Sabre Corp

Previous wording

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 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. Passengers boarded for IT solutions has been negatively impacted by recent customer de-migrations, which has been partially offset by customer growth.

Current wording

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 third 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. Passengers boarded for IT solutions has been negatively impacted by recent customer de-migrations, which has been partially offset by customer growth.

Previous wording

During the second quarter of 2023, we announced and began to implement a cost reduction plan designed to reposition our business and structurally reduce our cost base. As a result of this cost reduction plan, we incurred restructuring costs beginning in the second quarter of 2023 associated with our workforce. 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$82 million in connection with this business 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.

Current wording

During the second quarter of 2023, we announced and began to implement a cost reduction plan designed to reposition our business and structurally reduce our cost base. As a result of this cost reduction plan, we incurred restructuring costs beginning in the second quarter of 2023 associated with our workforce. 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$81 million in connection with this business 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.

Previous wording

We believe that we have resources to sufficiently fund our liquidity requirements over at least the next twelve months; however, given the uncertain economic environment and the leveling off of industry air distribution volume growth, we will continue to monitor our liquidity levels and take additional steps should we determine they are necessary. See “—Recent Events Impacting Our Liquidity and Capital Resources” and “—Senior Secured Credit Facilities.” During 2023 and the first quarter of 2024, we refinanced portions of our debt which resulted in higher interest rates than prior years, increasing our current and future interest expense. 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. Approximately 24% of our debt is variable, excluding the Senior Secured Term Loan due in 2028, where pricing is subject to the highest yield to maturity of Sabre GLBL secured debt as defined by the Reference Rate. See “Risk Factors—We are exposed to interest rate fluctuations.”

Current wording

We believe that we have resources to sufficiently fund our liquidity requirements over at least the next twelve months, including the payment of approximately $242 million of principal due at maturity under current debt facilities; however, given the uncertain economic environment and the leveling off of industry air distribution volume growth, we will continue to monitor our liquidity levels and take additional steps should we determine they are necessary. See “—Recent Events Impacting Our Liquidity and Capital Resources” and “—Senior Secured Credit Facilities.” During 2023 and the first quarter of 2024, we refinanced portions of our debt which resulted in higher interest rates than prior years, increasing our current and future interest expense. 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. Approximately 23% of our debt is variable, excluding the Senior Secured Term Loan due in 2028, where pricing is subject to the highest yield to maturity of Sabre GLBL secured debt as defined by the Reference Rate. See “Risk Factors—We are exposed to interest rate fluctuations.”

Previous wording

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.

Current wording

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, non-recoverable taxes, digital services taxes ("DST"), 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.

Previous wording

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.

Current wording

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, loss on extinguishment of debt, net, other, net, acquisition-related costs, litigation costs, net, indirect tax matters, stock-based compensation, and the tax impact of adjustments.

Previous wording

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, (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.

Current wording

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, net, acquisition-related costs, litigation costs, net, indirect tax matters, stock-based compensation and the remaining provision for income taxes.

Previous wording

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):

Current wording

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

Previous wording

(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.

Current wording

(3) Other, net includes non-operating gains recognized in 2023 and the impacts of realized and unrealized gains and losses from our investments in securities 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.

Previous wording

(6) Litigation costs, net represent charges associated with antitrust litigation and other foreign non-income tax contingency matters. See Note 13. Contingencies, to our consolidated financial statements.

Current wording

(7) Indirect tax matters represents charges associated with certain DST related to historical periods and certain foreign non-income tax litigation matters. See Note 13. Contingencies, to our consolidated financial statements.

Previous wording

•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; and

Current wording

•a $26 million, or 5% increase in transaction-based distribution revenue primarily due to a 4% increase in direct billable bookings to 93 million and favorable rate impacts from travel supplier mix; partially offset by,

Previous wording

•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.

Current wording

•a $7 million, or 5% decrease in IT solutions revenue driven by the impact of de-migrations, partially offset by the growth in passengers boarded from existing partners and other revenue.

