Sabre Corporation (SABR Quick QuoteSABR - Free Report) reported better-than-expected bottom-line results for the fourth quarter of 2023. Despite this, shares of the company plunged 22.5% on Thursday as its sales guidance for the first quarter and full-year 2024 fell short of the Zacks Consensus Estimate.

Before delving deeper into the forthcoming quarter and full-year outlook, let’s discuss fourth-quarter 2023 financial results first.

Sabre reported an adjusted loss of 12 cents per share, narrower than the Zacks Consensus Estimate of a loss of 14 cents. Also, the figure was narrower than the year-ago quarter’s loss of 36 cents per share. The year-over-year improvement in the bottom line reflects the benefits of increased revenues, lower labor and professional services costs and reduction in technology expenses, partially offset by higher incentive expenses.

Sabre reported revenues of $687 million for the fourth quarter, missing the consensus mark of $707.9 million. However, the top line came in 9% higher than $631.2 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 travel bookings. Additionally, the company's Travel Solutions division benefited from favorable rates as international and corporate bookings continued to improve.

Quarter in Detail

The Travel Solutions segment’s revenues increased 8% year over year to $622 million, primarily driven by an increase in global air and other travel bookings. The segment’s revenues also benefited from favorable rate impacts as international and corporate bookings improved. Our model estimates for Travel Solutions revenues were pegged at $641.1 million, which indicated 11.1% year-over-year growth.

Distribution’s (a sub-division of Travel Solutions) revenues improved 14% to $476 million in the fourth quarter of 2023. This was chiefly driven by the gradual recovery of bookings and an increase in average booking fees due to a favorable shift in the booking mix. Our model estimates for Distribution revenues were pegged at $498 million, which indicated 19.3% year-over-year growth.

IT Solutions’ (a sub-division of Travel Solutions) revenues were $146 million, down 7% from the year-ago quarter’s $157 million. The decrease in performance was due to reduced revenues attributed to de-migrations owing to the repercussions of changes in Russian legislation, partially offset by a 3% increase in the number of passengers boarded. Our model estimates for IT Solution revenues were pegged at $143.1 million, which indicated a 9% year-over-year decline.

The Hospitality Solutions segment’s revenues totaled $75.1 million compared with the year-ago quarter’s $64.9 million. This upside was mainly fueled by a 5% increase in central reservation system transactions from stronger global travel volumes, new customer deployments and higher sales of ancillary products. Our model estimates for Hospitality Solutions revenues were pegged at $76.7 million, which indicated 18.1% year-over-year growth.

Sabre reported an adjusted operating income of $71 million, significantly improving from the operating income of $30 million posted in the year-earlier period. Adjusted EBITDA improved from $67 million reported a year ago to $144.7 million. This improvement was driven by an increase in revenues, a decrease in labor and professional services costs and a decline in technology expenses, including cost savings related to mainframe offloads and data migrations.

Balance Sheet and Cash Flow

Sabre exited the December-end quarter with cash, cash equivalents and restricted cash of $648.2 million compared with the previous quarter’s $622.6 million.

In the fourth quarter, Sabre generated operating cash flow of $96 million and free cash flow of $77.2 million. During the full year 2023, the company generated operating cash flow of $56.2 million, while free cash flow came at -$31.2 million.

First-Quarter & FY24 Guidance

Sabre initiated guidance for the first quarter and full-year 2024. For the first quarter, the company anticipates revenues of approximately $750 million, which is significantly lower than the Zacks Consensus Estimate of $820 million. It anticipates adjusted EBITDA of $115 million for the first quarter and expects to have free cash flow of about $100 million.

For the full year 2024, Sabre anticipates revenues of approximately $3 billion, which is significantly lower than the Zacks Consensus Estimate of $3.21 billion. It anticipates adjusted EBITDA of more than $500 million for the year and expects to have positive free cash flow.

Zacks Rank & Other Stocks to Consider

Currently, Sabre carries a Zacks Rank #2 (Buy). Shares of SABR have plunged 40.7% over the past year.

Some other top-ranked stocks from the broader technology sector are CrowdStrike Holdings (CRWD Quick QuoteCRWD - Free Report) , Amazon.com (AMZN Quick QuoteAMZN - Free Report) and NVIDIA Corporation (NVDA Quick QuoteNVDA - Free Report) . CrowdStrike and Amazon each sport a Zacks Rank #1 (Strong Buy) at present, while NVIDIA carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for CrowdStrike’s fiscal 2024 earnings has been revised a penny upward to $2.95 per share in the past seven days, suggesting year-over-year growth of 91.6%. The long-term estimated earnings growth rate for the stock stands at 36.1%. Shares of CRWD have jumped 186.9% over the past year.

The Zacks Consensus Estimate for Amazon’s 2024 earnings has been revised upward by 39 cents to $4.03 per share in the past 30 days, which calls for an increase of 39% on a year-over-year basis. The long-term expected earnings growth rate for the stock is pegged at 28.1%. AMZN stock has returned 71.6% over the past year.

The consensus mark for NVIDIA’s fiscal 2024 earnings has been revised upward by a penny to $12.32 per share over the past 30 days, indicating a whopping 268.9% increase from fiscal 2023. It has a long-term earnings growth expectation of 13.5%. In the trailing 12 months, NVDA stock has surged 220.9%.