What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-08-01 compared with 2024-05-02 · 298 added, 98 removed, 419 unchanged (49% of the section changed)

19 unchanged sentences

The travel ecosystem has shifted over the past few years, resulting in the changing needs of our airline, hotel and agency customers, for which we have established strategic priorities with the goal of achieving sustainable long-term growth.

We have experienced continued material headwinds within our consolidated financial results for 2023 and through the first quarter of 2024.

We have experienced continued material headwinds within our consolidated financial results for 2023 and through the second quarter of 2024.

Recent industry air distribution volume growth has leveled off, which may continue into the future and could impact our rate of growth.

3 unchanged sentences

We estimate that these actions will reduce our operating expense on an annual basis by approximately $200 million.

Since the second quarter of 2023, we have incurred costs of $66 million in connection with this business plan, within our consolidated statement of operations.

We expect to continue this cost reduction plan through the end of 2024 and may incur additional costs as we continue to implement plans to further reposition and structurally reduce our cost base.

Since the second quarter of 2023, we have incurred costs of $82 million in connection with this busine ss plan, within our consolidated statement of operations.

We do not expect additional restructuring charges associated with these activities to be significant and we expect to be substantially complete with all activities associated with this plan by the end of 2024.

We believe that we have resources to sufficiently fund our liquidity requirements over at least the next twelve months;

30 unchanged sentences

Selling, general and administrative expenses consist of professional service fees, certain settlement charges or reimbursements, costs to defend legal disputes, provision for expected credit losses, other overhead costs, and personnel-related expenses, including stock-based compensation, for employees engaged in sales, sales support, account management and who administratively support the business in finance, legal, human resources, information technology and communications.

Depreciation and amortization included in selling, general and administrative expenses is associated with property and equipment, acquired customer relationships, trademarks and brand names purchased through acquisitions or established through the take private transaction in 2007, which includes a remaining useful life of 13 years as of March 31, 2024 for trademarks and brand names.

Intersegment Transactions

11 unchanged sentences

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

Three Months Ended March 31,

2024 2023 % Change

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

2024 2023 % Change 2024 2023 % Change

Travel Solutions

7 unchanged sentences

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 , 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 as operating income (loss) adjusted for equity method income, acquisition-related amortization, restructuring and other costs, acquisition-related costs, 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 (loss) attributable to noncontrolling interests, preferred stock dividends, acquisition-related amortization, restructuring and other costs, loss on extinguishment of debt, other, net, acquisition-related costs, 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, stock-based compensation and the remaining provision for income taxes.

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

interest expense, net, other, net, (gain) loss on extinguishment of debt, acquisition-related costs, litigation costs, net, indirect tax matters, stock-based compensation and the remaining provision for income taxes.

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

18 unchanged sentences

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

Three Months Ended March 31,

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

2024 2023 2024 2023

Net loss attributable to common stockholders $ (69,760) $ (129,278) $ (141,243) $ (233,558)

Loss from discontinued operations, net of tax — 403

(Income) loss from discontinued operations, net of tax — (2) — 401

Net income (loss) attributable to noncontrolling interests (1)

275 (66) 653 (901)

Preferred stock dividends — 5,347 — 10,693

1 unchanged sentence

Acquisition-related amortization (2a)

9,620 9,934 19,242 19,867

Restructuring and other costs (4)

15,492 59,372 10,439 59,053

Loss on extinguishment of debt 37,994 —

(Gain) loss on extinguishment of debt — (12,543) 37,994 (12,543)

Other, net (3)

1 unchanged sentence

Acquisition-related costs (5)

613 541 863 1,388

Litigation costs, net (6)

1,579 9,234 1,579 9,234

Indirect tax matters (7)

6,131 — 6,131 —

Stock-based compensation 12,230 8,738 26,135 25,743

Tax impact of adjustments (8)

8,590 9,009 12,761 25,014

Adjusted Net Loss from continuing operations $ (18,481) $ (56,939) $ (24,220) $ (115,241)

4 unchanged sentences

Acquisition-related amortization (2a)

9,620 9,934 19,242 19,867

Restructuring and other costs (4)

1 unchanged sentence

Acquisition-related costs (5)

613 541 863 1,388

Litigation costs, net (6)

1,579 9,234 1,579 9,234

Indirect tax matters (7)

6,131 — 6,131 —

Stock-based compensation 12,230 8,738 26,135 25,743

4 unchanged sentences

Amortization of capitalized implementation costs (2c)

4,578 4,607 9,402 13,964

Acquisition-related amortization (2a)

9,620 9,934 19,242 19,867

Restructuring and other costs (4)

3 unchanged sentences

(3,251) (17,225) 1,226 (19,632)

Loss on extinguishment of debt 37,994 —

(Gain) loss on extinguishment of debt — (12,543) 37,994 (12,543)

Acquisition-related costs (5)

613 541 863 1,388

Litigation costs, net (6)

1,579 9,234 1,579 9,234

Indirect tax matters (7)

6,131 — 6,131 —

Stock-based compensation 12,230 8,738 26,135 25,743

2 unchanged sentences

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 Loss from continuing operations in our statement of operations by business segment (in thousands):

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

Travel Solutions Hospitality Solutions Corporate Total

6 unchanged sentences

Acquisition-related costs (5)

Litigation costs, net (6)

— — 1,579 1,579

Indirect tax matters (7)

— — 6,131 6,131

Stock-based compensation — — 12,230 12,230

10 unchanged sentences

Acquisition-related costs (5)

Litigation costs, net (6)

— — 1,579 1,579

Indirect tax matters (7)

— — 6,131 6,131

Stock-based compensation — — 12,230 12,230

3 unchanged sentences

Other, net (3)

Equity method income 469

Provision for income taxes (4,766)