Previous wording

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.

Current wording

Hospitality Solutions—Revenue increased $5 million, or 7%, for the three months ended September 30, 2024 compared to the same period in the prior year. The increase was primarily driven by a $6 million increase in SynXis Software and Services revenue due to a favorable mix within our customer base and an increase in transaction volumes of 2% to 35 million driven by new customer deployments.

Previous wording

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.

Current wording

Travel Solutions—Cost of revenue, excluding technology costs, increased $30 million, or 12%, for the three months ended September 30, 2024 compared to the same period in the prior year. The increase was primarily driven by a $27 million increase in incentive consideration due to higher transaction volume and an increase in rates due to travel agency mix and a $3 million increase in labor and professional services costs driven by the growth of our business.

Previous wording

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.

Current wording

Hospitality Solutions—Cost of revenue, excluding technology costs, decreased $1 million, or 2% for the three months ended September 30, 2024 compared to the same period in the prior year primarily due to favorable revenue mix.

Previous wording

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.

Current wording

Travel Solutions—Technology costs decreased $32 million, or 15% for the three months ended September 30, 2024 compared to the same period in the prior year. The decrease was primarily driven by a $19 million decrease in technology costs due to cost savings related to our cloud migrations, an $11 million decrease in labor and professional services driven by our cost reduction plan and a decrease in depreciation and amortization of $2 million primarily due to the completion of amortization of certain capitalized internal use software.

Previous wording

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.

Current wording

Travel Solutions—Selling, general and administrative expenses increased $1 million, or 2%, for the three months ended September 30, 2024 compared to the same period in the prior year due to a $5 million increase in labor and professional services, offset by a $2 million decrease in the provision for credit losses and a $1 million decrease in other ongoing business expenses.

Previous wording

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

Current wording

Interest expense increased $8 million, or 7%, during the three months ended September 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. See Note 7. Debt for further details regarding these debt transactions.

Previous wording

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. See Note 7. Debt for further details.

Current wording

We recognized a loss on extinguishment of debt of $121 million for the three months ended September 30, 2023 as a result of the financing activity that occurred in the third quarter of 2023. See Note 7. Debt for further details.

Previous wording

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.

Current wording

Other, net decreased $12 million for the three months ended September 30, 2024 compared to the same period in the prior year primarily due to changes in realized and unrealized gains and losses from our investments in securities from a loss of $14 million in the prior year period to a gain of $2 million in the current year period, offset by a $3 million increase due to realized and unrealized foreign currency exchange losses in the current period. See Note 9. Fair Value Measurements for further details regarding our investments in securities.

Previous wording

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.

Current wording

For the three months ended September 30, 2024, we recognized $7 million of income tax expense, representing an effective tax rate of less than 1%, compared to an income tax expense of $8 million, representing an effective tax rate of less than 1% for the three months ended September 30, 2023. The effective tax rate decreased for the three months ended September 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.

Previous wording

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:

Current wording

Travel Solutions—Revenue increased $80 million, or 4%, for the nine months ended September 30, 2024 compared to the same period in the prior year, primarily due to:

Previous wording

•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; and

Current wording

•a $93 million, or 6%, increase in transaction-based distribution revenue due to favorable rate impacts from improved international and corporate bookings and a 2% increase in direct billable bookings to 282 million; partially offset by,

Previous wording

•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. 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.

Current wording

•a $13 million or 3%, decrease in IT solutions revenue driven by a $33 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 and a $3 million decrease in other revenue. This decrease was partially offset by an increase of $14 million due to volume growth, excluding the impact of customers that have de-migrated, a $5 million increase in license fee revenue, and a $4 million increase in revenue recognized due to changes in facts and circumstances associated with certain carriers.

Previous wording

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. This increase was partially offset by a $1 million decrease in DX revenue.

