• Global ‘Black Hole’ Risk Rising: A Discussion With Danielle DiMartino Booth

    Former Fed advisor Danielle DiMartino Booth will discuss key economic developments and the outlook for Fed rate cuts with Hedgeye CEO Keith McCullough.

Takeaway: Plus, October Data Much Better Than Seasonal

Sabre is spending $360m to acquire a leader in NDC with $40m of revenue in 2018. This is what happens when a company stops a stupid buyback, gets lucky with TRA restructuring, focuses on capex reduction and OCF improvement, and makes forward thinking acquisitions instead of CYA revenue stopgaps.

About Farelogix:

  • Backed by Sandler Capital, last round appears to be $10m in 2005
  • More than 1/3rd of the 21 airlines that have made commitments to push 20% of their volume through NDC capable APIs by 2020 are supported by Farelogix, and more importantly, that list includes the majority of the volume so far including Lufthansa, Qantas, American, United, and Emirates
  • Headcount has grown from 124 in 2014 to 161 in 2016 to 228 today

Re October Data – puts 4Q on track for ~in-line revenue:

  • Monthly transactions y/y went from +3% in September to +5% in October
  • Rolling 12-month transactions y/y still decelerated from 4.9% in September to 4.7% in October, but the slope of decel was better than if the normal course of seasonality had played out
  • We are still below Street on 1Q19 revenue and will wait for more 4Q data before changing estimates

No change to our view: SABR is a company making all the right moves, turning a legacy software platform into a forward thinking, modern technology company, and in the process putting itself in position to even the competitive field (or better) with giant Amadeus. We are temporarily on the sidelines while cyclical comparisons get adjusted into Street estimates so that Sabre can return to beat & raise dynamics.  

Sabre is hosting a call at 11am to discuss today’s acquisition. We will be back with more if need be.

Please call or e-mail with any questions.

Ami Joseph

Managing Director

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Yosef Vaitsblit

Analyst

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