baseline assumption is flat to nominal industry growth. Which is, as you know, has been our assumption for quite a while at this stage. Now with that being said, when you look at the overall backdrop, it's actually fairly constructive and positive. There's still expectations for increases, meaningful increases in business travel spend. And when you look at airline capacity increases, there's still some meaningful growth internationally, particularly as yields domestically have softened So with that being said, there's reason to believe We could be better than our industry assumption of flat to nominal, but there is our assumption. What I would highlight is quite frankly, we're focused on that, which we can control. As you can see, we've won significant business this year. And we expect to have significant ramp up in volume based on what we've won and based on what we control.

Thank you.

Our next question comes from Chang of Bank of America. Your line is open.

Hi, good morning. Thanks for taking my questions. I couple if I may. I guess, first of all, thinking about the airline well, the air bookings growth and how it ramps up throughout the year, it almost implies a substantially higher growth in Q4 and to some maybe the growth going into $26,000,000 is quite material as well. Is that how we think about it? And then on the win undisclosed win, How do we how should we think about the impact to revenue per booking Is it higher or lower? How does it affect the mix?

Victor, let me take the first and then we'll try to do the second as well.

On air bookings growth, you're right. You'll see a significant ramp through the year. As we implement and realize the wins that we have had. That implies strong momentum into Q4 and then into 2026, that's clearly an expectation that you should have.

And with regard to as we think about like booking fee and impact, as we talked about in the prepared remarks, first, as we look at the EBITDA improvement coming up in this year, we expect it to be driven to the large, largest degree by gross profit dollar growth from the double digit booking distribution growth that we're seeing. Now with that being said, what I would highlight is some of these volumes are coming with slightly lower margin and slightly lower booking fee. So we ended the year for 2024 at $5.98 I would expect that the average booking fee in 2025 would be slightly below that. And so I would expect the trends overall to be lower, I would expect gross margin to be slightly lower, but I would also expect that we're going to generate substantial gross profit dollars and that's what's going to drive the lion's share of our EBITDA growth Yes. Just to add on to Mike's point, With respect to the undisclosed North American customer, given that booking fees in North America tend to be slightly lower than the balance of the world, and there's significant volume associated with this win that will have a slightly dilutive effect on the average Yes, very clear.

Thank you. And then I think this quarter you didn't mention about share gains I don't know whether you have some color on whether how you performed relative to the market in Q4 specifically And also on the mix of NDC bookings as well given your light between nine airlines now, any updates on on whether you're seeing NDC volumes ramping on your end? Yes, Victor. In Q4 twenty twenty four, as indicated, we exited the year up about one percentage point year on year. We're winning that pretty broadly against the competition. With NDC specifically, NDC remains a low single digit component of our overall air distribution bookings total. We do expect from that very low basis to see significant or exponential growth in 2025 and beyond. We think the solution we have provided in terms of content connectivity coupled with the leading functionality for TMCs for brick and mortar and for OTAs will make us the NDC provider of choice over the long term. Victor, the only other thing I would just remind you is we have double we're expecting double digit bookings growth this year. I think that highlights our competitiveness in the marketplace.

Eric, the and maybe if I can squeeze in one last one.

The wins that you mentioned and especially the Undersclosed ones, generally speaking, is it a win versus other GDS peers or is it going to Is it more reintermediation? How should we think about the trend going forward as well? On kind of reintermediation or maybe winning more on the LCC front?

Obviously, you have guided for 25% a bit, the portion of of that. But maybe if we think about medium term as well, what are the potential there? Yes. Thanks, Victor. In 2025 specifically, the vast majority of the growth you're going to see is the realization of new wins as we articulated. Now a portion of that an increasing portion of the pie will be for NDC and for long tail LCC content that we did not traditionally have. You go out beyond 2025, we expect NDC and especially the LCC long tail to become more meaningful contributors to our growth So we feel very good about what that makes it going to be over time. Got it. Very clear. Thank you.

Our next question comes from Dan Laseolik of Morningstar. Your line is open.

Hey, great. Good morning, guys. Thanks for taking the question. So just with your kind of communications that gross margins in 2025 might be slightly lower, just as a result of signing all this new business. Is that a result like you've talked about of just kind of the mix of that new business or is there has there been some kind of change in the competitive environment with incentives? Thank you.

Yes. First, thanks for the question. First, let me also just highlight when you look at our trajectory, one, we expect to generate significant gross profit dollars albeit at a slightly lower margin. Second, if you look at 2024, we increased our EBITDA margin by over 500 basis points. And if you do the math, between '24 and twenty five, expect significant EBITDA margin accretion. What I would say is I don't see we haven't seen any significant change in the competitive environment. It's been a highly competitive environment and we work to compete effectively. It really has more to do with the mix of types of transactions that are being added in terms of bookings. It's a higher mix of NBC, a higher mix of LCC content. And so with that some of that does have a lower average booking fee and slightly lower margin. But again, very accretive from a gross profit dollar perspective.

Okay, perfect. Congrats on the quarter.

Thank you. Our next question comes from Deepak of Cantor Fitzgerald. Your line is open. Hey, guys. This is Jack on for Deepak.

Just a high level one for me.

Talked a little bit about AI in your prepared remarks. Can you discuss where you see the most opportunity from running AI across your business kind of going forward? And 'twenty five and maybe even beyond? Thanks.

Yes. Thanks, Jack. Near term, the two biggest opportunities are in the efficiency or the productivity of our customer service operations And then number two is on developer productivity and throughput. Meaning for the thousands of developers we have enabling them to put out code at a faster pace.

Are things that we're stepping into and realizing within this calendar year.

Longer term, there's a transformative opportunity really for how consumers shop for and engage with travel. Through e commerce. And so right now, we're, for example, embedding Google's Gemini AI code within our revenue optimization products that we deliver for airlines, for example.

You'll see us begin to promulgate that [indiscernible] Fully into the Sapro Mosaic stack as well as into our distribution footprint. And so we think that's going to one, help make our competitors or excuse me, our customers more competitive and then two, help Sabre Sabre that into revenue over time. But near term, again, more on the first two, medium to long term more on the latter.

Got it.

Thanks.

Thank you. Our next question comes from Wei Fang of Mizuho. Your line is open. Thank you guys. This is Wei calling for James.

First of all, congrats on the solid results. Most of my questions in the answer just want to double check since you guys called out, right, higher will be like half of the incremental transactions for the house into 2025. I was wondering if that happens to carry a little bit different margin profile versus the rest of [indiscernible] Wayne, thanks for the question. Just for clarity, I believe what you asked [indiscernible] is the margin profile for Hyatt different than the other HS customers?

Don't break out the details of individual customer contracts. Hyatt will be, as Mike indicated, roughly half of the overall CRS transaction growth that we expect to see in HS this year.

And it like the balance of business we're bringing on is accretive to HS. Yes.

And we would expect if you look at hospitality solutions, if you look at EBITDA, you'll see continued EBITDA margin expansion overall year on year.

Great. Thank you.

Thank you. I'm showing no further questions at this time. I'd like to turn it back to Curt Eckert for closing remarks. All right. Well, thank you. I could not be prouder of the team at Sabre.

And look forward as we go into the future in sharing additional progress on how Sabre is performing. I do appreciate your support and interest. Thank you.

This concludes today's conference call.

Thank you for participating and you may now disconnect.