Loss from continuing operations $ (69,485)

Three Months Ended June 30, 2023

Travel Solutions Hospitality Solutions Corporate Total

Adjusted Operating Income (Loss) $ 116,368 $ (2,037) $ (68,236) $ 46,095

Equity method income 459 — — 459

Acquisition-related amortization (2a)

— — 9,934 9,934

Restructuring and other costs (4)

— — 59,372 59,372

Acquisition-related costs (5)

Litigation costs, net (6)

— — 9,234 9,234

Stock-based compensation — — 8,738 8,738

Operating income (loss) $ 115,909 $ (2,037) $ (156,055) $ (42,183)

Adjusted EBITDA $ 136,641 $ 4,307 $ (67,899) $ 73,049

Depreciation and amortization of property and equipment (2b)

17,071 4,939 337 22,347

Amortization of capitalized implementation costs (2c)

3,202 1,405 — 4,607

Acquisition-related amortization (2a)

— — 9,934 9,934

Restructuring and other costs (4)

— — 59,372 59,372

Acquisition-related costs (5)

Litigation costs, net (6)

— — 9,234 9,234

Stock-based compensation — — 8,738 8,738

Equity method income 459 — — 459

Operating income (loss) $ 115,909 $ (2,037) $ (156,055) $ (42,183)

Interest expense, net (106,134)

Other, net (3)

Gain on extinguishment of debt 12,543

Equity method income 459

Provision for income taxes (5,909)

Loss from continuing operations $ (123,999)

Six Months Ended June 30, 2024

Travel Solutions Hospitality Solutions Corporate Total

Adjusted Operating Income (Loss) $ 333,426 $ 7,818 $ (116,486) $ 224,758

Equity method income 1,429 — — 1,429

Acquisition-related amortization (2a)

— — 19,242 19,242

Restructuring and other costs (4)

— — 10,439 10,439

Acquisition-related costs (5)

Litigation costs, net (6)

— — 1,579 1,579

Indirect tax matters (7)

— — 6,131 6,131

Stock-based compensation — — 26,135 26,135

Operating income (loss) $ 331,997 $ 7,818 $ (180,875) $ 158,940

Adjusted EBITDA $ 368,625 $ 18,442 $ (116,067) $ 271,000

Depreciation and amortization of property and equipment (2b)

28,759 7,662 419 36,840

Amortization of capitalized implementation costs (2c)

6,440 2,962 — 9,402

Acquisition-related amortization (2a)

— — 19,242 19,242

Restructuring and other costs (4)

— — 10,439 10,439

Acquisition-related costs (5)

Litigation costs, net (6)

— — 1,579 1,579

Indirect tax matters (7)

— — 6,131 6,131

Stock-based compensation — — 26,135 26,135

Equity method income 1,429 — — 1,429

Operating income (loss) $ 331,997 $ 7,818 $ (180,875) $ 158,940

Interest expense, net (254,041)

Other, net (3)

Loss on extinguishment of debt (37,994)

2 unchanged sentences

Loss from continuing operations $ (140,590)

Three Months Ended March 31, 2023

Six Months Ended June 30, 2023

Travel Solutions Hospitality Solutions Corporate Total

6 unchanged sentences

Acquisition-related costs (5)

— — 1,388 1,388

Litigation costs, net (6)

— — 9,234 9,234

Stock-based compensation — — 25,743 25,743

10 unchanged sentences

Acquisition-related costs (5)

— — 1,388 1,388

Litigation costs, net (6)

— — 9,234 9,234

Stock-based compensation — — 25,743 25,743

3 unchanged sentences

Other, net (3)

Gain on extinguishment of debt 12,543

Equity method income 882

2 unchanged sentences

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):

Three Months Ended March 31,

Six Months Ended June 30,

Cash used in operating activities $ (39,959) $ (99,188)

1 unchanged sentence

Cash provided by financing activities 54,124 70,360

Three Months Ended March 31,

Six Months Ended June 30,

Cash used in operating activities $ (39,959) $ (99,188)

8 unchanged sentences

(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 includes non-operating gains of $3 million recognized in the first quarter of 2023 and the impacts of fair value adjustments of our GBT investment in all periods presented.

(3) Other, net includes non-operating gains recognized in 2023 and the impacts of fair value adjustments of our GBT investment in all periods presented.

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 in 2024 primarily represents adjustments to charges associated with our cost reduction plan we began implementing in the second quarter of 2023.

(4) Restructuring and other costs in 2024 primarily represents charges and adjustments to charges associated with our cost reduction plan we began implementing in the second quarter of 2023.

Restructuring Activities to our consolidated financial statements.

(5) Acquisition-related costs represent fees and expenses incurred associated with acquisition and disposition-related activities.

(6) Litigation costs, net represent charges associated with antitrust litigation and other foreign non-income tax contingency matters.

Contingencies, to our consolidated financial statements.

(7) Indirect tax matters represents charges associated with certain digital tax matters, including a charge recorded as a result of newly adopted legislation in Canada.

(8) The tax impact of adjustments includes the tax effect of each separate adjustment based on the statutory tax rate for the jurisdiction(s) in which the adjustment was taxable or deductible, and the tax effect of items that relate to tax specific financial transactions, tax law changes, uncertain tax positions, valuation allowances and other items.

