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Item 2. Management’s Discussion and Analysis

2022-11-02 compared with 2022-08-02 · 225 added, 170 removed, 507 unchanged (44% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

orward-Looking Statements

This Quarterly Report on Form 10-Q, including this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I, Item 2, contains information that may constitute forward-looking statements.

Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts, such as statements regarding our future financial condition or results of operations, our prospects and strategies for future growth, the development and introduction of new products, and the implementation of our marketing and branding strategies.

In many cases, you can identify forward-looking statements by terms such as “expects,” “outlook,” "intends," "will," "may," "believes," “plans,” “provisional,” “predicts,” “potential,” “estimates,” “should,” “could,” “anticipates,” “likely,” “commit,” “guidance,” “anticipate,” “incremental,” “preliminary,” “forecast,” “continue,” “strategy,” “confidence,” “estimate,” “objective,” “project,” or the negative of these terms or other comparable terminology.

In many cases, you can identify forward-looking statements by terms such as “expects,” “outlook,” "intends," "will," "may," "believes," “plans,” “provisional,” “predicts,” “potential,” “estimates,” “should,” “could,” “anticipates,” “likely,” “commit,” “guidance,” “anticipate,” “incremental,” “preliminary,” “forecast,” “continue,” “strategy,” “confidence,” “objective,” “project,” or the negative of these terms or other comparable terminology.

The forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions and are subject to risks, uncertainties and changes in circumstances that may cause events or our actual activities or results to differ significantly from those expressed in any forward-looking statement.

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The inputs into our judgments and estimates consider the economic implications of COVID-19 on our critical and significant accounting estimates.

Our air booking cancellation reserve totaled $9 million and $18 million as of June 30, 2022, and December 31, 2021, respectively, as cancellation activity has continued to decline over the year.

Our air booking cancellation reserve totaled $9 million and $18 million as of September 30, 2022, and December 31, 2021, respectively, as cancellation activity has continued to decline over the year.

Given the uncertainties surrounding the duration and effects of COVID-19, including any variants, on transaction volumes in the global travel industry, particularly air travel transaction volumes and future cancellation activity, including from airlines’ insolvency or suspension of service or aircraft groundings, we cannot provide assurance that the assumptions used in the estimates will be accurate and the impacts could be material on our cancellation reserves, credit loss provisions and results of operations.

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however, given the magnitude of travel decline and the unknown duration of the COVID-19 impact, we will continue to monitor our liquidity levels and take additional steps should we determine they are necessary.

In August 2022, we completed the acquisition of Conferma Limited ("Conferma"), a virtual payments technology company, to expand our investment in technology for the payments ecosystem in the travel industry .

We acquired all of the outstanding stock and ownership interest of Conferma, for net cash considerations of $65 million and conversion of a pre-existing loan into share capital.

We have consolidated the results of Conferma from the date of acquisition into our Travel Solutions segment, which did not have a material impact on our results of operations.

In May 2022, we acquired 8 million shares of Class A Common Stock, par value of $0.0001 per share, of Global Business Travel Group, Inc.(“GBT”) for an aggregate purchase price of $80 million.

As of June 30, 2022, we continued to own these 8 million shares.

We recognized unrealized losses of $30 million during the three and six months ended June 30, 2022 from the investment in GBT.

As of September 30, 2022, we continued to own these 8 million shares.

We recognized unrealized losses of $5 million and $35 million during the three and nine months ended September 30, 2022, respectively, from the investment in GBT.

Fair Value Measurements for further details.

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On February 28, 2022, we sold the AirCentre product portfolio, related technology and intellectual property for $392 million .

We recorded a pre-tax gain on sale of approximately $180 million, which includes an adjustment recorded in the second quarter of 2022 related to $12 million in contingencies identified in connection with the sale (after-tax $112 million ) in Other, net in our consolidated statements of operations for the six months ended June 30, 2022.

In connection with the closing, we entered into a transition services agreement with the purchaser, pursuant to which we will continue to provide certain services and conduct certain operations in connection with the transferred business while it transitions to the purchaser’s system, in return for compensation from the purchaser with respect to these costs.

Acquisitions and Dispositions for further details.

Subsequent to the initiation of the current military conflict in Ukraine, we terminated our distribution agreement with a certain Travel Solutions customer located in Russia.

In the second quarter of 2022, this customer was removed from the International Air Transport Association clearing house, which has negatively impacted our ability to collect amounts due to us pursuant to our IT Solutions agreement with the customer.

Subsequent to quarter end, however, an alternative payment method has currently been established.

Air travel in and to Russia, Ukraine, and Belarus has substantially declined, including as a result of sanctions imposed on those countries.

Subsequent to the initiation of the current military conflict in Ukraine, air travel in and to Russia, Ukraine, and Belarus has substantially declined, including, with respect to Russia and Belarus, as a result of sanctions imposed on those countries.

While none of Russia, Ukraine, and Belarus constituted a significant portion of our financial results in 2021, we have experienced significantly reduced GDS bookings and passengers boarded in Russia, Belarus, and Ukraine beginning in the middle of the first quarter of 2022, and these reductions are ongoing.

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An expansion in the scope of the current conflict or any economic disruption, or any expansion of sanctions or export controls, could have a material adverse effect on our results of operations.

See “Risk Factors—Our business could be harmed by adverse global and regional economic and political conditions.”

During the six months ended June 30, 2022, we recognized $24 million of previously deferred revenue due to a change in facts and circumstances associated with an IT Solutions customer located in Russia.

See “Risk Factors—Our business could be harmed by adverse global and regional economic and political conditions” and “—Any failure to comply with regulations or any changes in such regulations governing our businesses could adversely affect us.”

During the nine months ended September 30, 2022, we recognized $24 million of previously deferred revenue due to a change in facts and circumstances associated with a certain Travel Solutions customer located in Russia.

It is no longer considered probable that this revenue will be reversed and this amount was fully paid by the customer.

Revenue from Contracts with Customers for details regarding the impact on revenue.

Revenue recognized during the six months ended June 30, 2022 from customers located in Russia represented a low-single digit percentage of our total 2022 Travel Solutions revenue, excluding the release of previously deferred revenue above.

Our consolidated balance sheets include net assets of approximately $33 million as of June 30, 2022 related to customers located in Russia.

If our performance under our IT Solutions agreements with such customers were terminated, or if we are unable to collect amounts due to us in the future, these net assets could be impaired.

Revenue recognized during the nine months ended September 30, 2022 from customers located in Russia represented a low-single digit percentage of our total 2022 Travel Solutions revenue, excluding the release of previously deferred revenue above.

In March 2022, we terminated our distribution agreement with a Travel Solutions customer located in Russia.

In the second quarter of 2022, this customer was removed from the International Air Transport Association clearinghouse.

This removal negatively impacted our ability to collect amounts due to us pursuant to our IT Solutions agreement with this customer;

however, an alternative payment method was established.

In August 2022, Russia adopted legislation and related regulations that, effective October 30, 2022, require activities related to the development, creation and operation of automated information systems for processing domestic air transportation within the Russian Federation to be owned and operated by Russian residents or legal entities with no updates from or connection with systems abroad.

This legislation and these regulations are expected to significantly restrict or prohibit our ability to provide these services in Russia, which is expected to negatively impact our future revenue and results.

While we received payments from the customer through the alternative payment method described above during the third quarter of 2022 and during October 2022, it is currently uncertain whether future payments will be received from the customer after this legislation became effective on October 30, 2022.

Our consolidated balance sheets include net assets of approximately $19 million as of September 30, 2022 related to customers located in Russia.

If we are unable to collect amounts due to us, these net assets could be impaired in 2022 or in future periods.

During the three months ended September 30, 2022, we recorded an impairment of $5 million due to the expected impact of the Russian legislation described above on the future recoverability of certain assets related to these customers.

In addition, we accelerated the amortization of customer advances into revenue, which reduced our IT Solutions revenue by $4 million.

Factors Affecting our Results

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The following table sets forth these key metrics for the periods indicated (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 % Change 2022 2021 % Change

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Definitions of Non-GAAP Financial Measures

We have included both financial measures compiled in accordance with GAAP and certain non-GAAP financial measures in this Quarterly Report on Form 10-Q, including Adjusted Operating Loss , Adjusted Net Loss from continuing operations ("Adjusted Net Loss"), Adjusted EBITDA, Free Cash Flow and ratios based on these financial measures.

