DESP - Earnings call transcript Q1 2022

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Operator

Good morning, and welcome to Despegar's First Quarter 2022 Earnings Call. A slide presentation is accompanying today's webcast and is available in the Investors section of the company's website, www.investor.despegar.com. There will be an opportunity for you to ask questions at the end of today's presentation. This conference call is being recorded.

As a reminder, all participants will be in listen-only mode.

turn over to Ms. like I'd the to call Now Natalia Relations. Nirenberg, Investor ahead. go Please

Natalia Nirenberg

morning, joining for and today. Good thanks us everyone,

In or superior should addition non-GAAP accepted they financial calculation. measures accounting operating to measures Non-GAAP and US including GAAP Investors principles, our with reporting metrics, release not definition considered and we as financial should results metrics in read discuss of be exchange included them. certain foreign are financial press the or carefully supplemental and understand to in measures neutral substitute accordance these in measures financial information isolation operating to ensure metrics for that provided and only. generally

allow to This Best may actual based are subject and to we expectations may results the and factors you to and the including the the discussion of remind statements on and could to, the and forward-looking beliefs Koin. the number course a Before uncertainties remarks, that impact acquire, which but COVID-XX assumptions statements, management's performance that of not our includes, cause constitute company's we businesses begin expectations current related integration are of me risks of made prepared to certain during and that limited beyond be and are pandemic Day materially differ, including control. the

the filings For Exchange our please a risks, description release. US Securities and with these to our refer and press of Commission

the ahead. the please your our Scokin, priorities. quarter's discuss CEO, for more and is Damian call Damian, provide quarter CFO, update today's on questions. we'll go After Speaking our that, in results will Alberto fourth strategic will of on open detail. an our call who financial overview Lopez-Gaffney, you then the

Damian Scokin

day, Natalia, our you interest everyone. Despegar. in earnings call Thanks, joining and for your good for and Thank

impacted well continue a Omicron we that travel recovering we January shows to presentation. gross also demand how market. this reflect strategy, growth. versus against result our in once April execute to increasing Despegar recent was XX% most is positioned level. levels and show sustaining limited January's profitable bookings well They Our as March our February, but again, will strong later with equally was in

quarter, XX% were quarter growth. bookings the of XXXX, outperforming industry For gross first

at hand, quarter the below ASPs of were XXXX. On X% sequentially stable the $XXX, only other first

however, in were that of growth It vis-a-vis terms transactions For international transactions, recovery XX% note Despegar’s pre-pandemic air than is level are bookings levels. gross bookings our gross the of to portfolio across higher important and XXXX. industry

domestic well, While overall, gain investing Colombia as on and we Brazil. in such profitability are we travel to are that share focused in performing are markets

XX% margins gross second highest versus our for XX.X% our of generate the XX%, to revenue revenue for was and of points accounted leverage travel Travel exceptionally Our revenues. quarter the connection with products combined pandemic quarter which XX% These consecutive factors EBITDA, and hotels first XXXX. XXXX. also since first at margin our level strong since the versus operational in quarter was improved first of other of cost XXXX. in up XXX packages, highest basis quarter first the quarter adjusted began, delivered We positive

the way solid, also first rose even as million, our XXXX cash Excluding still million, position quarter Koin, end at EBITDA bookings flow was over nearly were At cash $XX our though was levels. of of operating $XX quarter. below

are In Brazil's Colombia. elaborate I XXX% in a top we forming rental product [indiscernible] strategic the of Viajanet, an Brazil's will leading vacation to acquisition travel market and We a agreement moment, and segment year travels. with growth Movii significant More discuss signed on agreement the manager recently, of Viajanet our an in acquire of strategy also we one the the to also acquire XX% with began M&A potential. advancing Stays, with alliance

to Now four. turn Slide please

markets, our and same recovery us behind lifted the of and with in recovering. The observed has November. seasonally we demand slow October trend Now that finally those March Thankfully, also is April period. Omicron restrictions in been as travel coincided variant been last have and

XXXX you level. in a and by important were bookings XXXX particularly and is XX% first record. domestic XX% quarter slide, for level, travel track reached bookings in us respectively. strong Of X%, March as As graphs XXX% of of represents Despegar opportunity international recovery of while international the gross has April exceeded on can this it of note, quarter's that The an booking where first quarter see

