Sabre's (NASDAQ:SABR) Q1 Sales Top Estimates, Stock Soars

Kayode Omotosho /
2024/05/02 8:37 am EDT

Travel technology company Sabre (NASDAQ:SABR) reported results ahead of analysts' expectations in Q1 CY2024, with revenue up 5.4% year on year to $782.9 million. On the other hand, the company expects next quarter's revenue to be around $750 million, slightly below analysts' estimates. It made a non-GAAP loss of $0.02 per share, improving from its loss of $0.32 per share in the same quarter last year.

Is now the time to buy Sabre? Find out by accessing our full research report, it's free.

Sabre (SABR) Q1 CY2024 Highlights:

  • Revenue: $782.9 million vs analyst estimates of $753.6 million (3.9% beat)
  • Adjusted EBITDA: $142 million vs analyst estimates of $116 million (big beat)
  • EPS (non-GAAP): -$0.02 vs analyst estimates of -$0.06
  • The company lifted its revenue guidance for the full year from $3 billion to $3.04 billion at the midpoint, a 1.3% increase (also lifted adjusted EBITDA guidance for the same period)
  • Gross Margin (GAAP): 59%, in line with the same quarter last year
  • Free Cash Flow was -$95.77 million, down from $77.21 million in the previous quarter
  • Airline Bookings: 85,170
  • Market Capitalization: $1.10 billion

Originally a division of American Airlines, Sabre (NASDAQ:SABR) is a technology provider for the global travel and tourism industry.

Hotels, Resorts and Cruise Lines

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 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 business quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Sabre's revenue declined over the last five years, dropping 5.6% annually. Sabre Total RevenueWithin consumer discretionary, a long-term historical view may miss a company riding a successful new property or emerging trend. That's why we also follow short-term performance. Sabre's annualized revenue growth of 23.1% over the last two years is a reversal from its five-year trend, suggesting some bright spots.

This quarter, Sabre reported solid year-on-year revenue growth of 5.4%, and its $782.9 million of revenue outperformed Wall Street's estimates by 3.9%. The company is guiding for revenue to rise 1.7% year on year to $750 million next quarter, slowing from the 12.2% year-on-year increase it recorded in the same quarter last year. Looking ahead, Wall Street expects sales to grow 4.5% over the next 12 months, a deceleration from this quarter.

Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.

Cash Is King

If you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.

Over the last two years, Sabre's demanding reinvestments to stay relevant with consumers have drained company resources. Its free cash flow margin has been among the worst in the consumer discretionary sector, averaging negative 5.6%.

Sabre burned through $95.77 million of cash in Q1, equivalent to a negative 12.2% margin, reducing its cash burn by 5.8% year on year. Over the next year, analysts predict Sabre will reach cash profitability. Their consensus estimates imply its LTM free cash flow margin of negative 1.2% will increase to positive 1.8%.

Key Takeaways from Sabre's Q1 Results

This was a 'beat and raise' quarter that investors cheer. We were impressed by how significantly Sabre blew past analysts' adjusted EBITDA and EPS expectations this quarter. We were also excited that the company raised its full year revenue and adjusted EBITDA guidance. Overall, this quarter's results seemed fairly positive and shareholders should feel optimistic. The stock is up 7.6% after reporting and currently trades at $3.12 per share.

Sabre may have had a good quarter, but does that mean you should invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.