1 unchanged sentence

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

Three Months Ended March 31,

(Amounts in thousands)

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

2024 2023 2024 2023

(Amounts in thousands) (Amounts in thousands)

Revenue $ 767,241 $ 737,529 $ 1,550,127 $ 1,480,224

4 unchanged sentences

Interest expense, net (129,294) (106,134) (254,041) (205,918)

Loss on extinguishment of debt (37,994) —

(Loss) gain on extinguishment of debt — 12,543 (37,994) 12,543

Equity method income 469 459 1,429 882

3 unchanged sentences

Loss from continuing operations $ (69,485) $ (123,999) $ (140,590) $ (223,365)

Three Months Ended March 31, 2024 and 2023

Three Months Ended March 31,

Three Months Ended June 30, 2024 and 2023

Three Months Ended June 30,

2024 2023 Change

5 unchanged sentences

Total revenue $ 767,241 $ 737,529 $ 29,712 4 %

Travel Solutions— Revenue increased $36 million, or 5%, for the three months ended March 31, 2024 compared to the same period in the prior year, primarily due to:

Travel Solutions— Revenue increased $24 million, or 4%, for the three months ended June 30, 2024 compared to the same period in the prior year, primarily due to:

• a $20 million, or 4% increase in transaction-based distribution revenue primarily due to favorable rate impacts from travel supplier mix and a 1% increase in direct billable bookings to 91 million;

• a $4 million, or 3% increase in IT solutions revenue driven by an increase in other revenue and 5% growth in passengers boarded from existing partners, partially offset by a 7% decline in passengers boarded due to previously announced de-migrations.

Hospitality Solutions — Revenue increased $7 million, or 9%, for the three months ended June 30, 2024 compared to the same period in the prior year.

The increase was primarily driven by a $7 million increase in SynXis Software and Services revenue due to an increase in transaction volumes of 4% to 33 million driven by new customer deployments, and a favorable mix within our customer base.

Cost of revenue, excluding technology costs

Three Months Ended June 30,

2024 2023 Change

(Amounts in thousands)

Travel Solutions $ 288,426 $ 270,590 $ 17,836 7 %

Hospitality Solutions 37,833 37,136 697 2 %

Corporate 1,310 13,813 (12,503) (91) %

Depreciation and amortization 4,959 4,734 225 5 %

Eliminations (11,047) (9,903) (1,144) 12 %

Total cost of revenue, excluding technology costs $ 321,481 $ 316,370 $ 5,111 2 %

Travel Solutions— Cost of revenue, excluding technology costs, increased $18 million, or 7%, for the three months ended June 30, 2024 compared to the same period in the prior year.

The increase was primarily driven by a $21 million increase in incentive consideration due to an increase in rates due to travel agency mix and slightly higher transaction volume.

This increase was partially offset by a $3 million decrease in labor and professional services costs driven by our cost reduction plan.

Hospitality Solutions— Cost of revenue, excluding technology costs, increased $1 million, or 2% for the three months ended June 30, 2024 compared to the same period in the prior year primarily due to increased costs associated with increased transaction volumes.

Corporate— Cost of revenue, excluding technology costs, decreased $13 million, or 91%, for the three months ended June 30, 2024 compared to the same period in the prior year primarily due to a $12 million restructuring charge associated with the reduction of our workforce recognized in the previous year.

Technology Costs

Three Months Ended June 30,

2024 2023 Change

(Amounts in thousands)

Travel Solutions $ 176,898 $ 226,026 $ (49,128) (22) %

Hospitality Solutions 25,786 28,087 (2,301) (8) %

Corporate 16,584 30,166 (13,582) (45) %

Total technology costs $ 219,268 $ 284,279 $ (65,011) (23) %

Travel Solutions— Technology costs decreased $49 million, or 22% for the three months ended June 30, 2024 compared to the same period in the prior year.

The decrease was primarily driven by a $26 million decrease in labor and professional services driven by our cost reduction plan, a $19 million decrease in technology costs due to cost savings related to our cloud migrations and mainframe offloads, and a decrease in depreciation and amortization of $4 million primarily due to the completion of amortization of certain capitalized internal use software.

Hospitality Solutions— Technology costs decreased $2 million, or 8%, for the three months ended June 30, 2024 compared to the same period in the prior year primarily due to a $2 million decrease in labor and professional services driven by our cost reduction plan and a decrease in depreciation and amortization of $2 million due to the completion of amortization of certain capitalized internal use software.

These decreases were partially offset by a $2 million increase in technology costs to support growth in the business.

Corporate— Technology costs decreased $14 million, or 45%, for the three months ended June 30, 2024 compared to the same period in the prior year due to a $10 million decrease in restructuring costs associated with our cost reduction plan and a $3 million decrease in labor and professional services driven by our cost reduction plan.

Selling, General and Administrative Expenses

Three Months Ended June 30,

2024 2023 Change

(Amounts in thousands)

Travel Solutions $ 63,365 $ 54,905 $ 8,460 15 %

Hospitality Solutions 12,766 12,081 685 6 %

Corporate 89,506 112,077 (22,571) (20) %

Total selling, general and administrative expenses $ 165,637 $ 179,063 $ (13,426) (7) %

Travel Solutions— Selling, general and administrative expenses increased $8 million, or 15%, for the three months ended June 30, 2024 compared to the same period in the prior year due to a $3 million increase in labor and professional services, a $3 million increase in other ongoing business expenses and a $1 million increase in legal costs.

Corporate— Selling, general and administrative expenses decreased $23 million, or 20%, for the three months ended June 30, 2024 compared to the same period in the prior year.

The decrease was primarily driven by a $19 million decrease in restructuring costs associated with our cost reduction plan, an $8 million decrease due to a tax litigation matter accrued in the prior year, a $3 million decrease in costs associated with our internal business systems, and a $2 million decrease in labor and professional services driven by our cost reduction plan.

These decreases were partially offset by a $5 million increase in digital services tax as a result of recently enacted legislation in Canada, which was retroactive to 2022 and a $4 million increase in stock-based compensation primarily due to forfeitures of unvested shares in the prior period.