We define Adjusted Operating Loss as operating loss adjusted for equity method loss, acquisition-related amortization, restructuring and other costs, acquisition-related costs, litigation costs, net, and stock-based compensation.

We define Adjusted Net Loss as net loss attributable to common stockholders adjusted for loss from discontinued operations, net of tax, net income attributable to noncontrolling interests, preferred stock dividends, acquisition-related amortization, restructuring and other costs, loss on extinguishment of debt, other, net, acquisition-related costs, litigation costs, net, stock-based compensation, and the tax impact of adjustments.

We define Adjusted EBITDA as loss from continuing operations adjusted for depreciation and amortization of property and equipment, amortization of capitalized implementation costs, acquisition-related amortization, restructuring and other costs, interest expense, net, other, net, loss on extinguishment of debt, acquisition-related costs, litigation costs, net, stock-based compensation and the remaining provision (benefit) for income taxes.

We have included both financial measures compiled in accordance with GAAP and certain non-GAAP financial measures in this Quarterly Report on Form 10-Q, including Adjusted Operating Income (Loss) , Adjusted Net Loss from continuing operations ("Adjusted Net Loss"), Adjusted EBITDA, Free Cash Flow and ratios based on these financial measures.

We define Adjusted Operating Income (Loss) 1 as operating loss adjusted for equity method loss, impairment and related charges, acquisition-related amortization, restructuring and other costs, acquisition-related costs, litigation costs, net, and stock-based compensation.

We define Adjusted Net Loss 1 as net loss attributable to common stockholders adjusted for loss from discontinued operations, net of tax, net income attributable to noncontrolling interests, preferred stock dividends, impairment and related charges, acquisition-related amortization, restructuring and other costs, loss on extinguishment of debt, other, net, acquisition-related costs, litigation costs, net, stock-based compensation, and the tax impact of adjustments.

We define Adjusted EBITDA 1 as loss from continuing operations adjusted for depreciation and amortization of property and equipment, amortization of capitalized implementation costs, acquisition-related amortization, impairment and related charges, restructuring and other costs, interest expense, net, other, net, loss on extinguishment of debt, acquisition-related costs, litigation costs, net, stock-based compensation and the remaining benefit for income taxes.

We define Free Cash Flow as cash used in operating activities less cash used in additions to property and equipment.

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We believe that these non-GAAP financial measures are used by investors, analysts and other interested parties as measures of financial performance and to evaluate our ability to service debt obligations, fund capital expenditures, fund our investments in technology transformation, and meet working capital requirements.

We also believe that Adjusted Operating Loss, Adjusted Net Loss and Adjusted EBITDA assist investors in company-to-company and period-to-period comparisons by excluding differences caused by variations in capital structures (affecting interest expense), tax positions and the impact of depreciation and amortization expense.

We also believe that Adjusted Operating Income (Loss), Adjusted Net Loss and Adjusted EBITDA assist investors in company-to-company and period-to-period comparisons by excluding differences caused by variations in

capital structures (affecting interest expense), tax positions and the impact of depreciation and amortization expense.

In addition, amounts derived from Adjusted EBITDA are a primary component of certain covenants under our senior secured credit facilities.

Adjusted Operating Loss, Adjusted Net Loss, Adjusted EBITDA, Free Cash Flow and ratios based on these financial measures are not recognized terms under GAAP.

Adjusted Operating Income (Loss), Adjusted Net Loss, Adjusted EBITDA, Free Cash Flow and ratios based on these financial measures are not recognized terms under GAAP.

These non-GAAP financial measures and ratios based on them are unaudited and have important limitations as analytical tools, and should not be viewed in isolation and do not purport to be alternatives to net income as indicators of operating performance or cash flows from operating activities as measures of liquidity.

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• Free Cash Flow removes the impact of accrual-basis accounting on asset accounts and non-debt liability accounts, and does not reflect the cash requirements necessary to service the principal payments on our indebtedness;

• other companies, including companies in our industry, may calculate Adjusted Operating Loss, Adjusted Net Loss, Adjusted EBITDA or Free Cash Flow differently, which reduces their usefulness as comparative measures.

The following table sets forth the reconciliation of Net loss attributable to common stockholders to Adjusted Net Loss from continuing operations, Operating loss to Adjusted Operating Loss, and Loss from continuing operations to Adjusted EBITDA (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

• other companies, including companies in our industry, may calculate Adjusted Operating Income (Loss), Adjusted Net Loss, Adjusted EBITDA or Free Cash Flow differently, which reduces their usefulness as comparative measures.

______________________

(1) For previous periods, no impairment and related charges or restructuring and other costs were recognized.

Accordingly, such costs were not previously included in the calculation of this non-GAAP financial measure.

The following table sets forth the reconciliation of Net loss attributable to common stockholders to Adjusted Net Loss from continuing operations, Operating loss to Adjusted Operating Income (Loss), and Loss from continuing operations to Adjusted EBITDA (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Net loss attributable to common stockholders $ (140,722) $ (240,641) $ (291,396) $ (758,029)

Loss from discontinued operations, net of tax 284 81 150 344

Loss (income) from discontinued operations, net of tax 446 (186) 596 158

Net income attributable to noncontrolling interests (1)

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Loss from continuing operations (134,154) (234,713) (272,828) (739,958)

Impairment and related charges (2)

5,146 — 5,146 —

Acquisition-related amortization (3a)

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Equity method income (loss) 199 (114) 215 (395)

Impairment and related charges (2)

5,146 — 5,146 —

Acquisition-related amortization (3a)

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Stock-based compensation 16,349 32,218 70,081 86,122

Adjusted Operating Loss $ (9,312) $ (121,752) $ (38,467) $ (288,254)

Adjusted Operating Income (Loss) $ 716 $ (102,644) $ (37,751) $ (390,898)

Loss from continuing operations (134,154) $ (234,713) (272,828) $ (739,958)

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9,824 15,939 41,075 48,296

Impairment and related charges (2)

5,146 — 5,146 —

Restructuring and other costs (5)

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Stock-based compensation 16,349 32,218 70,081 86,122

Provision (benefit) for income taxes 5,390 (1,897) 4,794 2,100

Benefit for income taxes (6,989) (6,613) (2,195) (4,513)

Adjusted EBITDA $ 34,251 $ (54,928) $ 63,867 $ (234,886)

The following tables set forth the reconciliation of Adjusted Operating Income (Loss) to Operating income (loss) in our statement of operations and Adjusted EBITDA to Income (loss) from continuing operations in our statement of operations by business segment (in thousands):

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Travel Solutions Hospitality Solutions Corporate Total

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Equity method income 199 — — 199

Impairment and related charges (2)

— — 5,146 5,146

Acquisition-related amortization (3a)

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Acquisition-related costs (6)

— — 2,245 2,245

Litigation costs, net (7)

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— — 9,824 9,824

Impairment and related charges (2)

— — 5,146 5,146

Restructuring and other costs (5)

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Acquisition-related costs (6)

— — 2,245 2,245

Litigation costs, net (7)

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Equity method income 199

Provision for income taxes (5,390)

Benefit for income taxes 6,989

Loss from continuing operations $ (134,154)

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Travel Solutions Hospitality Solutions Corporate Total

Adjusted Operating Loss $ (39,078) $ (8,868) $ (54,698) $ (102,644)

Equity method income 630 — — 630

Equity method loss (114) — — (114)

Acquisition-related amortization (3a)

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Restructuring and other costs (5)

— — (856) (856)

Acquisition-related costs (6)

— — 1,709 1,709

Litigation costs, net (7)

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Restructuring and other costs (5)

— — (856) (856)

Acquisition-related costs (6)

— — 1,709 1,709

Litigation costs, net (7)

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Stock-based compensation — — 32,218 32,218

Equity method income 630 — — 630

Equity method loss (114) — — (114)

Operating loss $ (38,964) $ (8,868) $ (108,856) $ (156,688)

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Other, net (4)

Equity method income 630

Loss on extinguishment of debt (13,070)

Equity method loss (114)

Benefit for income taxes 6,613

Loss from continuing operations $ (234,713)

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Travel Solutions Hospitality Solutions Corporate Total

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Equity method income 215 — — 215

Impairment and related charges (2)

— — 5,146 5,146

Acquisition-related amortization (3a)

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— — 41,075 41,075

Impairment and related charges (2)

— — 5,146 5,146

Restructuring and other costs (5)

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Equity method income 215

Provision for income taxes (4,794)

Benefit for income taxes 2,195

Loss from continuing operations $ (272,828)

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Travel Solutions Hospitality Solutions Corporate Total

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Other, net (4)

Loss on extinguishment of debt (13,070)

Equity method loss (395)

Provision for income taxes (2,100)

Benefit for income taxes 4,513

Loss from continuing operations $ (739,958)

The following tables present information from our statements of cash flows and set forth the reconciliation of Free Cash Flow to cash used in operating activities, the most directly comparable GAAP measure (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Cash used in operating activities $ (314,770) $ (408,152)

Cash provided by investing activities 271,898 7,634

Cash provided by (used in) investing activities 186,251 (5,535)

Cash used in financing activities (61,646) (37,013)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash used in operating activities $ (314,770) $ (408,152)

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of 40%, (iii) Sabre Travel Network Lanka (Pte) Ltd of 40%, and (iv) Sabre Bulgaria of 40%.