April, and Slide carnival five. side to slide On we impacted restriction have right our were in notably the of demand that parade travel the Mexico Argentina, restrictions quarter, highlighted Brazil's the while postponed the minimal. in were

continue make to agreed Despegar’s in $XX and leading one as Viajanet, we offering. revenue. More OTA avenue another acquisitions acquire recently, targeted with to million Brazil's We of of annual of XXX% growth

our potential In to Viajanet travel travel. great important level, and when Air travel base. customer of gross the a presence Today, [indiscernible] BXC business the addition a loyal expanding in and bookings Viajanet Viajanet's in for non-air products. in of XX% are has originate a At air that our Despegar's incorporating of market, brings profitable channel deal and product BXB. XX% bookings XX%

such There is travel there that we realize enhanced rates to are to accommodations by technology other platform cross-sell Despegar's as opportunity performance a and Despegar's non-air such systems, and packages, Viajanet's conversion which huge marketing command as higher expect improved significant into also So inventory, plugging margin. synergies capabilities.

million $XX acquire consideration to total Finally, Viajanet.

leading another its market, BXB market BNPL us. now large move and six. a rapidly and key fintech. slide To BXC country's Colombia strategic growing alliance one for Movii, with has is established the tap Koin Let's to of

year. XXX% Colombia for forecasted know, Koin be e-commerce you doubled transactions in are fast-growing BNPL Their of in has $X.X billion, XXXX. merchant BNPL electronic BXB Moreover, the segment. I users. year merchants. we Brazil, Decolor Colombia, [indiscernible] Movii more to a continues many products. this market. also payment think partner TPV Decolar. has access to in XX,XXX excluding also merchant Koin expected than accounted can TPV. quarter, payments market Koin million In also users Brazil, XX% offers expand the the travel has In sequentially. to sell credit. Koin's limited active increased of It base there with our growing in for cross XX% its per hit population Movii an largest with excellent X.X positive Movii to It high end is of first underserved beyond As In Movii

Alberto, end and That we we concludes agreements we listed merchants, quarter, number verticals the have with March, my At During retail tourism, had presentation. go XX portion ahead. of of important that a merchants also others. agreement this of signed with on the education, slide. across which please include the

Alberto Lopez-Gaffney

for quarter rate, take Damian, all Please turn profit Thank to results. XXXX, thank million, by joining reversal January during same million. period, performance in our of us the net resulted cancellations the and of XX% in you positive margin extraordinary a reflecting gross the rate over take to third $XXX a points reported provisions, XX%, a sequentially. line review when nearly robust at delivered today. was the was benefited in our from levels seven to sequentially down slide since quarter that even at revenues February. revenue. million, with of gross high Omicron which impact this totaling $XX and exceptionally Revenues We with Note lower booking declined also posted slightly This highest recovering drop, Actually, XX% to solid you, quarter cost slightly the driven in the gross first increasing higher that year. together top by of XXX basis $X

EBITDA positive since adjusted delivered to eight. the quarter Now, second the We please the of with consecutive slide turn pandemic. start

XX% reaching on of payment greater reaching Excluding $X achieved improved structure, a our pandemic. operation. operations the Koin’s adjusted $XX synergies and With back impact loss power loan first levels, EBITDA only invest profitability respect diversification operating Koin, million during we 'XX to gross in EBITDA reflects Despegar’s the pre-pandemic was scaling a our of fintech slightly to at adjusted and million, leaner despite operation, on as of levels. this of revenue This above the continue over quarter XX% earnings was bookings performance merchant

XXXX. the to half of second Damian breakeven we As expect noted, Koin in reach

please stood closed $XXX up with nearly XX% slide and of at while quarter sequentially. nine. cash end, the We at Now $XXX million million, our position payable to turn quarter equivalents net

resurgence generated $X million cash given which of open and expect balances in would Despegar when $XX by flow million in reported of we million, working all, the had net an we fourth the quarter following cash operating our and on $XX up use we an from to nearly both provided million, travel, capital. million, cash a in Note, XXXX of of generated quarter same $X nearly including year $XX cash increase first quarters. impact the respectively. All the anticipated During in quarter, of flow of the vouchers have use that close

what please quarter, Now advanced expanded for two strategy aspects a which during our to important we was with of strong and slide turn important than acquisitions. a faster summary EBITDA M&A XX gross bookings on

results was our recovering increasing earnings of Again, second power Despegar's First, it travel our a market. adjusted in positive reflect EBITDA. quarter