Interest expense, net

Three Months Ended June 30,

2024 2023 Change

(Amounts in thousands)

Interest expense, net $ 129,294 $ 106,134 $ 23,160 22 %

Interest expense increased $23 million, or 22%, during the three months ended June 30, 2024 compared to the same period in the prior year primarily due to additional interest incurred in connection with the financing activities that have occurred since the prior year period.

Debt for further details regarding these debt transactions.

Gain on extinguishment of debt

We recognized a gain on extinguishment of debt of $13 million for the three months ended June 30, 2023 as a result of the refinancing activity that occurred in the second quarter of 2023.

Debt for further details.

Three Months Ended June 30,

2024 2023 Change

(Amounts in thousands)

Other, net $ (3,251) $ (17,225) $ 13,974 (81) %

Other, net increased $14 million for the three months ended June 30, 2024 compared to the same period in the prior year primarily due to other non-operating gains recognized in the prior period of $12 million and a $3 million increase due to realized and unrealized foreign currency exchange losses in the current period.

Provision for Income Taxes

Three Months Ended June 30,

2024 2023 Change

(Amounts in thousands)

Provision for income taxes $ 4,766 $ 5,909 $ (1,143) (19) %

For the three months ended June 30, 2024, we recognized $5 million of income tax expense, representing an effective tax rate of less than 1%, compared to an income tax expense of $6 million, representing an effective tax rate of less than 1% for the three months ended June 30, 2023.

The effective tax rate decreased for the three months ended June 30, 2024 as compared to the same period in 2023 primarily due to the change in the geographic mix of taxable income 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, 2024 and 2023

Six Months Ended June 30,

2024 2023 Change

(Amounts in thousands)

Travel Solutions $ 1,408,683 $ 1,348,202 $ 60,481 4 %

Hospitality Solutions 162,057 150,483 11,574 8 %

Total segment revenue 1,570,740 1,498,685 72,055 5 %

Eliminations (20,613) (18,461) (2,152) 12 %

Total revenue $ 1,550,127 $ 1,480,224 $ 69,903 5 %

Travel Solutions— Revenue increased $60 million, or 4%, for the six months ended June 30, 2024 compared to the same period in the prior year, primarily due to:

• a $67 million, or 6%, increase in transaction-based distribution revenue due to favorable rate impacts from improved international and corporate bookings and a 1% increase in direct billable bookings to 189 million;

• a $6 million or 2%, decrease in IT solutions revenue driven by a $28 million decline in revenue from customers that have de-migrated from our systems, including the impact of termination fees from a certain carrier in the prior year.

These decreases were partially offset by a $5 million increase in license fee revenue, an increase of $3 million due to a 2% increase in passengers boarded to 168 million and a $3 million increase in other revenue.

Hospitality Solutions — Revenue increased $5 million, or 7%, for the three months ended March 31, 2024 compared to the same period in the prior year.

This decrease was partially offset by an increase of $7 million due to volume growth, excluding the impact of customers that have de-migrated, a $4 million increase in license fee revenue, a $4 million increase in revenue recognized due to changes in facts and circumstances associated with certain carriers, and a $7 million increase in other revenue.

Hospitality Solutions— Revenue increased $12 million, or 8%, for the six months ended June 30, 2024 compared to the same period in the prior year.

The increase was primarily driven by a $13 million increase in SynXis Software and Services revenue due to an increase in transaction volumes of 4% to 62 million driven by new customer deployments, and a favorable mix within our customer base.

1 unchanged sentence

Cost of revenue, excluding technology costs

Three Months Ended March 31,

Six Months Ended June 30,

2024 2023 Change

2 unchanged sentences

Hospitality Solutions 74,392 74,193 199 — %

Eliminations (9,566) (8,558) (1,008) 12 %

Corporate 1,357 15,365 (14,008) (91) %

Depreciation and amortization 10,163 14,298 (4,135) (29) %

Eliminations (20,613) (18,461) (2,152) 12 %

Total cost of revenue, excluding technology costs $ 642,575 $ 623,412 $ 19,163 3 %

Travel Solutions— Cost of revenue, excluding technology costs, increased $21 million, or 8%, for the three months ended March 31, 2024 compared to the same period in the prior year.

The increase was primarily driven by a $23 million increase in incentive consideration due to an increase in rates and higher transaction volume.

This increase was partially offset by a $2 million decrease in labor and professional services costs driven by our cost reduction plan.

Hospitality Solutions— Cost of revenue, excluding technology costs, declined slightly for the three months ended March 31, 2024 compared to the same period in the prior year.

A $2 million decrease in labor and professional services costs driven by our cost reduction plan was partially offset by a $1 million increase in costs associated with increased transaction volumes and the mix of our transactions across our distribution channels.

Corporate— Cost of revenue, excluding technology costs, decreased $2 million, or 97%, for the three months ended March 31, 2024 compared to the same period in the prior year primarily due to a decrease in labor and professional services.

Depreciation and Amortization— Cost of revenue, excluding technology costs, decreased $4 million, or 46%, for the three months ended March 31, 2024 primarily due to the acceleration of amortization of certain customer implementation costs in the prior year, in connection with a customer de-migrating from our systems.

Travel Solutions— Cost of revenue, excluding technology costs , increased $39 million, or 7%, fo r the six months ended June 30, 2024 compared to the same period in the prior year.

The increase was primarily driven by a $44 million increase in incentive consideration due to an increase in rates as well as higher transaction volume.

This increase was partially offset by a $6 million decrease in labor and professional services costs primarily due to our cost reduction plan.

Hospitality Solutions— Cost of revenue, excluding technology costs, remained flat for the six months ended June 30, 2024 compared to the same period in the prior year.

Increased costs associated with increased transaction volumes and the mix of our transactions across our distribution channels were offset by a $2 million decrease in labor and professional services costs driven by our cost reduction plan.