(2) Impairment and related charges represents a $5 million impairment charge associated with the impact of regulatory changes in Russia on the future recoverability of certain assets.

(3) Depreciation and amortization expenses:

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(c) Amortization of capitalized implementation costs represents amortization of upfront costs to implement new customer contracts under our SaaS and hosted revenue model.

(3) Other, net incl udes a $180 million gain on the sale of AirCentre during 2022, a fair value loss of $30 million on our GBT investment during the second quarter of 2022 and a $15 million gain on sale of equity securities during the first quarter of 2021.

(4) Other, net incl udes a $180 million gain on the sale of AirCentre during 2022, a fair value loss of $5 million and $35 million on our GBT investment for the three and nine months ended September 30, 2022, respectively, and a $15 million gain on sale of equity securities during

the first quarter of 2021.

In addition, all periods presented include foreign exchange gains and losses related to the remeasurement of foreign currency denominated balances included in our consolidated balance sheets into the relevant functional currency.

(4) Restructuring and other costs represents charges, and adjustments to those charges, associated with planning and implementing business restructuring activities, including costs associated with third party consultants advising on our business structure and strategy going forward which are integral to the restructuring plan and will result in severance benefits related to employee terminations, which primarily occurred in July 2022.

(5) Restructuring and other costs represents charges, and adjustments to those charges, associated with planning and implementing business restructuring activities, including costs associated with third party consultants advising on our business structure and strategy going forward which are integral to the restructuring plan and severance benefits related to employee terminations, which primarily occurred in July 2022.

During 2021, adjustments to charges were recorded in conjunction with the changes implemented in 2020 to support the new organizational structure and to respond to the impacts of the COVID-19 pandemic on our business, facilities and cost structure.

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The following table sets forth our consolidated statements of operations data for each of the periods presented:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

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Loss from continuing operations before income taxes (141,143) (241,326) (275,023) (744,471)

Provision (benefit) for income taxes 5,390 (1,897) 4,794 2,100

Benefit for income taxes (6,989) (6,613) (2,195) (4,513)

Loss from continuing operations $ (134,154) $ (234,713) $ (272,828) $ (739,958)

Three Months Ended June 30, 2022 and 2021

Three Months Ended June 30,

Three Months Ended September 30, 2022 and 2021

Three Months Ended September 30,

2022 2021 Change

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Total revenue $ 663,394 $ 441,086 $ 222,308 50 %

Travel Solutions— Revenue increased $226 million, or 60%, for the three months ended June 30, 2022 compared to the same period in the prior year, primarily due to:

Travel Solutions— R evenue increased $213 million, or 55%, for the three months ended September 30, 2022 compared to the same period in the prior year, primarily due to:

• a $185 million, or 76%, increase in transaction-based distribution revenue due to a 50% increase in Direct Billable Bookings to 80 million primarily as a result of the continued recovery trends from the COVID-19 pandemic and favorable rate impacts from improved international and corporate bookings;

• a $13 million increase in IT solutions revenue consisting of a $36 million, or 69%, increase in reservation revenue primarily due to a 55% increase in Passengers Boarded to 160 million as a result of the continued recovery trends from the COVID-19 pandemic and the recognition of $3 million in previously deferred revenue from a customer that entered liquidation.

Additiona lly, commercial and operations revenue declined due to the sale of our AirCentre portfolio on February 28, 2022.

Hospitality Solutions— Revenue increased $15 million, or 30%, for the three months ended June 30, 2022 compared to the same period in the prior year.

The increase was primarily driven by a $14 million increase in SynXis Software and Services revenue due to an increase in transaction volumes of 23% to 30 million, as a result of the continued recovery from the COVID-19 pandemic and an increase of $1 million in DX revenue.

• a $28 million increase in IT solutions revenue consisting of a $31 million, or 53%, increase in reservation revenue primarily due to a 56% increase in Passengers Boarded to 180 million as a result of the continued recovery trends from the COVID-19 pandemic and a $7 million increase due to the recognition of a termination fee on a carrier in the process of de-migrating from our system, partially offset by a $4 million reduction associated with a Russian carrier and an unfavorable rate mix due to revenue that does not fluctuate with our volumes.

Additionally, commercial and operations revenue decreased $3 million due to the sale of our AirCentre portfolio on February 28, 2022, partially offset by $4 million increase due to the aforementioned termination fee on the carrier that is de-migrating and other product revenue.

Hospitality Solutions— Revenue increased $12 million, or 22%, for the three months ended September 30, 2022 compared to the same period in the prior year.

The increase was primarily driven by a $12 million increase in SynXis Software and Services revenue due to an increase in transaction volumes of 18% to 32 million, as a result of the continued recovery from the COVID-19 pandemic.

Cost of revenue, excluding technology costs

Three Months Ended June 30,

Three Months Ended September 30,

2022 2021 Change

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Total cost of revenue, excluding technology costs $ 274,330 $ 171,429 $ 102,901 60 %

Travel Solutions— Cost of revenue, excluding technology costs, increased $86 million, or 57%, for the three months ended June 30, 2022 compared to the same period in the prior year.

The increase was primarily driven by an $89 million increase in incentive consideration due to higher transaction volume given the continued recovery from the COVID-19 pandemic.

This increase was slightly offset by a decrease in labor and professional services costs resulting from the sale of AirCentre and other labor related expenses.

Hospitality Solutions— Cost of revenue, excluding technology costs, increased $9 million, or 36%, for the three months ended June 30, 2022 compared to the same period in the prior year primarily due to costs associated with increased transaction volumes.

Travel Solutions— Cost of revenue, excluding technology costs, increased $99 million, or 72%, for the three months ended September 30, 2022 compared to the same period in the prior year.

The increase was primarily driven by a $97 million increase in incentive consideration due to higher transaction volume as well as an increase in rates given the continued recovery from the COVID-19 pandemic.

Hospitality Solutions— Cost of revenue, excluding technology costs, increased $8 million, or 29%, for the three months ended September 30, 2022 compared to the same period in the prior year primarily due to costs associated with increased transaction volumes.

Technology Costs

Three Months Ended June 30,

Three Months Ended September 30,

2022 2021 Change

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Total technology costs $ 273,240 $ 269,111 $ 4,129 2 %

Travel Solutions— Technology costs increased $9 million, or 4%, for the three months ended June 30, 2022 compared to the same period in the prior year.

Travel Solutions— Technology costs increased $8 million, or 4%, for the three months ended September 30, 2022 compared to the same period in the prior year.

The increase was primarily driven by a $12 million increase in technology costs due to higher transaction volumes given the continued recovery from the COVID-19 pandemic and expected temporary costs resulting from our cloud migration efforts.

Additionally, labor and professional services increased $9 million to support our technology transformation initiatives.

Additionally, labor and professional services increased $7 million to support our technology transformation initiatives and other ongoing business expenses increased by $3 million.

These increases were partially offset by a decrease in depreciation and amortization of $14 million primarily due to a change in the mix of our technology spend beginning in 2019 resulting in less capitalized internal use software as well as reduced costs due to the sale of our AirCentre portfolio.

Hospitality Solutions— Technology costs increased $9 million, or 41%, for the three months ended June 30, 2022 compared to the same period in the prior year due to a $6 million increase in labor and professional services costs and a $4 million increase in technology costs to support our technology transformation initiatives, including the migration of SynXis to the cloud.

We expect decreases in depreciation and amortization to continue due to these factors.

