Good morning, and welcome to Sabre's Full Year and Fourth Quarter 2025 Earnings Conference Call. My name is Olivia and I will be your operator. As a reminder, please note today's call is being recorded. I will now turn the call over to the Senior Vice President, Finance, Roushan Zenooz. Please go ahead, sir.

Good morning, and welcome to our Full Year and Fourth Quarter 2025 Earnings Call. This morning, we issued an earnings press release, which is available on our website at investors.sabre.com. A slide presentation, which accompanies today's prepared remarks, is also available during this call on the Sabre Investor Relations web page. A replay of today's call will be available on our website later this morning. We advise you that our comments contain forward-looking statements that represent our beliefs or expectations about future events, including results of our growth strategies, our AI offerings and AI-related developments in the industry, transactions and bookings growth, commercial and strategic arrangements, our financial guidance, outlook and expectations, pro forma financial information, free cash flow, net leverage and liquidity, among others. All forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from the statements made on today's conference call. More information on these risks and uncertainties is contained in our earnings release issued this morning, and our SEC filings, including our Form 10-K for the year ended December 31, 2025. 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, normalized adjusted EBITDA and normalized adjusted EBITDA margin 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. Normalized amounts have been adjusted for estimated costs historically allocated to our Hospitality Solutions business, which was sold on July 3, 2025. We are also presenting certain financial information on a pro forma basis to give effect to the sale of the Hospitality Solutions business, and we have removed the impact of the $227 million payment-in-kind interest that was recorded in conjunction with the refinancing activity in the second quarter of 2025 from pro forma free cash flow. Unless otherwise noted, results presented are based on continuing operations. Participating with me are Kurt Ekert, President and CEO; Mike Randolfi, CFO; and Garry Wiseman, President, Product and Engineering. With that, I will turn the call over to Kurt.

Thanks, Roushan. Hello, everyone, and thank you for joining us. 2025 was a challenging and dynamic year in which exogenous events impacted our operational results. 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. Moving forward, I believe we are well positioned for strong, sustained performance. Our growth outlook today is driven by several key catalysts: continued distribution share gains, the expansion of our multisource content platform, solid growth in both hotel distribution and our payments business as well as improving performance in our airline technology business. As I've discussed previously, our industry is evolving rapidly, and Sabre is evolving with it. We are in the midst of a fundamental transition, moving Sabre from a GDS-focused company to an AI-native technology leader. Before reviewing 2025 performance, I have some thoughts on recent market sentiment around AI disintermediation risk, the concern that AI bots could bypass our marketplace and connect directly to suppliers. We strongly disagree. AI needs what Sabre has already built: vast, constantly evolving data, integrated content, and complex logic purpose-built to solve travel's uniquely challenging workflows. We provide the foundational transaction layer AI uses to shop, price, book and service travel. We expect this shift makes us more essential, not less. We believe agentic AI will reshape the technology landscape, and we are positioning Sabre to lead in this next phase. As AI-native companies enter the travel ecosystem, they need Sabre's strong foundation, which provides breadth of content, modern cloud-native platform, and AI-native APIs, which we believe positions us as the platform of choice. While we are in the early stages of sizing the AI opportunity and have not included any of the potential significant upside in our forward outlook, we…

Thank you, Kurt. Moving to Slide 7. AI needs us to power results, and we believe it is a huge opportunity for us. Let me explain why from a technology perspective. We sit on over 50 petabytes of curated travel data, and we have the greatest depth and breadth of content in the travel space. We process 14,000 transactions per second and 11 billion shopping signals per month. These unparalleled demand signals don't exist anywhere in the public domain. However, we enable pure-play AI companies to participate in a complex space with a simple connection to these insights. We believe we are also critical in an AI-first world because of our proprietary and constantly evolving logic. Travel is extraordinary complex. We house over 50 years of servicing workflows, travel policies and compliance logic across 200-plus countries and thousands of supplier-specific fare rules and partner network agreements, all built through billions of real transactions. In short, we believe we have solved for almost every single edge case that has ever existed in travel anywhere in the world. This logic is proprietary and cannot be scraped from the web or reverse engineered. AI engines cannot independently obtain and orchestrate this logic. While chatbots can generate itineraries, they can't book or service them reliably at scale. For example, we aggregate and normalize real-time flight results in sub-seconds across hundreds of sources. This is a huge technical hurdle for most AI players today. And this is why Virgin Australia, PayPal and a growing pipeline are building on us, not around us. And finally, we have a first-mover advantage in the industry. We launched the first agentic APIs and MCP server for travel almost 6 months ago. This was purpose-built for LLM consumption at enterprise scale. It is in production now while competitors have yet…