Corporate— Cost of revenue, excluding technology costs , decreased $14 million, or 91%, for the six months ended June 30, 2024 primarily due to a $12 million restructuring charge associated with the reduction of our workforce recognized in the previous year and a $2 million decrease in labor and professional services driven by our cost reduction plan.

Depreciation and Amortization— Cost of revenue, excluding technolo gy costs, decreased $4 million, or 29%, for the six months ended June 30, 2024 primarily due to the acceleration of amortization of certain customer implementation costs in the prior year, in connection with a customer de-migrating from our systems .

Technology Costs

Three Months Ended March 31,

Six Months Ended June 30,

2024 2023 Change

4 unchanged sentences

Total technology costs $ 441,559 $ 555,717 $ (114,158) (21) %

Travel Solutions— Technology costs decreased $44 million, or 19% for the three months ended March 31, 2024 compared to the same period in the prior year.

The decrease was primarily driven by a $29 million decrease in labor and professional services driven by our cost reduction plan, a $14 million decrease in technology costs due to cost savings related to our mainframe offloads and data migrations, and a decrease in depreciation and amortization of $2 million primarily due to the completion of amortization of certain capitalized internal use software.

Hospitality Solutions— Technology costs decreased $4 million, or 14%, for the three months ended March 31, 2024 compared to the same period in the prior year primarily due to a $5 million decrease in labor and professional services driven by our cost reduction plan.

Travel Solutions— Technology costs decreased $94 million, or 20%, for the six months ended June 30, 2024 compared to the same period in the prior year.

The decrease was primarily driven by a $56 million decrease in labor and professional services driven by our cost reduction plan, a $33 million decrease in technology costs due to cost savings related to our cloud migrations and mainframe offloads, and a $6 million decrease in depreciation and amortization primarily due to the completion of amortization of certain capitalized internal use software.

Hospitality Solutions— Technology costs decreased $6 million, or 11%, for the six months ended June 30, 2024 compared to the same period in the prior year primarily due to a $7 million decrease in labor and professional services driven by our cost reduction plan.

This decrease was partially offset by a $2 million increase in technology costs to support growth in the business.

Corporate— Technology costs decreased $1 million, or 7%, for the three months ended March 31, 2024 compared to the same period in the prior year due to $1 million decrease in stock-based compensation primarily due to forfeitures of unvested shares.

Corporate— Technology costs decreased $14 million, or 37%, for the six months ended June 30, 2024 compared to the same period in the prior year due to an $11 million decrease in restructuring costs associated with our cost reduction plan, a $1 million decrease in stock-based compensation primarily due to forfeitures of unvested shares, and a $1 million decrease in labor and professional services driven by our cost reduction plan.

Selling, General and Administrative Expenses

Three Months Ended March 31,

Six Months Ended June 30,

2024 2023 Change

4 unchanged sentences

Total selling, general and administrative expenses $ 307,053 $ 343,491 $ (36,438) (11) %

Travel Solutions— Selling, general and administrative expenses decreased $15 million, or 19%, for the three months ended March 31, 2024 compared to the same period in the prior year due to a $10 million decrease in labor and professional services primarily driven by our cost reduction plan, a $3 million decrease in legal costs, and a $2 million decrease in the provision for credit losses.

Hospitality Solutions— Selling, general and administrative expenses decreased $2 million, or 11%, for the three months ended March 31, 2024 compared to the prior year primarily due to a $2 million decrease in the provision for credit losses and a $1 million decrease in labor and professional services driven by our cost reduction plan.

Corporate— Selling, general and administrative expenses decreased $6 million, or 9%, for the three months ended March 31, 2024 compared to the same period in the prior year.

The decrease was primarily driven by a $5 million decrease in labor and professional services driven by our cost reduction plan, a $4 million decrease due to the reversal of severance cost accruals associated with our cost reduction plan and a $2 million decrease in stock-based compensation primarily due to forfeitures of unvested shares.

These decreases were partially offset by a $2 million increase in technology costs and a $2 million increase associated with other ongoing business expenses.

Travel Solutions— Selling, general and administrative expenses decreased $7 million, or 5%, for the six months ended June 30, 2024 compared to the same period in the prior year primarily due to a $6 million decrease in labor and professional services primarily driven by our cost reduction plan, a $2 million decrease in legal costs, and a $2 million decrease in the provision for credit losses.

These decreases were partially offset by a $2 million increase in other ongoing business expenses.

Hospitality Solutions— Selling, general and administrative expenses decreased $1 million, or 3%, for the six months ended June 30, 2024 compared to the same period in the prior year primarily due to a $2 million decrease in the provision for credit losses and a $1 million decrease in labor and professional services driven by our cost reduction plan.

Corporate— Selling, general and administrative expenses decreased $29 million, or 16%, for the six months ended June 30, 2024 compared to the same period in the prior year.

The decrease was primarily driven by a $22 million decrease in restructuring costs associated with our cost reduction plan, an $8 million decrease due to a tax litigation matter accrued in the prior year, an $8 million decrease in labor and professional services driven by our cost reduction plan, and a $1 million decrease in depreciation and amortization.

These decreases were partially offset by a $7 million increase in digital services tax as a result of recently enacted legislation in Canada, which was retroactive to 2022, and a $3 million increase in stock-based compensation primarily due to forfeitures of unvested shares in the prior year.

Interest expense, net

Three Months Ended March 31,

Six Months Ended June 30,

2024 2023 Change

1 unchanged sentence

Interest expense, net $ 254,041 $ 205,918 $ 48,123 23 %

Interest expense increased $25 million, or 25%, during the three months ended March 31, 2024 compared to the same period in the prior year primarily due to additional interest incurred in connection with the financing activities that have occurred since the prior year period.