Hospitality Solutions— Technology costs increased $5 million, or 17%, for the three months ended September 30, 2022 compared to the same period in the prior year due to a $5 million increase in technology costs to support our technology transformation initiatives, including the migration of SynXis to the cloud and an increase in labor and professional services of $1 million to support our technology transformation initiatives.

This increase was partially offset by a $1 million decrease in depreciation and amortization due to a change in the mix of our technology spend beginning in 2019 resulting in less capitalized internal use software.

Corporate— Technology costs decreased $9 million, or 41%, for the three months ended September 30, 2022 compared to the same period in the prior year primarily due to a decrease in depreciation and amortization associated with a reduction in intangible amortization as a result of the completion of amortization of technology assets from prior acquisitions and a $2 million decrease in stock-based compensation.

Selling, General and Administrative Expenses

Three Months Ended June 30,

Three Months Ended September 30,

2022 2021 Change

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Total selling, general and administrative expenses $ 172,359 $ 157,234 $ 15,125 10 %

Travel Solutions— Selling, general and administrative expenses increased $5 million, or 7%, for the three months ended June 30, 2022 compared to the same period in the prior year.

The increase was driven by a $2 million increase due to continued investments in our internal business systems, a $1 million increase in the provision for expected credit losses, and a $3 million increase due to other ongoing business expenses.

Hospitality Solutions—Selling, general and administrative expenses increased $1 million, or 6%, for the three months ended June 30, 2022 compared to the same period in the prior year primarily due to a $2 million increase in labor and professional services costs related to our business strategy to support the long-term growth of the business, partially offset by a decrease in the provision for expected credit losses as a result of the continued recovery from the COVID-19 pandemic.

Corporate— Selling, general and administrative expenses increased $12 million, or 14%, for the three months ended June 30, 2022 compared to the same period in the pri or year.

This increase was driven by a $5 million increase as a result of increased compensation to attract and retain talent, a $6 million increase in professional services related to our business structure and strategy to support the long-term growth of the business, a $1 million increase in risk and security costs, a $1 million increase due to the reversal of severance costs in the prior year associated with the reduction of our workforce in 2020, and other ongoing business expenses.

These increases were partially offset by a $3 million decrease in stock-based compensation.

Travel Solutions— Selling, general and administrative expenses decreased $3 million, or 5%, for the three months ended September 30, 2022 compared to the same period in the prior year primarily due to a $1 million decrease in depreciation and amortization as well as reduced costs due to the sale of our AirCentre portfolio, a $1 million decrease in the provision for credit losses and a $2 million decrease due to other ongoing business expenses.

Hospitality Solutions —Selling, general and administrative expenses increased $2 million, or 24%, for the three months ended September 30, 2022 compared to the same period in the prior year primarily due to an increase in the provision for expected credit losses due to the unfavorable comparison to a provision reversal in the prior year as the economy began to recover and payment experience began to improve, as well as an increase in labor and professional services.

Corporate— Selling, general and administrative expenses increased $16 million, or 19%, for the three months ended September 30, 2022 compared to the same period in the pri or year.

This increase was driven by a $15 million increase due to litigation reserves, a $5 million increase related to an impairment associated with an IT Solutions customer located in Russia, a $3 million increase in severance as a result of business restructuring, a $4 million increase in professional services related to our business structure and strategy to support the long-term growth of the business, a $1 million increase in risk and security costs, and a $2 million increase in other ongoing business expenses.

These increases were partially offset by an $11 million decrease in stock-based compensation primarily due to forfeitures of unvested shares and a $5 million decrease in legal costs.

Interest expense, net

Three Months Ended June 30,

Three Months Ended September 30,

2022 2021 Change

1 unchanged sentence

Interest expense, net $ 77,120 $ 65,461 $ 11,659 18 %

Interest expense increased $3 million, or 4% during the three months ended June 30, 2022 compared to the same period in the prior year primarily due to higher interest rates und er the New Other Term B Facility due 2028 entered into in the first quarter of 2022.

This increase was partially offset by a decline caused by the maturation of certain interest rate swaps in the fourth quarter of 2021.

Debt for further details regarding these debt transactions.

Three Months Ended June 30,

Interest expense increased $12 million, or 18% during the three months ended September 30, 2022 compared to the same period in the prior year primarily due to higher interest rates on our term loans.

This increase was partially offset by a decline caused by our interest rate swaps.

Derivatives for further details regarding our interest rate swaps.

Loss on extinguishment of debt

We recognized a loss on extinguishment of debt of $13 million for the three months ended September 20, 2021 as a result of the refinancing that occurred in the third quarter of 2021.

Debt for further details.

Three Months Ended September 30,

2022 2021 Change

1 unchanged sentence

Other, net $ 7,687 $ 5,993 $ 1,694 28 %

Other, net increased $41 million for the three months ended June 30, 2022 compared to the same period in the prior year primarily due to a fair value loss of $30 million on our GBT investment and a reduction of the gain on sale of AirCentre of $12 million.

Fair Value Measurements for further details regarding the GBT investment and Note 3.

Acquisitions and Dispositions for further details regarding the AirCentre sale.

Provision (benefit) for Income Taxes

Three Months Ended June 30,

Other, n et increased $2 million for the three months ended September 30, 2022 compared to the same period in the prior year primarily due to a fair value loss of $5 million on o ur GBT investment and a $5 million increase due to modification costs in connection with the refinancing that occurred in August 2022.

These increases were partially offset by a $4 million gain recognized in conjunction with the acquisition of Conferma, a $2 million decrease due to a pension settlement charge in the prior year that did not reoccur in the current year, and a $2 million decrease due to modification costs in connection with refinancing activity in 2021.

Acquisitions and Dispositions for further details regarding the acquisition of Conferma, Note 6.

Debt for further details regarding the August 2022 refinancing and the 2021 refinancing and Note 8.

Fair Value Measurements for further details regarding the GBT investment.

Benefit for Income Taxes

Three Months Ended September 30,

2022 2021 Change

(Amounts in thousands)

Provision (benefit) for income taxes $ 5,390 $ (1,897) $ 7,287 (384) %

For the three months ended June 30, 2022 , we recognized $5 million income tax expense, representing a negative effective tax rate of 3%, compared to an income tax benefit of $2 million, representing an effective tax rate of 1% for the three months ended June 30, 2021.

The decrease in the effective tax rate for the three months ended June 30, 2022 as compared to the same period in 2021 was primarily due to an increase in valuation allowance recorded in the current period and various discrete items recorded in each of the respective three month periods.

Benefit for income taxes $ (6,989) $ (6,613) $ (376) 6 %

For the three months ended September 30, 2022 , we recognized a $7 million income tax benefit, representing an effective tax rate of 5%, compared to an income tax benefit of $7 million, representing an effective tax rate of 3% for the three months ended September 30, 2021.

The increase in the effective tax rate for the three months ended September 30, 2022 as compared to the same period in 2021 was primarily due to a decrease in valuation allowance recorded in the current period and various discrete items recorded in each of the respective three month periods.

The difference between our effective tax rates and the U.S.

federal statutory income tax rate primarily results from valuation allowances, our geographic mix of taxable income in various tax jurisdictions, tax permanent differences and tax credits.

Six Months Ended June 30, 2022 and 2021

Six Months Ended June 30,

Nine Months Ended September 30, 2022 and 2021

Nine Months Ended September 30,

2022 2021 Change

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Total revenue $ 1,905,836 $ 1,188,238 $ 717,598 60 %

Travel Solutions— Revenue increased $471 million, or 71%, for the six months ended June 30, 2022 compared to the same period in the prior year, primarily due to:

Travel Solutions— Rev enue increased $684 million, or 65%, for the nine months ended September 30, 2022 compared to the same period in the prior year, primarily due to:

• a $590 million, or 96%, increase in transaction-based distribution revenue due to a 51% increase in Direct Billable Bookings to 226 million primarily as a result of the continued recovery trends from the COVID-19 pandemic and favorable rate impacts from improved international and corporate bookings;

• a $66 million increase in IT solutions revenue consisting of a $76 million, or 82%, increase in reservation revenue primarily due to a 62% increase in Passengers Boarded to 289 million as a result of the continued recovery trends from the COVID-19 pandemic, $24 million of previously deferred revenue recognized during the three months ended March 31, 2022 due to a change in facts and circumstances associated with a Russian carrier and the recognition of $3 million in previously deferred revenue from a customer that entered liquidation.