Thanks, Garry, and good morning, everyone. Please turn to Slide 10. Fourth quarter financial results were solid and generally met the expectations we shared on our third quarter call. These results reflect the continued improvement in operating trends we saw at the end of the third quarter, partially offset by impacts related to the government shutdown during the quarter. In the fourth quarter, total revenue grew by 3% year-on-year, consistent with our guidance of low single-digit year-on-year growth. Distribution revenue grew $27 million, an increase of 5%, primarily due to an increase in air and hotel distribution bookings, favorable rate impacts and an increase in other revenue. Air distribution bookings grew 4% year-on-year, below the guidance of 6% to 8% we provided on our third quarter earnings call. While our previous outlook accounted for the government and military travel reductions known at the time, the impacts were broader than expected due to lower inbound U.S. traffic and an increase in flight cancellations. As Kurt mentioned, we ended the year with strong momentum, achieving 7% air distribution bookings growth in December, and we anticipate mid-single-digit air distribution bookings growth in the first quarter. IT Solutions revenue of $140 million was within the range of expectations we shared on our third quarter call. Gross margin of 58% was also in line with our expectations. The year-on-year decrease in gross margin was primarily due to revenue mix and FX impacts of a weaker U.S. dollar. Fourth quarter 2025 normalized adjusted EBITDA of $119 million increased 10% year-on-year, with normalized adjusted EBITDA margin expanding by 107 basis points to 18%. Normalized adjusted EBITDA growth was driven by higher revenue and continued expense management. Pro forma free cash flow was $116 million for the fourth quarter, a year-on-year increase of $45 million. And recall, our…

[Operator Instructions] And our first question coming from the line of Dan Wasiolek with Morningstar.

Probably a question here for Garry. So guys have obviously been hard at work with your AI tool development. I can see how that strengthens your network ecosystem. Just wondering kind of what still needs to be done in your view on the AI front? What should we be looking for? And then in the prepared comments, it was mentioned upside opportunities from AI. Just wondering if maybe you could provide some more color on what those might be?

Thank you for the question.

Go ahead, Garry, just jump right in.

Yes. So I think on the AI front and relative towards the travel use cases, for me, really what is going to be the next stage here is to generally show the end-to-end experience of conversational commerce in travel. And so that's what we're doing with the partnerships that you've seen with MindTrip and with PayPal, where, through the MindTrip app itself, you can have a great experience in terms of building an itinerary that's personalized, that's highly relevant towards your needs as you try and plan your next trip. We then come in, in terms of making sure that we provide you the greatest offers in terms of how to get there, where to stay? And then obviously, with PayPal, they then are able to help in terms of the payment, whether it's a single payment or actually payment over time through installments to make sure that you can actually afford that particular trip. So that's been one of the things for me that's been missing when it came to AI and a travel experience is that no one has really done that end-to-end yet from really the discovery, the planning, the booking, the payments and the servicing. So that's what I'm super excited to see as we go into the second quarter of 2026. Go ahead, Kurt.

Yes. I was just going to add, one of the interesting things that is unique about Sabre, as Garry alluded to in the prepared remarks is we already have the full breadth of data, content, intelligent shopping, servicing capabilities. Putting the front-end agentic layer on there, as Garry would articulate, is actually not that technically complex. It's just a matter of extending our capabilities into it as a new ecosystem of agentic travel.

And then anything, I guess, to -- that you're willing to remark on like upside opportunities that might evolve from AI in the years to come?

Yes. I think the best way to think about this in my eyes is, if you think back, if you're as old as I am, 30 years ago, you saw the emergence of online travel agents as a fundamentally new channel. And that had the impact of taking share away from both supplier direct and indirect channels at the time. I think what you're going to see with agentic travel, these are the agentic players as well as tech platforms, is that is going to emerge similar to the way OTAs emerged as a fundamentally new channel, probably happen even more rapidly than what you saw with the emergence of OTAs. When you think about which channels are at risk, I think it's those that are subject to an Internet or electronic experience today. So less impacted should be corporate travel and brick-and-mortar travel agencies, more impacted would be supplier direct where you have nonloyal travelers, Metasearch, which is not an end-to-end experience because you're being linked off. And then third would be OTAs, obviously, OTAs are going to play in this very differently. So we think the offensive opportunity for Sabre is very substantial. Again, very hard to articulate how large that agentic sector is going to be and the pace at which it is going to play. But we believe we have a distinct market advantage in terms of speed to market today. So we're looking to plant flags very aggressively.