Interest expense increased $48 million, or 23% during the six months ended June 30, 2024 compared to the same period in the prior year primarily due to additional interest incurred in connection with the financing activities that have occurred since the prior year period .

Debt for further details regarding these debt transactions.

Loss on extinguishment of debt

We recognized a loss on extinguishment of debt of $38 million for the three months ended March 31, 2024 as a result of the refinancing activity that occurred in the current quarter.

Loss/Gain on extinguishment of debt

We recognized a loss on extinguishment of debt of $38 million du ring the six months ended June 30, 2024 as a result of the refinancing activity that occurred in the first quarter of 2024 .

We recognized a gain on extinguishment of debt of $13 million during the six months ended June 30, 2023 as a result of the refinancing activity that occurred in the second quarter of 2023.

Debt for further details.

Three Months Ended March 31,

Six Months Ended June 30,

2024 2023 Change

1 unchanged sentence

Other, net $ 1,226 $ (19,632) $ 20,858 (106) %

Other, net increased $7 million for the three months ended March 31, 2024 compared to the same period in the prior year primarily due to a change in fair value of our investments in securities from a loss of $1 million in the prior year period to a loss of $3 million in the current year period and a $3 million increase due to other non-operating gains recognized in the first quarter of 2023.

Other, net increased $21 million for the six months ended June 30, 2024 compared to the same period in the prior year primarily due to a $15 million increase due to other non-operating gains recognized in the prior year, a $4 million increase due to realized and unrealized foreign currency exchange losses in the current period, and a change in fair value of our investments in securities from a gain of $4 million in the prior year period to a gain of $1 million in the current year period.

Fair Value Measurements for further details regarding our investments in securities.

Provision for Income Taxes

Three Months Ended March 31,

Six Months Ended June 30,

2024 2023 Change

1 unchanged sentence

Provision for income taxes $ 7,698 $ 8,108 $ (410) (5) %

For the three months ended March 31, 2024, we recognized $3 million of income tax expense, representing an effective tax rate of less than 1%, compared to an income tax expense of $2 million, representing an effective tax rate of less than 1% for the three months ended March 31, 2023.

While the total tax provision increased slightly, the effective tax rate decreased for the three months ended March 31, 2024 as compared to the same period in 2023 primarily due to the change in the geographic mix of taxable income and various discrete items recorded in each of the respective three month periods.

For the six months ended June 30, 2024, we recognized $8 million of income tax expense, representing an effective tax rate of less than 1%, compared to an income tax expense of $8 million, also representing an effective tax rate of less than 1% for the six months ended June 30, 2023.

The effective tax rate decreased for the six months ended June 30, 2024 as compared to the same period in 2023 primarily due to an increase in valuation allowance recorded in the current period and various discrete items recorded in each of the respective six month periods.

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

2 unchanged sentences

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

As of March 31, 2024 and December 31, 2023, our cash and cash equivalents and outstanding letters of credit were as follows (in thousands):

March 31, 2024 December 31, 2023

As of June 30, 2024 and December 31, 2023, our cash and cash equivalents and outstanding letters of credit were as follows (in thousands):

June 30, 2024 December 31, 2023

Cash and cash equivalents $ 612,614 $ 648,207

6 unchanged sentences

(1) AR Facility (as defined below) does not include the FILO Facility (as defined below).

As of March 31, 2024, we had $112 million outstanding under the AR Facility.

As of June 30, 2024, we had $94 million outstanding under the AR Facility.

The AR Facility matures on March 29, 2027 and allows us the ability to prepay the principal amount prior to the maturity date without penalty.

3 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 March 31, 2024 and December 31, 2023.

We had $21 million held as cash collateral for standby letters of credit in restricted cash on our consolidated balance sheets as of March 31, 2024 and December 31, 2023.

We held no short-term investments as of June 30, 2024 and December 31, 2023.

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, 2024 and December 31, 2023.

Liquidity Outlook

We have experienced continued material headwinds within our consolidated financial results for 2023 and through the first quarter of 2024.

We have experienced continued material headwinds within our consolidated financial results for 2023 and through the second quarter of 2024.

These changes have had, and we believe they will continue to have, a material negative impact on our financial results and liquidity, and this negative impact may continue.

2 unchanged sentences

During the first quarter of 2024, we refinanced and extended the maturity on approximately $300 million of our debt, which negatively impacted our results due to increasing interest rates, but increased our overall liquidity by approximately $70 million.

We expect to repay our remaining 2025 debt maturities with cash from our balance sheet.

In the second quarter of 2023, we began implementing a cost reduction plan designed to reposition our business to the current environment and to structurally reduce our cost base.

1 unchanged sentence

We will continue to monitor our liquidity levels and take additional steps should we determine they are necessary.

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 and service our debt and other long-term liabilities.

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, service our debt as it becomes due, and pay other long-term liabilities.

Free cash flow is calculated as cash flow from operations reduced by additions to property and equipment.

9 unchanged sentences

We expect to continue to benefit from our NOLs and certain tax credits in the near-term beyond 2024.

Additionally, several countries, primarily Canada and in Europe, have proposed or adopted taxes on revenue earned by multinational companies from the provision of certain digital services, such as the use of an online marketplace, regardless of physical presence.

These regulations have generally been labeled as a digital services tax (“DST”).

Rates for DST we incur range from 1.5% to 3% of revenue earned in these jurisdictions.

We record DST in selling, general and administrative costs in the consolidated statements of operations.

During the second quarter of 2024, we recorded $8 million of DST related to recently enacted legislation in Canada, of which $6 million was retroactive to periods prior to 2024.

These amounts will become due in the second quarter of 2025.