• a $94 million increase in IT solutions revenue consisting of a $107 million, or 71%, increase in reservation revenue primarily due to a 59% increase in Passengers Boarded to 469 million as a result of the continued recovery trends from the COVID-19 pandemic, $24 million of previously deferred revenue recognized during the three months ended March 31, 2022 due to a change in facts and circumstances associated with a Russian carrier, a $9 million increase due to the recognition of a termination fee on a carrier in the process of de-migrating from our systems, which will not repeat in 2023 and the recognition of $3 million in previously deferred revenue from a customer that entered liquidation.

Revenue from Contracts with Customers.

This increase was partially offset by an unfavorable rate mix due to revenue that does not fluctuate with our volumes.

Additionally, commercial and operations revenue decreased due to the sale of our AirCentre portfolio on February 28, 2022.

Hospitality Solutions— Revenue increased $29 million, or 31%, for the six months ended June 30, 2022 compared to the same period in the prior year.

This increase was partially offset by an unfavorable rate mix due to revenue that does not fluctuate with our volumes and a $4 million reduction associated with a Russian carrier.

Additionally, commercial and operations revenue decreased $13 million due to the sale of our AirCentre portfolio on February 28, 2022, partially offset by other product revenue and a $6 million increase due to the aforementioned termination fee on the carrier that is de-migrating.

Hospitality Solutions— Revenue increased $42 million, or 28%, for the nine months ended September 30, 2022 compared to the same period in the prior year.

The increase was primarily driven by a $37 million increase in SynXis Software and Services revenue due to an increase in transaction volumes of 23% to 84 million, as a result of the continued recovery from the COVID-19 pandemic and an increase of $4 million in DX revenue.

Cost of revenue, excluding technology costs

Six Months Ended June 30,

Nine Months Ended September 30,

2022 2021 Change

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Total cost of revenue, excluding technology costs $ 771,609 $ 498,011 $ 273,598 55 %

Travel Solutions— Cost of revenue, excluding technology costs, increased $159 million, or 59%, for the six months ended June 30, 2022 compared to the same period in the prior year.

The increase was primarily driven by a $167 million increase in incentive consideration due to higher transaction volume given the continued recovery from the COVID-19 pandemic.

Travel Solutions— Cost of revenue, excluding technology costs, increased $257 million, or 64%, for the nine months ended September 30, 2022 compared to the same period in the prior year.

The increase was primarily driven by a $264 million increase in incentive consideration due to higher transaction volume as well as an increase in rates given the continued recovery from the COVID-19 pandemic.

This increase was partially offset by a decrease in labor and professional services costs resulting from the sale of AirCentre and other labor related expenses.

Hospitality Solutions— Cost of revenue, excluding technology costs, increased $17 million, or 38%, for the six months ended June 30, 2022 compared to the same period in the prior year primarily due to costs associated with increased transaction volumes.

Hospitality Solutions— Cost of revenue, excluding technology costs, increased $24 million, or 34%, for the nine months ended September 30, 2022 compared to the same period in the prior year primarily due to costs associated with increased transaction volumes.

Technology Costs

Six Months Ended June 30,

Nine Months Ended September 30,

2022 2021 Change

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Total technology costs $ 824,142 $ 782,991 $ 41,151 5 %

Travel Solutions— Technology costs increased $20 million, or 5%, for the six months ended June 30, 2022 compared to the same period in the prior year.

The increase was primarily driven by a $39 million increase in technology costs due to higher transaction volumes given the continued recovery from the COVID-19 pandemic and expected temporary costs resulting from our cloud migration efforts.

Additionally, labor and professional services increased $15 million to support our technology transformation initiatives.

We expect to incur a significant amount of incremental technology costs in 2022 over the prior year as a result of our technology transformation.

These increases were partially offset by a decrease in depreciation and amortization of $34 million primarily due to a change in the mix of our technology spend beginning in 2019 resulting in less capitalized internal use software as well as a reduction due to the sale of our AirCentre portfolio.

Travel Solutions— Technology costs increased $28 million, or 4%, for the nine months ended September 30, 2022 compared to the same period in the prior year.

The increase was due to a $52 million increase in technology costs due to higher transaction volumes given the continued recovery from the COVID-19 pandemic and expected temporary costs resulting from our cloud migration efforts.

Additionally, labor and professional services increased $22 million to support our technology transformation initiatives, and other ongoing business expenses increased by $3 million.

We have incurred a significant amount of incremental technology costs in 2022 over the prior year as a result of our technology transformation and expect that to continue for the remainder of 2022.

This increase was partially offset by a decrease in depreciation and amortization of $48 million primarily due to a change in the mix of our technology spend beginning in 2019 resulting in less capitalized internal use software as well as a reduction due to the sale of our AirCentre portfolio.

We expect decreases in depreciation and amortization to continue due to these factors .

Hospitality Solutions— Technology costs increased $15 million, or 34%, for the six months ended June 30, 2022 compared to the same period in the prior year due to an $11 million increase in labor and professional services costs and a $6 million increase in technology costs to support our technology transformation initiatives, including the migration of SynXis to the cloud.

Hospitality Solutions— Technology costs increased $20 million, or 28%, for the nine months ended September 30, 2022 compared to the same period in the prior year due to a $13 million increase in labor and professional services costs and an $11 million increase in technology costs to support our technology transformation initiatives, including the migration of SynXis to the cloud.

This increase was partially offset by a $3 million decrease in depreciation and amortization primarily driven by a change in the mix of our technology spend beginning in 2019 resulting in less capitalized internal use softw are.

The migration to the cloud for SynXis is expected to result in higher cloud-based transaction costs for Hospitality Solutions whereas historically it incurred data center operating costs and incurred hardware and infrastructure costs, which were capitalized, and became fully depreciated in prior periods.

Corporate— Technology costs decreased $7 million, or 12%, for the nine months ended September 30, 2022 compared to the same period in the prior year primarily due to a $5 million decrease in depreciation and amortization associated with a reduction in intangible amortization as a result of the completion of amortization of technology assets from prior acquisitions and a $3 million decrease in labor and professional services.

Selling, General and Administrative Expenses

Six Months Ended June 30,

Nine Months Ended September 30,

2022 2021 Change

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Total selling, general and administrative expenses $ 516,345 $ 446,847 $ 69,498 16 %

Travel Solutions— Selling, general and administrative expenses increased $17 million, or 14%, for the six months ended June 30, 2022 compared to the same period in the prior year.

The increase was driven by an $8 million increase in the provision for expected credit losses due to the unfavorable comparison to a provision reversal in the prior year as the economy began to recover and payment experience began to improve, a $6 million increase in legal costs incurred due to ongoing litigation, a $2 million increase due to continued investments in our internal business systems, and $3 million due to other ongoing business expenses.

These increases were partially offset by a $2 million decrease in depreciation and amortization.

Hospitality Solutions— Selling, general and administrative expenses increased $2 million, or 8%, for the six months ended June 30, 2022 compared to the same period in the prior year primarily due to a $5 million increase in labor and professional services costs related to our business strategy to support the long-term growth of the business.

Travel Solutions— Selling, general and administrative expenses increased $14 million, or 7%, for the nine months ended September 30, 2022 compared to the same period in the prior year.

The increase was driven by a $7 million in crease in the provision for expected credit losses due to the unfavorable comparison to a provision reversal in the prior year as the economy began to recover and payment experience began to improve, a $6 million increase in legal costs incurred due to ongoing litigation and a $3 million increase due to continued investments in our internal business systems.

These increases were partially offset by a $3 million d ecrease in depreciation and amortization.

Hospitality Solutions— Selling, general and administrative expenses increased $4 million, or 13%, for the nine months ended September 30, 2022 compared to the same period in the prior year primarily due to a $6 million increase in labor and professional services costs related to our business strategy to support the long-term growth of the business and a $2 million increase due to continued investments in our internal business systems.

This increase was partially offset by a $3 million decrease in the provision for expected credit losses due to an improvement in our expected credit losses in the current year as a result of the continued recovery from the COVID-19 pandemic, and lower depreciation and amortization.

Corporate— Selling, general and administrative expenses increased $36 million, or 25%, for the six months ended June 30, 2022 compared to the same period in the pri or year.