Current wording

Hospitality Solutions—Revenue increased $17 million, or 7%, for the nine months ended September 30, 2024 compared to the same period in the prior year. The increase was primarily driven by a $19 million increase in SynXis Software and Services revenue due to an increase in transaction volumes of 4% to 97 million driven by new customer deployments, and a favorable mix within our customer base.

Previous wording

Travel Solutions—Cost of revenue, excluding technology costs, increased $39 million, or 7%, for 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.

Current wording

Travel Solutions—Cost of revenue, excluding technology costs, increased $69 million, or 9%, for the nine months ended September 30, 2024 compared to the same period in the prior year. The increase was primarily driven by a $71 million increase in incentive consideration due to an increase in rates as well as higher transaction volume. This increase was partially offset by a $4 million decrease in labor and professional services costs primarily due to our cost reduction plan.

Previous wording

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.

Current wording

Hospitality Solutions—Cost of revenue, excluding technology costs, decreased $1 million for the nine months ended September 30, 2024 compared to the same period in the prior year. A $1 million decrease in labor and professional services costs driven by our cost reduction plan was partially offset by increased costs associated with increased transaction volumes and the mix of our revenue transactions.

Previous wording

Corporate—Cost of revenue, excluding technology costs, decreased $14 million, or 91%, forthe 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.

Current wording

Corporate—Cost of revenue, excluding technology costs, decreased $15 million, or 87%, forthe nine months ended September 30, 2024 primarily due to a $12 million restructuring charge associated with the reduction of our workforce recognized in the previous year and a $3 million decrease in labor and professional services driven by our cost reduction plan.

Previous wording

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

Current wording

Depreciation and Amortization—Cost of revenue, excluding technology costs, decreased $4 million, or 21%, for the nine months ended September 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.

Previous wording

Travel Solutions—Technology costs decreased $94 million, or 20%, for the six months ended June 30, 2024 compared tothe 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.

Current wording

Travel Solutions—Technology costs decreased $125 million, or 19%, for the nine months ended September 30, 2024 compared tothe same period in the prior year. The decrease was primarily driven by a $67 million decrease in labor and professional services driven by our cost reduction plan, a $52 million decrease in technology costs due to cost savings related to our cloud migrations and a $7 million decrease in depreciation and amortization primarily due to the completion of amortization of certain capitalized internal use software.

Previous wording

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.

Current wording

Hospitality Solutions—Technology costs decreased $6 million, or 8%, for the nine months ended September 30, 2024 compared to the same period in the prior year primarily due to a $6 million decrease in labor and professional services driven by our cost reduction plan, and a $4 million decrease in depreciation and amortization primarily due to the completion of amortization of certain capitalized internal use software. This decrease was partially offset by a $4 million increase in technology costs to support growth in the business.

Previous wording

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.

Current wording

Travel Solutions—Selling, general and administrative expenses decreased $5 million, or 3%, for the nine months ended September 30, 2024 compared to the same period in the prior year primarily due to a $3 million decrease in legal costs and a $3 million decrease in the provision for credit losses.

Previous wording

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.

Current wording

Corporate—Selling, general and administrative expenses decreased $21 million, or 8%, for the nine months ended September 30, 2024 compared to the same period in the prior year. The decrease was primarily driven by a $23 million decrease in restructuring costs associated with our cost reduction plan, a $7 million decrease in labor and professional services driven by our cost reduction plan, and a $2 million decrease in depreciation and amortization. These decreases were partially offset by a $7 million increase in indirect taxes, and a $3 million increase in stock-based compensation primarily due to forfeitures of unvested shares in the prior year.

Previous wording

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

Current wording

Interest expense increased $56 million, or 17% during the nine months ended September 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. See Note 7. Debt for further details regarding these debt transactions.

Previous wording

We recognized a loss on extinguishment of debtof$38 million during thesix 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. See Note 7. Debt for further details.