And our next question coming from the line of Josh Baer with Morgan Stanley.

I think you did a great job addressing the topic of agentic and AI bots. I was hoping you'd do the same with just direct connects generally. One of the challenges of airlines or -- and OTAs, other travel buyers just building direct connects is the huge cost burden in establishing and also maintaining and supporting those connections from an R&D and a developer and infrastructure perspective. Does the introduction of gen AI change that economic equation at all? Just thinking about lower cost of coding, increasing productivity of a developer, yes, if you could weigh in there on that topic?

Yes, this is Kurt. Let me have Garry jump in first on the, what I'll call the physics of direct connect, and how that will emerge in an agentic world. And then I'll comment on the industry structure a bit.

Yes. Thank you, Kurt. So really, this comes down to what makes us a great partner for an AI company or only company to work with rather than attempt to really replicate what we do. So we have a highly scalable marketplace obviously, with that vast selection of travel content that we both have the contractual rights to aggregate, normalize and display at a speed that an AI agent could not do in a real-time fashion, which is due to our volumes, which means that we can predictably cash content in such a way that individual suppliers cannot. And hence, we can cope with that look-to-book ratio that is a severe tax on suppliers' infrastructure costs. So this is something, again, that whether it's in a general web search or any type of shopping scenario that could be AI or not is something that we excel at in terms of responding in sub-second times compared to what is today taking 8 to 9 seconds if you connect directly to supplier and shopping on their APIs independently? Kurt?

Yes. Thank you, Garry. And so think about direct connects generally, for folks who enable a direct connect, and Sabre is an amalgam of 500 airline direct connects and thousands of hotel direct connect, for example. When you have look-to-book coming inbound and you have massive complexity, that creates challenges, both for the supplier who's dealing with this inbound traffic, Number 2 is for the person doing the direct connect, very difficult to manage that environment. We've spoken previously about the opportunity for reintermediation of some of the direct connect traffic. I think you'll see that in some of our results going forward. With agentic AI, that problem is going to be exacerbated for both the suppliers with inbound traffic and response times; and two, for folks who may have those direct connects in place like OTAs. So I actually think the utility that we provide tomorrow in an agentic world is actually going to be even more important than it was yesterday.

Okay. That's helpful. And then I was just hoping you could unpack this inflation offset program a little bit further. What exactly is inflating? Is that just wages? Is it other costs? And what exactly is offsetting?

Yes. As part of any cost to cost, you over time have some inflation, primarily wage inflation, but then you also have some contractual inflation, technology costs tend to go up. One of our goals is to keep our key line items of technology cost and SG&A roughly flat, except for some volume-related hosting costs. So we've embarked on a program basically to drive efficiency and effectiveness through our organization with the goal of over the next 2 to 3 years, keeping those cost items relatively flat such that as we grow bookings and revenue, we see strong flow-through to EBITDA and EBITDA margin accretion and ultimately greater free cash flow.

Okay. So that's layoffs and future restructurings?

The way I would think about it is I put it in 3 categories. One is leveraging best-in-class geographical location. Second, working with third parties who have certain expertise and efficiencies to a greater degree and then further embedding AI into our workforce and greater enabling our teams to be as productive as possible, and that's the focus.

And I would just say, in doing this, we hold 2 things relatively sacrosanct. One is operational delivery for our customers; and then two is research and development. And just anecdotally, we'll have more engineers working on Sabre a year from now than we do today. We're going to be ramping engineers through the year and doing that effectively through this program.

And our next question coming from the line of Jack Halpert with Cantor Fitzgerald.

Just another on the agentic AI stuff. So you have a relationship with Google for other parts of the business. Do you see any opportunity to deepen your relationship with Gemini on the agentic AI front? And are you having any conversations with other leading AI labs, OpenAI, et cetera? And then just secondly, on capital allocation. I know you made a lot of progress in the debt paydown this year. Moving forward, can you talk about how you're thinking about capital allocation for 2026 and beyond? Is the debt profile still the #1 priority? Or do you feel like you're at a good level to start shifting investment more towards growth initiatives?