Capital Resources

As of March 31, 2024, our outstanding debt totaled $5.0 billion, which is net of debt issuance costs and unamortized discounts of $133 million.

As of June 30, 2024, our outstanding debt totaled $5.0 billion, which is net of debt issuance costs and unamortized discounts of $126 million.

Currently approximately 42% of our debt, net of cash and hedging impacts from interest rates swaps, is variable and impacted by changes in interest rates.

1 unchanged sentence

See “Risk Factors—We are exposed to interest rate fluctuations." In the future, 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.

The global capital markets experienced periods of volatility throughout 2023 and through the first quarter of 2024, in response to the geopolitical conflict, increases in the rate of inflation, and uncertainty regarding the path of U.S.

The global capital markets experienced periods of volatility throughout 2023 and through the second quarter of 2024, in response to the geopolitical conflict, increases in the rate of inflation, and uncertainty regarding the path of U.S.

monetary policy.

3 unchanged sentences

In addition, from time to time, we may decide to repurchase or otherwise retire portions of our existing indebtedness through transactions in the open market, privately negotiated transactions, tender offers, exchange offers or otherwise, or we may redeem or prepay portions of our existing indebtedness.

Any such action will depend on market conditions and various other factors existing at that time.

Any such action

will depend on market conditions and various other factors existing at that time.

Furthermore, we may be required to pay US Airways' reasonable attorneys' fees and costs related to that antitrust litigation.

13 unchanged sentences

In addition, the 2023 Term Loan Agreement contains customary prepayment events and financial and negative covenants and other representations, covenants and events of default based on, but in certain instances more restrictive than, the Amended and Restated Credit Agreement.

As of March 31, 2024, we were in compliance with all covenants under the terms of the Amended and Restated Credit Agreement, the Securitization Facility and the 2023 Term Loan Agreement.

As of June 30, 2024, we were in compliance with all covenants under the terms of the Amended and Restated Credit Agreement, the Securitization Facility, the 2023 Term Loan Agreement and the Pari Passu Loan Agreement.

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

This percentage requirement may decrease or be eliminated if certain leverage ratios are achieved.

Based on our results for the year ended December 31, 2022, we were not required to make an excess cash flow

payment in 2023, and no excess cash flow payment is required in 2024 with respect to our results for the year ended December 31, 2023.

Based on our results for the year ended December 31, 2022, we were not required to make an excess cash flow payment in 2023, and no excess cash flow payment is required in 2024 with respect to our results for the year ended December 31, 2023.

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

15 unchanged sentences

We incurred additional fees of $15 million, plus $10 million of accrued and unpaid interest on the 9.25% Senior Secured Notes, which were funded with cash on hand.

We recognized a net gain on extinguishment of debt in connection with the June 2023 Refinancing during the year ended December 31, 2023 of $13 million.

As of March 31, 2024, we are in compliance with the covenants under the 2023 Term Loan Agreement and the Pari Passu Loan Agreement.

We recognized a net gain on extinguishment of debt in connection with the June 2023 Refinancing during the six months ended June 30, 2023 of $13 million.

On September 7, 2023, Sabre GLBL completed exchange offers in which approximately $787 million of our 7.375% senior secured notes due 2025 (the “September 2025 Notes”) and approximately $66 million of our 9.25% senior secured notes due 2025 (the “April 2025 Notes”) were exchanged for a combination of cash and approximately $853 million aggregate principal amount of 8.625% senior secured notes due 2027 (the “June 2027 Notes”), issued at par (the “September 2023 Exchange Transaction”).

9 unchanged sentences

We incurred additional fees of approximately $1 million, which were funded with cash on hand.

We determined that the March 2024 Exchange Transaction, including the impact of the exchange fees, represents a debt extinguishment and therefore recognized a loss on extinguishment of debt during the three months ended March 31, 2024 of approximately $7 million, primarily consisting of exchange fees related to the June 2027 Notes.

We determined that the March 2024 Exchange Transaction, including the impact of the exchange fees, represents a debt extinguishment and therefore recognized a loss on extinguishment of debt during the six months ended June 30, 2024 of approximately $7 million, primarily consisting of exchange fees related to the June 2027 Notes.

Exchangeable Notes

2 unchanged sentences

We determined that the exchange transaction, including the impact of the exchange fees, represents a debt extinguishment and therefore recognized a loss on extinguishment of debt of $31 million.

We did not receive any cash proceeds from the exchange and did not incur additional

indebtedness in excess of the aggregate principal amount of existing notes that were exchanged.

We did not receive any cash proceeds from the exchange and did not incur additional indebtedness in excess of the aggregate principal amount of existing notes that were exchanged.

The 2026 Exchangeable Notes are senior, unsecured obligations of Sabre GLBL, accrue interest payable semi-annually in arrears on February 1 and August 1 of each year, beginning on August 1 2024, and mature on August 1, 2026, unless earlier repurchased or exchanged in accordance with specified circumstances and terms of the indenture governing the 2026 Exchangeable Notes (the "2026 Exchangeable Notes Indenture" and together with the 2025 Exchangeable Notes Indenture, the "Exchangeable Indentures" ).

As of March 31, 2024, we have $150 million aggregate principal amount of 2026 Exchangeable Notes outstanding.

As of June 30, 2024 , we have $150 million aggregate principal amount of 2026 Exchangeable Notes outstanding.

Securitization Facility

6 unchanged sentences

The amount available for borrowings at any one time under the Securitization Facility is limited to a borrowing base calculated based on the outstanding balance of eligible receivables, subject to certain reserves.

As of March 31, 2024, we had $232 million outstanding under the Securitization Facility, consisting of $112 million under the AR Facility and $120 million outstanding under the FILO Facility.

As of June 30, 2024 , we had $214 million outstanding under the Securitization Facility, consisting of $94 million under the AR Facility and $120 million outstanding under the FILO Facility.