February, impacted in April. and bookings and levels our gross recovered Omicron March travel January in Although October's to in

gross a of an revenue We third benefited revenue. our cost quarter strong level. also exceptionally We achieved from 'XX margin profit our XX% of lower margin with and highest corresponding decreased installment our at

$XX.X Excluding greater than Koin, reflecting expanded million was operational leverage. EBITDA gross bookings, and faster adjusted

and offers expanding leading to growth, leading a Stays, is presence expand that channel rentals in with fast organic we synergies agreements will Brazil. significant opportunities Brazil's Regarding a Despegar's growing in itself other cross-selling Koin Brazilian market. acquire vacation among Viajanet, manager OTA

the quarter merchants cash with expect solutions, we nearly in $XXX more Colombia million. with of finished partnership. Movii a As we that success payment finally, to And a solid the adopt position its replicate new

on the for to on some XX for slide remarks coming views months. our quick Now,

our of we by the recovers underlying the business. of build strong quarters, expect our supported First, solid to the as in fundamentals on travel performance last two region,

leverage. We expect while our trajectory, to EBITDA operating additional maintain gaining positive

we to by greater potential to also expect travel international continue are capturing pre-pandemic recover travel to year-end upside where plan positioned. the and market of We strongly levels

support and For market overall business, particularly we the activities recovery Despegar's year, countries continue position, remainder marketing will in brand, that levels. promising investing with in the of

successes, a any for [extra] are complete earlier. to on way merchants timely Viajanet just achieve and of the to intend synergies expanding to partners, we finally, excited for highlighted that which at Koin, in we is our business building network Second, the solutions. of about further the we to also acquisition and integrate past effectively M&A (ph) And BNPL, paying essential but prevention, various not

for holding me you York our on second operations, Day that be you call with we strategy forward remind the New We outlook. sharing markets, color in more Investor look on our June XX opening and mid-term business to will let Before questions, City.

your Operator, We questions. are questions. line please for ready answer to open the

Operator

question Our Aranda ITAU. from comes [Operator first Instructions] Alejandra from you. Thank

Your ahead. line is open. Please go

Alejandra Aranda

may. I good on three Congratulations results. you. Thank morning. if Hi, I the have questions,

EBITDA from you to And I gross from if coming potential the expect for my that have, you on and I demand is, is if this? one for what margins question happen? of acquisition first on may, And we should level question to through be expect what in P&L terms that coming capital color to be second this last is is Koin us expect bit that me give level? could working are do Viajanet forward And of operation? the a that The little terms if a and going expecting breakeven what's in when could of you when walk you year. what the the to you completed Then expect when -- normalized

Alberto Lopez-Gaffney

believe I speaking. well. Alberto Alejandra, can you see me Okay.

to in 'XX. very markets. line of that those see? increase principle additional have lower percent and out We we is are strategy seeing we have this above we try margin first markets going time. Damian, as three gross most with expenditure share marketing and of much gross see of increase in in will quarter of margin, investments On recovered is, I What to with in 'XX see slightly margins the the and X% and questions the So What getting bookings. gross opportunities with the forward any to finalized certainly jump address please, we in at a and gain COVID to

into of a around quarter to in gross of translate margin will between so basis points XXX to losing upcoming the going X.XX%, points that approximately XXX vis-a-vis gross X%. around So the margin basis a

Despegar be structure. pre-pandemic. clearly vis-a-vis and marketing margins that given synergies more capture that, the profit including also an and be much seen higher, these margins sales margin and will believe the that streamlining all expect from have are a Following we having to the of that will higher operating that than recent cost gross you acquisitions We the the much

what discuss this to -- June XX into Day on the some looking our of visibility are to on applies second the quarter on long-term year. are X% the to but We Investor prospects, provide