This increase was driven by a $13 million increase in professional services related to our business structure and strategy to support the long-term growth of the business, an $5 million increase as a result of increased compensation to attract and retain talent , a $6 million increase in risk and security costs, a $5 million increase in legal costs resulting from ongoing litigation, a $2 million increase due to the reversal of severance costs in the prior year associated with the reduction of our workforce in 2020, and other ongoing business expenses.

This increase was partially offset by a $1 million decrease in stock-based compensation.

Corporate— Selling, general and administrative expenses increased $52 million, or 22%, for the nine months ended September 30, 2022 compared to the same period in the pri or year.

This increase was driven by a $17 million increase in professional services related to acquisition and disposition-related activities and costs related to our business structure and strategy to support the long-term growth of the business, a $15 million increase due to litigation reserves, a $7 million increase in risk and security costs, a $6 million increase in transaction tax expense, a $5 million increase related to an impairment associated with an IT Solutions customer located in Russia, a $5 million increase for restructuring costs and the reversal of severance costs in the prior year associated with the reduction of our workforce in 2020, and a $7 million increase in other ongoing business expenses.

This increase was partially offset by a $12 million decrease in stock-based compensation primarily due to forfeitures of unvested shares .

Interest expense, net

Nine Months Ended September 30,

2022 2021 Change

(Amounts in thousands)

Interest expense, net $ 205,062 $ 193,834 $ 11,228 6 %

Interest expense increased $11 million, or 6% during the nine months ended September 30, 2022 compared to the same period in the prior year primarily due to higher interest rates on our term loans.

This increase was partially offset by the impact of our interest rate swaps.

Debt for further details regarding these debt transactions and Note 7.

Derivatives for further details regarding our interest rate swaps.

Loss on extinguishment of debt

We recognized a loss on extinguishment of debt of $4 million during the six months ended June 30, 2022 as a result of the refinancing that occurred in the first quarter of 2022.

We recognized a loss on extinguishment of debt of $4 million du ring the nine months ended September 30, 2022 as a result of the refinancing that occurred in the first quarter of 2022 and a loss on extinguishment of debt of $13 million as a result of the refinancing that occurred in the third quarter of 2021.

Debt for further details.

Six Months Ended June 30,

Nine Months Ended September 30,

2022 2021 Change

1 unchanged sentence

Other, net $ (139,617) $ (2,439) $ (137,178) 5,624 %

Other, net decreased $139 million for the six months ended June 30, 2022 compared to the same period in the prior year primarily due to the gain on the sale of AirCentre of $180 million partially offset by a fair value loss of $30 million on our GBT investment and a $15 million gain on sale of investment recorded in the first quarter of 2021.

Fair Value Measurements for further details regarding the GBT investment and Note 3.

Other, net decreased $137 million for the nine months ended September 30, 2022 compared to the same period in the prior year primarily due to the gain on the sale of AirCentre of $180 million partially offset by a fair value loss of $35 million on our GBT investment and a $15 million gain on sale of investment recorded in the first quarter of 2021.

Measurements for further details regarding the GBT investment and Note 3.

Acquisitions and Dispositions for further details regarding the AirCentre sale.

Provision for Income Taxes

Six Months Ended June 30,

Benefit for Income Taxes

Nine Months Ended September 30,

2022 2021 Change

(Amounts in thousands)

Provision for income taxes $ 4,794 $ 2,100 $ 2,694 128 %

For the six months ended June 30, 2022, we recognized $5 million income tax expense, representing a negative effective tax rate of 4%, compared to an income tax expense of $2 million, representing a negative effective tax rate of less than 1% for the six months ended June 30, 2021.

The decrease in the effective tax rate for the six months ended June 30, 2022 as compared to the same period in 2021 was primarily due to a increase in valuation allowance recorded in the current period and various discrete items recorded in each of the respective six month periods.

Benefit for income taxes $ (2,195) $ (4,513) $ 2,318 (51) %

For the nine months ended September 30, 2022, we recognized a $2 million income tax benefit, representing an effective tax rate of less than 1%, compared to an income tax benefit of $5 million, representing an effective tax rate of less than 1% for the nine months ended September 30, 2021.

The slight increase in the effective tax rate for the nine months ended September 30, 2022 as compared to the same period in 2021 was primarily due to a decrease in valuation allowance recorded in the current period and various discrete items recorded in each of the respective nine month periods.

The difference between our effective tax rates and the U.S.

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Our current principal source of liquidity is our cash and cash equivalents on hand.

As of June 30, 2022 and December 31, 2021, our cash and cash equivalents and outstanding letters of credit were as follows (in thousands):

June 30, 2022 December 31, 2021

As of September 30, 2022 and December 31, 2021, our cash and cash equivalents and outstanding letters of credit were as follows (in thousands):

September 30, 2022 December 31, 2021

Cash and cash equivalents $ 782,763 $ 978,352

5 unchanged sentences

We invest in a money market fund which is classified as cash and cash equivalents in our consolidated balance sheets and statements of cash flows.

We held no short-term investments as of June 30, 2022 and December 31, 2021.

We had $21 million held as cash collateral for standby letters of credit in restricted cash on our consolidated balance sheets as of June 30, 2022 and December 31, 2021.

While the COVID-19 pandemic has had an adverse impact on our business, we expect to recognize federal taxable income in 2022 based on our operating and non-operating results, the annual limitation on the use of NOL carryforwards and a provision of the Tax Cuts and Jobs Act set to take effect.

We held no short-term investments as of September 30, 2022 and December 31, 2021.

We had $21 million held as cash collateral for standby letters of credit in restricted cash on our consolidated balance sheets as of September 30, 2022 and December 31, 2021.

While the COVID-19 pandemic has had an adverse impact on our business, we expect to recognize federal taxable income in 2022 based on our operating and non-operating results, the annual limitation on the use of Net Operating Loss ("NOL") carryforwards and a provision of the Tax Cuts and Jobs Act.

As a result, while we expect to be a U.S.

5 unchanged sentences

However, based on our assumptions and estimates with respect to our financial condition, we believe that we have resources to sufficiently fund our liquidity requirements over at least the next twelve months.

As previously disclosed, we responded with measures to increase our cash position during 2020, including the suspension of quarterly cash dividends on our common stock,

effective with respect to the dividends occurring after the March 30, 2020 payment and share repurchases under our $500 million share repurchase program (the "Share Repurchase Program"), borrowing under our Revolver, implementing cost savings measures, and completing debt and equity offerings.

In addition, in the third quarter of 2021, we refinanced and extended the maturity on a portion of our debt and amended the financial performance covenant to remove minimum liquidity and leverage ratio requirements and in the first quarter of 2022, we refinanced and extended the maturity on another portion of our debt.

As previously disclosed, we responded with measures to increase our cash position during 2020, including the suspension of quarterly cash dividends on our common stock, effective with respect to the dividends occurring after the March 30, 2020 payment and share repurchases under our $500 million share repurchase program (the "Share Repurchase Program"), borrowing under our Revolver, implementing cost savings measures, and completing debt and equity offerings.

In addition, in the third quarter of 2021, we refinanced and extended the maturity on a portion of our debt and amended the financial performance covenant to remove minimum liquidity and leverage ratio requirements and in the first and third quarters of 2022, we refinanced and extended the maturity on another portion of our debt.

We believe these actions will provide additional flexibility as we manage through the global economic recovery from the COVID-19 pandemic.

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Given the magnitude of travel decline and the unknown duration of the COVID-19 impact, we will continue to monitor travel activity and take additional steps should we determine they are necessary.

Additionally, we may review opportunities to refinance our existing debt, as well as conduct debt or equity offerings to support future strategic investments, support operational requirements, provide additional liquidity, or pay down debt.

Additionally, we may review

opportunities to refinance our existing debt, as well as conduct debt or equity offerings to support future strategic investments, support operational requirements, provide additional liquidity, or pay down debt.

We utilize cash and cash equivalents primarily to pay our operating expenses, make capital expenditures, invest in our information technology infrastructure, products and offerings, pay taxes, pay quarterly dividends on our Preferred Stock (as defined below) when declared, and service our debt and other long-term liabilities.

1 unchanged sentence

See “— Senior Secured Credit Facilities" below.

We had outstanding letters of credit totaling $12 million and $10 million as of June 30, 2022 and December 31, 2021, respectively, which were secured by a $20 million cash collateral deposit account.

We had outstanding letters of credit totaling $11 million and $10 million as of September 30, 2022 and December 31, 2021, respectively, which were secured by a $20 million cash collateral deposit account.

