Sabre reported revenue of $882m versus Street at $864m (+2%) and FCF of $149m versus Street of $147m. The company guided full year 2018 revenue of $3.72b at the midpoint, ahead of Street of $3.71b, but factoring the $40m negative impact from ASC606, like for like guidance of $3.77b, or +1.4% ahead of Street. The company also guided 2018 FCF to $390m, up 8% y/y, above Street at $372m.
One note on FCF: the company’s reported $149m of FCF contemplates a ~$60m TRA payment. We were not at all thinking that the company would make a second payment in 2017 (had paid $99m in January), and we appreciate management shifting recognition of those payments into OCF rather than prior practice of showing it below the capex line, buried in investing cash flow. We think the 2x change is an improvement in disclosure but also shows the strength of cash flows and management’s confidence to get ahead of a payment. On the flip side, investors may argue that forward FCF guidance benefits from a lower TRA payment, but we have to wait for future guidance to understand if that is in fact true.