The Preferred Stock accumulated cumulative dividends at a rate per annum equal to 6.50% payable, at our election, in cash, shares of our common stock or a combination of cash and shares of our common stock.

We accrued $5 million of preferred stock dividends in our consolidated results of operations for the three months ended March 31, 2023.

During the three months ended March 31, 2023, we paid cash dividends on our preferred stock of $5 million.

We accrued $5 million and $11 million of preferred stock dividends in our consolidated results of operations for the three and six months ended June 30, 2023.

During the three and six months ended June 30, 2023, we paid cash dividends on our preferred stock of $5 million and $11 million.

On September 1, 2023, the mandatory conversion date, each outstanding share of Preferred Stock was automatically converted into shares of our common stock.

3 unchanged sentences

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

During the three months ended March 31, 2024, we did not repurchase any shares pursuant to the Share Repurchase Program.

During the six months ended June 30, 2024, 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.

As of March 31, 2024, the Share Repurchase Program remains suspended and approximately $287 million remains authorized for repurchases.

As of June 30, 2024, the Share Repurchase Program remains suspended and approximately $287 million remains authorized for repurchases.

In addition, the terms of certain of the agreements governing our indebtedness contain covenants that, among other things, limit our ability to repurchase our common stock.

2 unchanged sentences

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 March 31, 2024, we are in compliance with all covenants under the terms of the Amended and Restated Credit Agreement.

Three Months Ended March 31,

As of June 30, 2024, we are in compliance with all covenants under the terms of the Amended and Restated Credit Agreement.

Six Months Ended June 30,

(Amounts in thousands)

4 unchanged sentences

Effect of exchange rate changes on cash, cash equivalents and restricted cash (1,663) 1,554

(Decrease) increase in cash, cash equivalents and restricted cash $ (19,070) $ 22,187

Decrease in cash, cash equivalents and restricted cash $ (35,592) $ (88,739)

Operating Activities

Cash used in operating activities totaled $68 million for the three months ended March 31, 2024.

The $4 million increase in operating cash flow from the same period in the prior year was primarily due to increased transaction volumes, partially offset by a $13 million increase in interest payments related to our debt and $5 million of severance payments made in connection with our cost reduction plan.

Cash used in operating activities totaled $40 million for the six months ended June 30, 2024.

The $59 million increase in operating cash flow from the same period in the prior year was primarily due to revenue growth from favorable rate impacts from travel supplier mix and an increase in global hotel and other travel bookings, as well as the impacts of our cost reduction plans and technology transformation efforts, which have improved our profitability and cash, a $33 million decrease in interest payments related to our debt, primarily due to the deferral of paid-in-kind interest and a $15 million decrease in severance payments made in connection with our cost reduction plan.

These changes were partially offset by payments of $17 million associated primarily with employee retention plans.

Investing Activities

For the three months ended March 31, 2024, we used $28 million of cash for capital expenditures primarily related to software developed for internal use and acquired software licenses associated with our internal billing systems.

For the three months ended March 31, 2023, we used $18 million of cash for capital expenditures primarily related to software developed for internal use.

For the six months ended June 30, 2024, we used $48 million of cash for capital expenditures primarily related to software developed for internal use and acquired software licenses associated with our internal billing systems.

For the six months ended June 30, 2023, we used $48 million of cash for capital expenditures primarily related to software developed for internal use and $13 million for acquisition-related activity.

Financing Activities

For the three months ended March 31, 2024, financing activities provided $78 million.

For the six months ended June 30, 2024, financing activities provided $54 million.

Significant highlights of our financing activities include:

5 unchanged sentences

• payment of $36 million on our September 2025 Notes and $7 million on our April 2025 Notes;

• net payment of $16 million on borrowings on our AR Facility;

• net payments of $6 million from the settlement of employee stock-option awards.

For the six months ended June 30, 2023, financing activities provided $70 million.

Significant highlights of our financing activities include:

• proceeds of $677 million from the issuance of the Senior Secured Term Loan Due 2028;

• payment of $665 million on our 9.25% senior secured notes due 2025, 2021 Term Loan B-1, 2021 Term Loan B-2 and 2022 Term Loan B-2;

• net proceeds of $130 million from borrowings on our AR Facility;

• payment of $54 million on our term loans under the Amended and Restated Credit Agreement, $48 million of which is a prepayment from the sale of our AirCentre portfolio in 2022;

• payment of $23 million for debt discount and issuance costs;

• proceeds of $16 million from the sale of our common shares of the direct parent of Conferma;

• payment of $11 million in dividends on our then outstanding preferred stock;

• net payments of $6 million from the settlement of employee stock-option awards.

For the three months ended March 31, 2023, financing activities provide d $112 million.

Sig nificant highlights of our financing activities include:

• proceeds of $115 million from borrowings on our AR Facility;

• proceeds of $16 million from the sale of common shares of a subsidiary;

• payment o f $6 million o n our term loans;

• payment of $2 million f or debt discount and issuance costs;

• net payme nts of $5 million fro m the settlement of employee stock-option awards;

• payment o f $5 million in dividends on our then-outstanding preferred stock.

Contractual Obligations

There were no material changes to our future minimum contractual obligations since December 31, 2023 as previously disclosed in our Annual Report on Form 10-K filed with the SEC on February 15, 2024, other than impacts of the March 2024 Exchange Transaction, 2026 Exchangeable Notes, and the Securitization Facility.

We had no off balance sheet arrangements during the three months ended March 31, 2024 and year ended December 31, 2023.

We had no off balance sheet arrangements during the six months ended June 30, 2024 and year ended December 31, 2023.

Recent Accounting Pronouncements

10 unchanged sentences

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