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Sabre (SABR) Shares Plunge 15% on Q3 Loss, Revenue Miss

Sabre SABR shares fell 15.1% on Wednesday after the travel technology company reported a loss for the third quarter of 2022 and lower-than-expected top-line results, raising concerns for slow post-pandemic recovery.

The company’s adjusted loss was 25 cents per share, which came in line with the Zacks Consensus Estimate. The figure was narrower than the year-ago quarter’s loss of 50 cents per share.

Sabre reported revenues of $663.4 million for the third quarter, 50% higher than $441.1 million in the year-ago period. This year-over-year surge in the top line reflects a significant improvement in global air, hotel and other bookings. However, the top line fell short of the consensus mark of $695.8 million.

Sabre Corporation Price, Consensus and EPS Surprise

Sabre Corporation Price, Consensus and EPS Surprise
Sabre Corporation Price, Consensus and EPS Surprise

Sabre Corporation price-consensus-eps-surprise-chart | Sabre Corporation Quote

Quarter in Detail

The Travel Solutions segment’s revenues increased 55% year over year to $604 million, primarily on the gradual recovery in global air and other bookings, partially offset by reduced revenues due to the sale of the AirCentre portfolio in February 2022. The segment’s revenues also benefited from favorable rate impacts as international and corporate bookings improved.

Distribution’s (a sub-division of Travel Solutions) revenues improved to $431 million from $245 million in the third quarter of 2021. This was chiefly driven by the gradual recovery in bookings and an increase in average booking fees due to a shift in the booking mix.

IT Solutions’ (a sub-division of Travel Solutions) revenues were $173 million, up 19% from the year-ago quarter’s $145 million. This increase was primarily driven by the gradual recovery in passengers boarded. The number of boarded airline passengers — a key revenue metric for the IT Solutions division — increased to 179.9 million from 115.6 million in the prior-year quarter.

The Hospitality Solutions segment’s revenues totaled $67 million compared with the year-ago quarter’s $55 million. This upside was mainly fueled by the increase in central reservation system transactions, which rose to 31.6 million from 26.7 million in the year-ago quarter.

Sabre reported an adjusted operating income of $0.7 million, significantly improving from the operating loss of $102.6 million posted in the year-earlier period.

Adjusted EBITDA improved from a negative $54.9 million reported a year ago to a positive $34.3 million. This improvement was driven by an increase in revenues.

Balance Sheet and Cash Flow

Sabre exited the September-end quarter with cash, cash equivalents and restricted cash of $804 million compared with the previous quarter’s $1.01 billion.

In the third quarter, the company utilized $102 million in cash for operational activities and generated negative free cash flow of $123 million.

Zacks Rank & Key Picks

Sabre currently carries a Zacks Rank #3 (Hold). Shares of SABR have decreased 41.2% year to date (YTD).

Some better-ranked stocks from the broader Computer and Technology sector are Zscaler ZS, Digi International DGII and Fortinet FTNT. Zscaler currently sports a Zacks Rank #1 (Strong Buy), while Digi and Fortinet each carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Zscaler's first-quarter fiscal 2023 earnings has been revised 7 cents north to 26 cents per share over the past 60 days. For fiscal 2023, earnings estimates have moved a penny north to $1.18 per share in the past 30 days.

ZS’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 28.6%. Shares of the company have declined 57% YTD.

The Zacks Consensus Estimate for Digi’s first-quarter fiscal 2023 earnings has increased by 4 cents to 42 cents per share over the past 90 days. For fiscal 2023, earnings estimates have moved 2.2% up to $1.88 per share in the past 60 days.

DGII's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 28.6%. Shares of the company have increased 51.7% YTD.

The Zacks Consensus Estimate for Fortinet's fourth-quarter 2022 earnings has been revised a penny northward to 35 cents per share over the past 90 days. For 2022, earnings estimates have moved upward by 2 cents to $1.05 per share in the past 90 days.

Fortinet's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 10.3%. Shares of FTNT have slumped 35.3% YTD.


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