Thanks, Jack. I'll take the first question and then ask Mike to speak about capital allocation. So we've got a great relationship with Google. Our AI infrastructure is effectively built on Google's Vertex and now Gemini AI capabilities. I'd say what you've seen is the tip of the iceberg in terms of relationships and partnerships that are going to come in the market. We're in conversations with effectively all the meaningful large players out there, which is why we believe this is such a significant opportunity for Sabre. And let me turn it to Mike to speak about capital allocation.

Yes. First, I'll start with the back part of your question first. And I would say, we prioritize our investment in our growth initiatives, our growth strategies and our agentic AI push forward. So that's a priority, that's always been a priority. With regards to capital structure, we've been thoughtful and proactive with regards to our capital structure. We'll continue to do so. But I think we're actually in a pretty good place today. We ended the year with $910 million of cash in the balance sheet. Now $98 million of that's in escrow for some debt paydowns in March of 2026. So really, the usable cash is $812 million. We expect to ultimately be generating positive free cash flow over the long run. And if you look at our maturity ladder, I think we put ourselves in a pretty good place. We have no large maturities up until June of 2029, and we've done that pretty efficiently in terms of costs. So we think we're in a pretty good place at the moment.

[Operator Instructions] And our next question in queue coming from the line of Victor Cheng with Bank of America.

Good slides on the agentic AI initiatives. Maybe on the volume growth for this year, can you walk us through maybe the cadence of it? Obviously, you're guiding mid-single-digit for Q1 and full year. I think earlier this year, you're still analyzing some of the share gains that you have. So what is sustainable growth in H2? Is that related to the multisource low-cost carrier initiative? How is that working? And then secondly, on NDC, you talked about that going up 4%. Can you talk a bit about where you're seeing that growth coming from? Are TMCs finally getting on board and maybe by region as well? And I will have a quick follow-up.

Victor, thank you, a multipart question as usual. Number 1 is with respect to distribution volume growth for this calendar year. As we indicated, we expect to see mid-single-digit distribution volume growth for 2026 and again for 2027. As we indicated in December, we saw 7% air distribution volume growth. We've seen a similar trend year-to-date so far. That's broad-based across all regions. It includes corporate travel, which we indicated was actually negative last year, so a much healthier market environment today. When we look at this in a componentized fashion, first of all, we expect -- our assumption is that GDS market, which we said is largely flat from '25 to '26, so the growth that we're indicating is largely organic performance by Sabre. Number 1, we expect to continue to take share. That will be the realization of share takeaways that we implemented last year. We have other things that are being implemented, and we expect to continue to win at pace. Two is NDC, which reached 4% adoption at the end of last year. We expect that to continue to scale, and I'll speak about that further in a second. And then 3 is, we spoke last year about the integration of additional low-cost carrier inventory and the launch of our multisource platform and new low-cost carrier. That is all fully in production today. It's one of the key reasons we're winning, and we expect to pick up incremental bookings from those carriers as well. With NDC more specifically, we're seeing it pretty broad-based in terms of adoption by OTA and TMC. And I'd say it varies by region, but it's very specific to carrier. So for example, you might have a large carrier in South America, which has broad NDC adoption. And if that's a top 2 or 3 carrier, that will drive adoption for the region in total. But I would say, generally, you're at a point now where, as we indicated, we have 42 carriers live within our NDC solution. We've done a significant amount of work on functionality to basically normalize workflow differences between EDIFACT and NDC for the travel agent, and that's mitigating any productivity or user experience impacts that they may have had previously. So again, we expect that to scale at pace as we go forward.

That makes sense. And maybe a quick follow-up on the restructuring. Should we expect the inflation offset program to continue? And kind of any cash flow impact for '27 as well potentially?

Sure. So we believe the total quantum of the restructuring will be around $65 million. As we talked about, we had a $51 million charge in the fourth quarter of 2025. The bulk of the cash flow impact will be during this year in 2026, and that's the $60 million you see in our guidance slide. So in 2027, any cash flow impacts we expect would be de minimis. Could be some, but I would expect it to be de minimis.

Our last question will come from the line of Jed Kelly with Oppenheimer.

Great. Just on the free cash flow guidance, can you give us an update on how your discussion is going with sort of your debt holders and free cash flow being flat? Would love to hear an update there.

Yes. I mean, well, Jed, we just -- as you know, we just completed a significant refinancing of $1.8 billion. That refinancing went very, very well. We did that at an interest cost of [ 11.8% ]. And the free cash flow profile today is the same as when we conducted that refinancing. So overall, we are focused on generating positive free cash flow. We expect to generate positive free cash flow in 2027, and we have a strong cash balance.