Second, we on the expect and as as EBITDA the same we perspective more business. noted reach Koin Koin, on with lines to the along to medium by question for present regards that of your XXXX, long-term breakeven remarks, we

for the that group let’s a EBITDA for, or be Despegar you the Day overall But at of the should of that the of breakeven think should Then at by we deal of regards short to to wait look end the the expect during -- Koin longer-term Let's context Investor just the the QX. results to term, half perspective. QX say, second of in levels. with beginning very occur closing XXXX by Viajanet, for

that frame we're on. So working the that's time

least, needs of a advance about out that At the will cash material. payment teams that the but Our we extracting the installments, will focused been is way payment but business, required closing. some. already let's well we're With last working at levels, thinking closing. which, of the closing, that in doing all we start for of transactions, expect payments to integration line the also And very be have that be the are for capital don't there regards XX% say, be what has not with different the on to acquisition Viajanet synergies the in

So question. hopefully, have Alejandra, addressed I your

Alejandra Aranda

Alberto you, thank Yes,

Alberto Lopez-Gaffney

You are very welcome.

Operator

question Morgan Stanley. next Kieran Our from Kenny from comes

Please Your line is open. go ahead.

Karen Kenny

taking for my Thanks questions. Great.

think of on take about of you in to of comment then couple you the then those back and rate the Thank you Could And could you. a on acquisition? just about the impact sustainability on First, how that, stronger forward? the underlying rate. the take Viajanet XQ talk drivers going take rate the from

Alberto Lopez-Gaffney

here. again Alberto, Kieran. Hi,

that 'XX will also we very at than the seeing Day. With levels So is take a we Investor rate so and are lower expanded percent. strong lower Cancellation a the what of quarter for We more much than clearly, plus the discussing Remember, vis-a-vis Remember has have much were quarter, we present first discussing actually far this we is were actually by take we what rate. term, cancellations. regards discuss marginally to rate levels. -- there, did long take expected. that XX.X been pre-pandemic were a benefited

from very We that that with that second basis that we much to it between, level. a expansion rate are can earnings when seeing higher say, let's of forward. allow And -- a we XXX Kieran, feel power have growing know level business that take if also will take better XX, XX, going -- comfortable comes points continue don't the much rate. I question, there was to is a pricing

Karen Kenny

acquisition? Yeah. the And you from the sized Have take what's to Viajanet rate that? Yeah. impact then

Alberto Lopez-Gaffney

the at not know, do rate you of line competitive we as one we take a targets. at information disclose not Again, -- do or look business perspective even Yes. for for reasons, each --

have customer take average into has. product take But by of synergies forward. should than today. Investor the we lower You address looking that at a rate see But business, ample extracting that Viajanet, that to the improving at rate as integrate rate strong or Day are look the Viajanet has assume course, a the mix will that that when Viajanet. opportunities air the XX% take is Despegar consumer going we increase company we we rate take overall for And we

Karen Kenny

Thanks it. Got a lot.

Alberto Lopez-Gaffney

You are welcome.

Operator

Kevin question Our and from comes next Cowen from Kopelman Company.

ahead. open. is go Please Your line

Emily Lavin

I April, if how provide looking Good update a date. morning. you just I This is us the through and was OTAs noticed Latin there. hotel We But to Emily on from Kevin. trends update the wanted Thank booking in global with noting are the latest large gross you for monthly was wondering stabilization could on of for trends strong on trends some an I April. you. companies And thank demand May to wondering but of trends America? in the

Damian Scokin

lagging sustainability in that of Emily, Northern earnings remains the hi. Actually, with This for And May recovery in strong do Latin last level. what about trajectory behind Thanks trend. How America you. upward terms call been in is May. Hemisphere has are are talking the question. regarding seeing we What Damian. a to is to the the we've lot over April your pre-pandemic of

much [indiscernible] very we up expect terms been -- and market fulfilled completely are and in continue to that expectations catching would has our forecast Our -- the I May, will of in say.

Emily Lavin

Okay, thank you.

Operator

We now have hand closing Scokin, I'll remarks. questions. no back Damian further to CEO, for

Damian Scokin

call Thank everyone, today. you, and for operator, joining our thanks,

call. hesitate speak you. questions, do forward always, to follow up reach As we'll Thank other if not out us. We much. any next in again with you to all. please our Investor Day good with at look next wish have our We'll very you you happy you to But We speaking be a day month. to sooner to hopefully,

Operator

like Today's We'd to concluded. participation. thank your call now you has for

may You disconnect lines. your now

Despegar.com (DESP) 19 May 222022 Q1 Earnings call transcript