Current wording

We recognized a loss on extinguishment of debtof$38 million during thenine months ended September 30, 2024 as a result of the refinancing activity that occurred in the first quarter of 2024. We recognized a loss on extinguishment of debt of $109 million during the nine months ended September 30, 2023, including a loss on extinguishment of debt of $121 million as a result of the financing activity that occurred in the third quarter of 2023, partially offset by a gain on extinguishment of debt of $13 million as a result of the financing activity that occurred in the second quarter of 2023. See Note 7. Debt for further details.

Previous wording

Other, netincreased $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. See Note 9. Fair Value Measurements for further details regarding our investments in securities.

Current wording

Other, netincreased $8 million for the nine months ended September 30, 2024 compared to the same period in the prior year primarily due to a $16 million increase due to other non-operating gains recognized in the prior year and a $7 million increase due to realized and unrealized foreign currency exchange losses in the current period. This increase is partially offset by changes in realized and unrealized gains and losses from our investments in securities from a loss of $10 million in the prior year period to a gain of $3 million in the current year period. See Note 9. Fair Value Measurements for further details regarding our investments in securities.

Previous wording

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. 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.

Current wording

For the nine months ended September 30, 2024, we recognized $15 million of income tax expense, representing an effective tax rate of less than 1%, compared to an income tax expense of $17 million, also representing an effective tax rate of less than 1% for the nine months ended September 30, 2023. The effective tax rate decreased for the nine months ended September 30, 2024 as compared to the same period in 2023 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. 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.

Previous wording

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. See Note 7. Debt.

Current wording

As of September 30, 2024, we had$87 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. See Note 7. Debt.

Previous wording

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 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. Given the uncertain economic environment, we cannot provide assurance that the assumptions used to estimate our liquidity requirements will be accurate. 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.

Current wording

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 third 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. Given the uncertain economic environment, we cannot provide assurance that the assumptions used to estimate our liquidity requirements will be accurate. 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, including the payment of approximately $242 million of principal due at maturity under current debt facilities.

Previous wording

On an ongoing basis, we will evaluate and consider strategic acquisitions, divestitures, joint ventures, equity method investments, refinancing our existing debt or repurchasing our outstanding debt obligations in open market or in privately negotiated transactions, as well as other transactions we believe may create stockholder value or enhance financial performance. 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.

Current wording

We have regularly evaluated and considered, and in the future we will continue to evaluate and consider, strategic acquisitions, divestitures, joint ventures, equity method investments, refinancing our existing debt or repurchasing our outstanding debt obligations in open market or in privately negotiated transactions, as well as other transactions we believe may create stockholder value or enhance financial performance. 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.

Previous wording

While our business has incurred net losses on a GAAP basis, we recognized federal taxable income in 2023 based on our operating and non-operating results along with provisions of the Tax Cuts and Jobs Act that limit interest expense deduction and the annual use of Net Operating Loss (“NOL”) carryforwards, and requires companies to capitalize and amortize research and development costs. As a result, we expect to be a U.S. federal cash taxpayer in 2024, and we also expect to benefit from the usage of NOLs in 2024 to the extent available. 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.

Current wording

While our business has incurred net losses on a GAAP basis, we recognized federal taxable income in 2023 based on our operating and non-operating results along with provisions of the Tax Cuts and Jobs Act that limit interest expense deduction and the annual use of Net Operating Loss (“NOL”) carryforwards, and requires companies to capitalize and amortize research and development costs. As a result, we expect to be a U.S. federal cash taxpayer in 2024, and we also expect to benefit from the usage of NOLs in 2024 to the extent available. 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 DST 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. Rates for DST we incur range from 1.5% to 7.5% 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. We are continuing to analyze the ongoing impacts of DST on our business in various jurisdictions and currently expect future DST expense to be lower than current periods, unless additional jurisdictions adopt DST with a retroactive date. In the third quarter of 2024, we increased our DST reserves further for additional jurisdictions that we believe are applicable; payment of these amounts may negatively impact our cash flow to the extent we are unable to recover the amounts from our customers, where allowed under our contracts.