Yes. And Jed, just keep in mind, as Mike indicated during the prepared remarks, free cash flow projection for this year includes the $60 million of impact from restructuring and about $130 million year-on-year difference from the PIK moving to cash. So there's no more PIK that we hold today.

And then I would love to hear your -- I guess I'm last, I will ask a couple. You said corporate travel is holding up pretty well. That's good to hear. Is that kind of a comp issue? Or what's going on there? And where are you seeing the strength? Is it coming more from the traditional travel agencies? Or is it coming from some of these new self-service players that we hear about?

I'd say corporate travel and TMC traffic, which was trailing the market last year. We're seeing positive signs in the first part of this year. That's fairly broad both with traditional or existing players as well as some of the new entrants, and we have good exposure to both parties.

Got it. And then I guess just my final one. I appreciate all the commentary around AI. Just -- and you've been in the travel industry for a while. When you hear all these direct connections and you can see the market is pretty excited about it, if you just look at the relative outperformance between Marriott, like a booking or any third-party travel agent, I guess just wondering, as we kind of see this evolve, how does this differ than search where I assume these direct connections were available for a while, but the suppliers never took advantage of search. And I guess, what makes this difference? Because I got to assume Google is not going to give away their search advertising business and OpenAI is going to need a pretty big auction advertising business to pay for all their compute requirements. So just wondering how you kind of see this evolving?

Yes. So what's interesting -- what's very different about -- let me compare this to Metasearch, which is Google Flight Search or Kayak, for example, where you get to compare, as a consumer, many different price points. And then you can launch into a different ecosystem to consummate your booking, into the supplier direct or into the OTA, for example. What we've heard from effectively every agentic player in the large tech platform that we've spoken to in recent months is they want to have an integrated end-to-end experience to include changes, servicing, et cetera, which doesn't sound like a Metasearch experience whatsoever. It sounds more like an agency experience. And so as Garry indicated, we think we're very well positioned to enable that. But when you think about this on a channel basis, and I talked earlier about supplier direct, let's say, nonloyal customers and Metasearch, we have a de minimis or almost no share impact from either of those 2 channels today. So as an intermediary, to the extent that those channels are impacted, that will have no adverse effect on Sabre. If OTAs are adversely impacted, that's between 20% and 25% of our intermediary trading volumes. But we think the OTAs especially, folks like Priceline or Expedia are very well positioned to compete there. So we look at this and say, agentic and us backing the agentics is an offensive new opportunity to the extent there's downside risk, the downside risk to us given our ecosystem is relatively small.

Got it. And then nice announcement with MindTrip and PayPal, [indiscernible] MineTrop people, pretty interesting platform they're building. Can you just expound on that? And just -- I know you said it in your prepared remarks, but any additional color we can add for people on the call?

Yes. Garry has been the architect of that, so I'll ask him to separate in.

Yes. So as I mentioned earlier, in terms of the way we're working together here is that MindTrip is that front-end experience where they're using agentic capabilities in order to really allow discovery and trip planning. So let's say you want to go to Japan. You've got 2 teenagers, one's into Manga, you can tell it that, and it will start to suggest an [indiscernible] places to go, things to go and see. And then combined with that, it will start calling us for hotel information as it's planning the itinerary to map out what a good hotel would be near a particular attraction that might interest you. And eventually, it will start to call us for flights as it builds the full itinerary. And then from that point onwards, as you decide, okay, this is the trip I actually want to go for, that's where PayPal comes into mix. So PayPal, as I said earlier, they have the instant payment option, of course, but then also they provide installment payments as travel, these days, particularly international travel, can get quite expensive. So the ability to pay in, in installments is also, I think, a very critical part of this particular experience. And then after that, we provide the booking and the servicing capabilities. So if during the trip you're running to issues, you need to reschedule things, rebook, et cetera, you can come back to the MindTrip app and simply tell it that you'd like to change your flight. So it's really -- it's an end-to-end experience for consumers as they look to discover, plan, book and then be serviced throughout the travel experience.

This ends the Q&A portion of the call. I will now turn the call back over to Mr. Ekert, CEO, for any closing remarks.

Thank you, everybody, for the interest today. We are extremely optimistic and excited for the year and the years ahead, and look forward to sharing results with you in the next quarter and quarters ahead. Take care.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.