Our ability to generate cash depends on many factors beyond our control, and any failure to meet our debt service obligations could harm our business, financial condition and results of operations.

4 unchanged sentences

These transactions may require cash expenditures or generate proceeds and, to the extent they require cash expenditures, may be funded through a combination of cash on hand, debt or equity offerings.

In July 2022 , we exercised a contractually binding option to acquire the outstanding shares of an entity in the payments industry for a price determined pursuant to an independent valuation process.

Our obligation under the agreement is expected to result in a payment of approximately $70 million in August 2022 to the current shareholders.

We will consolidate the results of this entity from the date of acquisition, which are not expected to have a material impact on our results of operations in the current year.

Recent Events Impacting Our Liquidity and Capital Resources

Debt Agreements

On March 9, 2022, we refinanced and extended the maturity on a portion of the Term Loan B facility.

On March 9, 2022 and August 15, 2022, we refinanced and extended the maturity on a portion of the Term Loan B facility.

See “— Senior Secured Credit Facilities" below.

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Declared dividends on the Preferred Stock are payable, at our election, in cash, shares of our common stock or a combination of cash and shares of our common stock.

We recorded $5 million and $11 million of accrued preferred stock dividends in our consolidated results of operations for the three and six months ended June 30, 2022 and 2021, respectively.

During the three and six months ended June 30, 2022 and 2021, we paid cash dividends on our preferred stock of $5 million and $11 million.

On May 4, 2022, the Board of Directors declared a dividend of $1.625 per share on Preferred Stock payable on June 1, 2022 to holders of record of the Preferred Stock on May 15, 2022.

On July 27, 2022, the Board of Directors declared a dividend of $1.625 per share on Preferred Stock payable on September 1, 2022 to holders of record of the Preferred Stock on August 15, 2022.

We recorded $5 million and $16 million, respectively, of accrued preferred stock dividends in our consolidated results of operations for the three and nine months ended September 30, 2022 and 2021, respectively.

During the three and nine months ended September 30, 2022 and 2021, we paid cash dividends on our preferred stock of $5 million and $16 million.

On October 18, 2022, the Board of Directors declared a dividend of $1.625 per share on Preferred Stock payable on December 1, 2022 to holders of record of the Preferred Stock on November 15, 2022.

On March 16, 2020, we announced the suspension of the payment of quarterly cash dividends on our common stock, effective with respect to the dividends occurring after the March 30, 2020 payment.

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Repurchases under the Share Repurchase Program may take place in the open market or privately negotiated transactions.

For the six months ended June 30, 2022, we did not repurchase any shares pursuant to the Share Repurchase Program.

For the nine months ended September 30, 2022, we did not repurchase any shares pursuant to the Share Repurchase Program.

On March 16, 2020, we announced the suspension of share repurchases under the Share Repurchase Program in conjunction with the cash management measures we are undertaking as a result of the market conditions caused by COVID-19.

Approximately $287 million remains authorized for repurchases under the Share Repurchase Program as of June 30, 2022.

Approximately $287 million remains authorized for repurchases under the Share Repurchase Program as of September 30, 2022.

Senior Secured Credit Facilities

On August 23, 2017, Sabre GLBL entered into a Fourth Incremental Term Facility Amendment to our Amended and Restated Credit Agreement, Term Loan A Refinancing Amendment to our Amended and Restated Credit Agreement, and Second Revolving Facility Refinancing Amendment to our Amended and Restated Credit Agreement (the “2017 Refinancing”).

The 2017 Refinancing included a $400 million revolving credit facility ("Revolver") as well as the application of the proceeds of the approximately $1,891 million incremental Term Loan B facility (“Term Loan B”) and $570 million Term Loan A facility (“Term Loan A”).

The 2017 Refinancing included a $400 million revolving credit facility ("Revolver") as well as the application of the proceeds of the

approximately $1,891 million incremental Term Loan B facility (“Term Loan B”) and $570 million Term Loan A facility (“Term Loan A”).

On August 27, 2020, Sabre GLBL entered into a Third Revolving Facility Refinancing Amendment to the Amended and Restated Credit Agreement (the "Third Revolving Refinancing Amendment") and the First Term A Loan Extension Amendment to the Amended and Restated Credit Agreement (the "Term A Loan Extension Amendment" and, together with the Third Revolving Refinancing Amendment, the "2020 Refinancing"), which extended the maturity of the Revolver from July 1, 2022 to November 23, 2023 at the earliest and February 22, 2024 at the latest, depending on certain "springing" maturity conditions as described in the Third Revolving Refinancing Amendment.

16 unchanged sentences

In addition, on July 2, 2021, in anticipation of the Revolver repayment and termination of the revolving commitments (and related letter of credit subfacility), Sabre GLBL entered into a new $20 million bilateral letter of credit facility, which is secured by a cash collateral deposit account and included as restricted cash on our consolidated balance sheets.

On March 9, 2022, we entered into an amendment to refinance a portion of the Term Loan B facility (the "2022 Refinancing").

We incurred no additional indebtedness as a result of the 2022 Refinancing, other than amounts covering certain fees and expenses.

The 2022 Refinancing included the application of the proceeds of a new $625 million term loan “B” facility (the “New Other Term B Facility”), borrowed by Sabre GLBL under our Amended and Restated Credit Agreement, with the effect of extending the maturity of approximately $623 million of the existing Term Loan B credit facility under the Amended and Restated Credit Agreement.

We recognized a loss on extinguishment of debt in connection with these transactions during the six months ended June 30, 2022 of $4 million and debt modification costs for financing fees of $1 million recorded to Other, net.

The New Other Term B Facility matures on June 30, 2028 and offers us the ability to prepay or repay the New Other Term B Facility after 12 months or to prepay or repay at a 101 premium before that date.

The interest rates on the New Other Term B Facility are based on Term SOFR, replacing LIBOR, plus an applicable margin.

On March 9, 2022, we entered into an amendment to refinance a portion of the Term Loan B facility (the "March 2022 Refinancing").

We incurred no additional indebtedness as a result of the March 2022 Refinancing, other than amounts covering t discounts and certain fees and expenses.

The March 2022 Refinancing included the application of the proceeds of a new $625 million term loan “B” facility (the “2022 Term Loan B-1 Facility”), borrowed by Sabre GLBL under our Amended and Restated Credit Agreement, with the effect of extending the maturity of approximately $623 million of the existing Term Loan B credit facility under the Amended and Restated Credit Agreement.

The remaining proceeds, net of a discount of $1 million, were used to pay $1 million in other fees and expenses.

We incurred an additional discount of $5 million and other fees of $3 million which were funded with cash on hand.

We recognized a loss on extinguishment of debt in connection with the March 2022 Refinancing during the nine months ended September 30, 2022 of $4 million and debt modification costs for financing fees of $1 million recorded to Other, net.

The 2022 Term Loan B-1 Facility matures on June 30, 2028 and offers us the ability to prepay or repay the 2022 Term Loan B-1 Facility after 12 months or to prepay or repay at a 101 premium before that date.

The interest rates on the 2022 Term Loan B-1 Facility are based on Term SOFR, replacing LIBOR, plus an applicable margin.

On August 15, 2022, we entered into an amendment to refinance a portion of the Term Loan B facility (the "August 2022 Refinancing").

We incurred no additional indebtedness as a result of the August 2022 Refinancing, other than amounts covering discounts and certain fees and expenses.

The August 2022 Refinancing included the application of the proceeds of a new $675 million term loan “B” facility (the “2022 Term Loan B-2 Facility”), borrowed by Sabre GLBL under our Amended and Restated Credit Agreement, with the effect of extending the maturity of approximately $647 million of the existing Term Loan B credit facility under the Amended and Restated Credit Agreement.

The remaining proceeds, net of a discount of $25 million, were used to pay $3 million in other fees and expenses.

We incurred an additional discount of $9 million and other fees of $2 million which were funded with cash on hand.

We recognized debt modification costs for financing fees in connection with the August 2022 Refinancing during the nine months ended September 30, 2022 of $5 million recorded to Other, net.

No loss on extinguishment of debt was recorded as a result of the August 2022 Refinancing.

The 2022 Term Loan B-2 Facility matures on June 30, 2028 and offers us the ability to prepay or repay the 2022 Term Loan B-2 Facility after 12 months or to prepay or repay at a 101 premium before that date.

The interest rates on the 2022 Term Loan B-2 Facility are based on Term SOFR, replacing LIBOR, plus an applicable margin.

Under the Amended and Restated Credit Agreement, the loan parties are subject to certain customary non-financial covenants, including restrictions on incurring certain types of indebtedness, creation of liens on certain assets, making of certain investments, and payment of dividends.

As of June 30, 2022, we are in compliance with all covenants under the terms of the Amended and Restated Credit Agreement.

As of September 30, 2022, we are in compliance with all covenants under the terms of the Amended and Restated Credit Agreement.

We are also required to pay down the term loans by an amount equal to 50% of annual excess cash flow, as defined in the Amended and Restated Credit Agreement.

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Based on our results for the year ended December 31, 2020, we were not required to make an excess cash flow payment in 2021, and no excess cash flow payment is required in 2022 with respect to our results for the year ended December 31, 2021.

We are further required to pay down the term loans with proceeds from certain asset sales or borrowings, that are not otherwise reinvested in the business, as defined in the Amended and Restated Credit Agreement.

As of June 30, 2022, we had outstanding approximately $2.2 billion of variable debt that is indexed to the London Interbank Offered Rate ("LIBOR") consisting of Term Loan B for $1.2 billion, Term Loan B-1 for $399 million and Term Loan B-2 for $633 million.

We are further required to pay down the term loans with proceeds from certain asset sales or borrowings, that are not otherwise reinvested in the business within 15 months, as defined in the Amended and Restated Credit Agreement, which is expected to include a payment in May 2023 for a portion of the proceeds from the disposition of AirCentre to the extent not considered reinvested into the business, as defined in the agreement.

This payment is expected to be no more than $150 million, but may change based on actual amounts reinvested.

As of September 30, 2022, we had outstanding approximately $1.6 billion of variable debt that is indexed to the London Interbank Offered Rate ("LIBOR") consisting of Term Loan B for $536 million, Term Loan B-1 for $398 million and Term Loan B-2 for $631 million.

In July 2017, the Financial Conduct Authority announced its intention to phase out LIBOR by the end of 2021, and subsequently extended the phase-out date to June 30, 2023.

In July 2021, we entered into the 2021 Refinancing which, among other things, allows for the LIBOR rate to be phased out and replaced with SOFR plus a credit spread adjustment factor for Term Loan B-1 and Term Loan B-2, and we therefore do not anticipate a material impact from the anticipated phase out of LIBOR with respect to these loans.

In March 2022, we entered into the 2022 Refinancing, which extended the maturity and replaced LIBOR with Term SOFR on a portion of our Term Loan B facility.

In March and August 2022, we entered into the March 2022 Refinancing and August 2022 Refinancing, respectively, which extended the maturity and replaced LIBOR with Term SOFR on a portion of our Term Loan B facility.

The remaining Term Loan B allows for a transition to the Prime rate plus a margin, and assuming the discontinuation of LIBOR in June 2023, we estimate the impact of transitioning to the Prime rate in June 2023, assuming changes in Prime rates aligned with expected changes in the federal funds rate, which are based on market data and analysts’ forecasts, would result in an aggregate of approximately $11 million of incremental interest expense over the remaining life of Term Loan B.

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See “Risk Factors—We are exposed to interest rate fluctuations.”

Six Months Ended June 30,

Nine Months Ended September 30,

(Amounts in thousands)

Cash used in operating activities $ (314,770) $ (408,152)

Cash provided by investing activities 271,898 7,634

Cash provided by (used in) investing activities 186,251 (5,535)

Cash used in financing activities (61,646) (37,013)

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Effect of exchange rate changes on cash, cash equivalents and restricted cash (2,197) (1,781)

Increase (decrease) in cash, cash equivalents and restricted cash $ 13,828 $ (377,551)

Decrease in cash, cash equivalents and restricted cash $ (195,593) $ (454,857)

Operating Activities

Cash used in operating activities totaled $212 million for the six months ended June 30, 2022.

The $126 million increase in operating cash flow from the same period in the prior year was primarily due to the impact of COVID-19 on the travel industry and on our results of operations, partially offset by an increase of $67 million associated with payments to our employees under performance-based bonus plans that did not occur in the prior year.

Cash used in operating activities totaled $315 million for the nine months ended September 30, 2022.

The $93 million increase in operating cash flow from the same period in the prior year was primarily due to the impact of COVID-19 on the travel industry and on our results of operations, partially offset by an increase of $67 million associated with payments to our employees under performance-based bonus plans that did not occur in the prior year and an increase in interest payments related to our term loans.

Investing Activities

For the six months ended June 30, 2022, we received proceeds of $392 million from the sale of AirCentre, partially offset by $33 million of cash used on capital expenditures primarily related to software developed for internal use, $80 million of cash for the investment in GBT, and $7 million for other acquisitions.

For the six months ended June 30, 2021, we received proceeds of $25 million from the sale of certain investments and assets, partially offset by $17 million of cash used on capital expenditures primarily related to software developed for internal use.

For the nine months ended September 30, 2022, we received proceeds of $392 million from the sale of AirCentre, partially offset by $53 million of cash used on capital expenditures primarily related to software developed for internal use, $80 million of cash for the investment in GBT, and $73 million for Conferma and other acquisitions.

For the nine months ended September 30, 2021, we received proceeds of $25 million from the sale of certain investments and assets, offset by $30 million of cash used on capital expenditures primarily related to software developed for internal use.

Financing Activities

For the six months ended June 30, 2022, financing activities used $40 million.

For the nine months ended September 30, 2022, financing activities used $62 million.

Significant highlights of our financing activities include:

• proceeds of $625 million from the issuance of New Other Term B Facility;

• payment of $624 million on Term Loan B and Other Term Loan B;

• payment of $5 million on Term B-1 Facility and Term B-2 Facility;

• payment of $10 million for debt prepayment fees and issuance costs;

• proceeds of $624 million and $650 million from the issuance of the 2022 Term Loan B-1 Facility and the 2022 Term Loan B-2 Facility, respectively;

• payment of $1.3 billion on Term Loan B ;

• payment of $11 million on Term B-1 Facility, Term B-2 Facility and 2022 Term Loan B-1;

• payment of $24 million for debt discount and issuance costs;

• net payments of $16 million from the settlement of employee stock-option awards;

• payment of $16 million in dividends on our preferred stock.

For the six months ended June 30, 2021, financing activities used $45 million.

For the nine months ended September 30, 2021, financing activities used $37 million.

Significant highlights of our financing activities include:

• proceeds of $403 million and $642 million from the issuance of New Term B-1 Facility and New Term B-2 Facility, respectively;

• proceeds of $25 million from the Revolver;

• net payments of $22 million from the settlement of employee stock-option awards;

• payment of $13 million on Term Loan B and Other Term Loan B;

• payment of $16 million in dividends on our preferred stock;

• payment of $12 million in debt discount and issuance costs;

• payments of $400 million for the Revolver;

• payment of $654 million on Term Loan B and Other Term Loan B.

Contractual Obligations

There were no material changes to our future minimum contractual obligations since December 31, 2021 as previously disclosed in our Annual Report on Form 10-K filed with the SEC on February 18, 2022, other than the impact of interest rates on our debt.

As of June 30, 2022, we had a total debt obligation of $6.1 billion, with $298 million due for the remainder of 2022.

We had no off balance sheet arrangements during the six months ended June 30, 2022 and year ended December 31, 2021.

As of September 30, 2022, we had a total debt obligation of $6.3 billion, with $98 million due for the remainder of 2022.

We had no off balance sheet arrangements during the nine months ended September 30, 2022 and year ended December 31, 2021.

Recent Accounting Pronouncements

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We regard an accounting estimate underlying our financial statements as a “critical accounting estimate” if the accounting estimate requires us to make assumptions about matters that are uncertain at the time of estimation and if changes in the estimate are reasonably likely to occur and could have a material effect on the presentation of financial condition, changes in financial condition, or results of operations.

For a discussion of the accounting policies involving material estimates and assumptions that we believe are most critical to the preparation of our financial statements, how we apply such policies and how results differing from our estimates and assumptions would affect the amounts presented in our financial statements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” included in our Annual Report on Form 10-K filed with the SEC on February 18, 2022.

included in our Annual Report on Form 10-K filed with the SEC on February 18, 2022.

Since the date of the annual report on Form 10-K filed with the SEC on February 18, 2022, there have been no material changes to our critical accounting estimates.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis