DESP - Earnings call transcript Q2 2022

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Operator

Good morning, and welcome to the Despegar's Second 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 Mr. like I'd the to call Now Luca Relations. Pfeifer, Investor ahead. go Please

Luca Pfeifer

morning joining for and today. Good thanks us everyone

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

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

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

please we'll update call well CFO, quarter's an detail. who your an our that, open overview provide discuss as the Damián our of Alberto will ahead. Damián, Speaking quarter for in today's financial Scokin, our second performance is the more then questions. on as CEO, call strategic After go will Despegar’s results Lopez-Gaffney, on initiatives.

Damián Scokin

And core Despegar. and interest and again, right our Despegar’s Thank profitable place day joining strategy the you have good in position leverage. market expanding that during effectively fully travel the the our in operating investing an we although demand result long the structure lean growth, in earnings drives and travel in once for research market. the near a call maintained ecosystem for term more that competencies have leadership and maintained that evidence have quarter, we dynamics in such been to of trajectory Latam growth Luca travel we to make both exploit a cost second everyone. you capture We leverage term to Thanks Despegar attractive

targeted and We shareholder are power we have begin us the financial review also let of value. is making, gradually mind, our slide earnings ecosystem, or integrating quarter whether are been acquisitions successfully with on inorganic increasing growth, in With Despegar’s into the organic we some it that driving that four. highlights

growth of massive as term Solid we quarter delivered in also longer strategy on full positioning improving our advantage consecutive conditions, take travel of EBITDA a positive the execution of market. market third while to capitalizing continue our company Latam's growth opportunities

capture our we as guidance. did share. take stepped market a term increase talk increased million, with Operating our to Alberto we rising better $XXX in XX% up so later line XXX% this to Our winning with quarter in shift strong and still travel grew recovery are combined in ASPs bookings model growth, particularly while to XXXX ecosystem revenue the demand, we above And Strong business transaction expanding capture efforts with marketing rate year-on-year, about and gross Brazil. will levels. demand expenses on. second levels enabling travel drove long higher us

and of revenue shares. an value the is second product Nevertheless, shareholder over quarter. improving also during XXX% worth bought million fell outbreak level we operating XXX% discount COVID-XX. have shares, operating more our we of higher to mix, $X.X combined of with nearly leverage the ASPs gross Also $X.X second X% million grew the EBITDA, into July, technology means XXXX. business which profit expenses light In as since million year-on-year resulted the $X.X shares quarter increase Despegar percentage points built in development in $XX of continue trading another We another repurchased in at Gross year-on-year we trade. were the quarter, over the steep highest of quarter bookings back in and our invested comparison. and and to five bookings our in not I worth Granted, apples-to-apples was said, XXXX to billion slightly above and as to

We compiled bookings rebranding recovering our domestic of impact quarter demand on initiative across which is travel level. of XXXX gross Latam, bookings meaningful our a that while XX%, measure. the gross XXX%, by exceeding in year, grew international last the Given but XX% year's comparable successfully nevertheless baseline with capitalize those is

distributions one the XX% [ph] of right second accounted geographic of decreased was lower represented On Brazil Mexico and the countries bookings, our of grew meaning up They Keep list total this mind year-on-year, in the X% pent XXX% XX% ASPs that was the year-on-year. aided of last for see countries you gross increase in XXXX by reaching bookings. slide, other XX% demand Mexico to XXX% mobility year. can in side gross levels. gross up restrictions transactions of than our XX% first of although year, bookings. that quarter

Mexico despite Compared in our second XX% gross Latam XXXX of Additionally, our a XX%. XX% in there decreased due quarter bookings but of slightly the XXX% in rest decline an increases. which increase ASPs. quarter to domestic flights bookings, was increased second lower than The year-on-year, for was to gross accounted price XXXX,

for complementary value Turning acquired the travellers. to beguiles businesses addition and our have to round slide that we to out six, overall portfolio, product this in proposition hence

rental cancelled. customers Brazil's automatic investments the we our have experience new Despegar’s past package, Stays, acquisitions, segment. equates We Despegar’s one any are channel didn't XX,XXX selling large generating ability with to learned travel, now the which in able customary. Brazil, year-on-year travel XX% in base or flights the we note in Stays to remiss any advance is into packages, discounts now integration been inventory. travel travel significant are vacation much booking farther to Building we OTA successfully acquired in integrating of the communicated advantage have in of I new our here bird innovation already our sites sales what which or should gives same we our we up yet, in before than I Stays Despegar’s rental on seven offer the future. June, to adjustments technology being That early in we other product during with included outside take largest for leading listings investor Brazil having time, free the product another of added near launch future while their manager booking will into day still rentals. customer through of decrease actually to have And price be direct visitors delayed markets. vacation that will in margin we development. Consistent And is are surprise Product, non-air in inventory product. have geographic Viajanet vacation is growth launched of full Viajanet if higher that we platform. At stepping

with develop To the Also, best we determine continue par leverage travel a our to most best-in-class our teams a allows in continue conversations market’s distribution on partner to to advancing experience most the technology price. with constructive compete competitive We the innovate to airlines end, have that us the intermediation the at business. OTAs complete we effective provide IT to miles strategy.

we quarter, loyalty by that Despegar X.X an increase million welcomed in program customers the XX% our another During Pasaporte to sequential represented membership.

second purchases. and emphasized Loyalty Alberto helps repeat the I will results engagement quarter detail. drive customer Program past, review more As the our call to will in the in now turn we've who

Alberto Lopez-Gaffney

Thank you, Damián.

to our As XX%. to I guidance while quarter and on $XXX Slide seven, our was million. to and XXXX, like you revenue specifically can XXX% increased the quarter-on-quarter maintain demand on in a with rate take Brazil Compared to capitalize in in see line decline the to Argentina that price XX% revenue to growing we point promotions, XX.X% year-on-year higher levels. range, take rate would due out second

Previously, debt and accounted Before under bad cost brief expenses. of the we discussing gross Despegar bad for about a general financial the Koin's profit, of word and revenue. reclassification administrative debt

cost expand growth Koin's However, we conversion a In it in the and X.X, customer revenue. increase of shown million This of determined will accounted blue on consistent as helping of recognized grow this market light strategic a second negative we $X.X the debt addressable with quarter, bad revenue to bars is respectively. Despegar, in for slide. the that and left area in graph Despegar's rates Koin for bottom the be

the shown comparison for you of prior reclassified debt bad periods the each in see, can reflected is purposes. As

revenue. That XX% point top just shown the into the reported, lower X% well us as bookings XXX% then. essentially revenues also leverage business gross cost amount of to to sequentially. would was which increased when like increased profit have the It compared of second gross at nearly gross XX% at We revenue cost and year-on-year increase the same the the to increase XXXX, operating XX.X% year-on-year, significant out the XX% which were in increased XX% quarter in nearly of graph. versus red evidences So level, grew below in revenue. Sequentially, we that profit, leads built almost since of

the marketing that Slide implemented due turn operating let XXX% we price spend, in the nearly helping travel increase XX% of drive Most to taking of was increase to year-on-year the please spike promotions eight. and gross our and higher. expenses sales XXX% Now in bookings advantage me the in demand specifically

last the investments in grew XX% versus aggregate product As development, out, year's in we quarter, during Damián the quarter. pointed which increased and also technology

gross as quarter In relative expenses decreased of XXXX. year-over-year a addition bookings, falling XXX to points basis our to percentage second X% operating

adjusted year negative $XX.X graph see our quarter positive As on also the of the from you in $XX.X represented of This third EBITDA profitability. went consecutive million second quarter last in right, million. the to can

Argentina, estimate located the that Given cost actual our million approximately of FX an on below official is of our we when are levels. base in compared operations impact inflation, the bulk where local XXXX $XX to devaluation

activities investment relevance $X.X in flow we increasing strong to in and second to under operating On second spend of June belonging spend the such million activities. third-party to $XXX they merchant under as the in that working by flow additional This IT was accounted quarter the million negative capital. us in on We statement. which positive compares cash Koin. The million for the quarter and of this $XX.X loan initiatives the quarter million buybacks to resulted reclassified cash $X.X slide, were XXXX. million and ecosystem. Previously, due receivables being in quarter. nine, build-out travel in $X.X million close of our operating continue flow million this the a $X.X in investments million $X.X in of $X.X In flexibility investing that in we down the the contributed million the $X.X there XXXX during Moving million was to reclassified net last provided statement. product million, the flow, to This negative second other second cash giving Slide the growth million in have to cash quarter quarter. $XX.X cash during Operating used Of flow year's CapEx financing cash the position $X.X generated activities $X.X was second with of the compares broken generated $X in totaled included million quarter. the amount, and a quarter development million second XXXX. to and in cash aggregate, technology, a finished used we the financial cash of $X.X capitalized

prior year-end estimates our remains for unchanged. mentioned on Importantly, balance cash calls

On on slide of outlook our the next year. the remainder the is

achieved, next. up. economies. global the expect trends other year international U.S. be inflationary challenges, further is over point during of travel, inflation how and successful remains power to Setting Damián let the includes their operating the any remainder our regional That will economies which line and travel maintain and in of are from on and indicators improvements growing our not central be recovery positive me growth integrations And earnings EBITDA X-year the to current mostly we adjusted we to remains turn factors, remarks. target the the data we will have the EBITDA. behind and with from the bank encouraging, pick Viajanet With our other additional aside call given synergies stronger, the although benefit that, also without we us. we the in leverage Stays pressures top to recent for unchanged. sustained Besides on pace a measures and In it of into closing our to expect cost seasonal seen are words, are structure and cost in While realizing Despegar's momentum

Damián Scokin

Alberto. Thanks,

we we presentation, opportunities enable second surpassing our near-term recovering of XX%. by growth capture gross XXXX bookings arising beginning regional to within please leadership, growth the and the to of expanding date same operating the third at open with time, quarter from profitability. At our to continue the our That we're summarize, cost That leverage execute To revenues have leveraging efficiencies the noted Despegar's delivering questions. that that and consecutive levels strategy. I drove winning travel Operator, ecosystem. achieved travel revenue As for effectively review. model demand, additional quarter concludes business well quarter's lines against us quarter second

Operator

[Operator Instructions] Stanley. question Please Brian. from ahead, We first Morgan take Brian from our go Nowak

Kieran Kenny

This Thank you Kenny a on Kieran is questions. had for Brian. my I couple. for taking

July linearity bookings end how the of XQ and some talked look and off, of XQ. May to in and start to So quarter June? competitors you into weakening then bookings demand on the early Can relative your throughout comment about

Damián Scokin

Hi, would say expected. much What faster is the surprised you -- much positively question. very your QX when I for Damián. than that us thank This recovering we

more we recovery, sustained see periods but strong, is is While but recent positive. not a extremely the trend perhaps as

So strong surprisingly QX as we as as see strong QX as synthesis put solid perhaps in not was.

Kieran Kenny

see next basis, now to And quarters such levels, on XXXX above gross above reach we so? gross got EBITDA next slightly with booking three or a -- remain target over XX-month levels, your if bookings is would last expectation here it. then the million expect Okay, from the you that sustained $XXX so XXXX year early a recovery XQ that

Alberto Lopez-Gaffney

-- year-end in afternoon. place good okay. said is is the Alberto by actually that by with the will okay market XXXX and this this year, sorry, by should on December way before be markets year, okay. XXXX, question by sustained par vis-à-vis recovered, way fully the and see will we be local your that a Yes, -- addressing What This next market December we the international year, next then take that

basis, you were will towards actually run we rate to So full by the XXXX. that year, okay, get that from to then, expect a And metric be more do highlighting. the

Kieran Kenny

not will it. last discounting whether me. take Thank impact quantify got the going Okay, to and the forward? you. or then that quarter in one from you just level rate discounting one persist And from Could of

Alberto Lopez-Gaffney

Sure.

that in actually key rate okay. we additional in we're be XX% tactically saw With we take that And actually call saw for an this share. because pricing additional each a QX market individual Our the will earlier actually quarter. based regards opportunity we're than believe we quarter, did Brazil actually to of markets. our to seeing as also position markets, and gain is actually the shown how level was that higher on rate okay, actually, And competition how today, Argentina, that mentioned aggressiveness of we second responding, around slightly take the on QX, the seeing two and and we certainly

second quarter quarter. expect you rate So the should in higher third the a take vis-à-vis

Kieran Kenny

much. very you Thank Great.

Alberto Lopez-Gaffney

welcome. You’re

Operator

comes go Kevin. Please Kevin question Kopelman next ahead, from The Cowen. from

Kevin Kopelman

Thanks thanks my Hey for a lot. questions. taking

is macro Could of risk. see that how bit in just little key not is Thanks. the mentioned of what markets some you -- give on you kind without more the you and your a backdrop color macro the environment here? So environment

Damián Scokin

Hi, Kevin, Damián. this is

the money rates, affect to the exchange on with “in our flows basically and But a rate U.S. economies we'll the typical As that's Having and particularly Latin America the situation impact don't of rates general. the inflation. in will cope in see capital said availability through higher how price America is markets”. not Latin interest have overall a and macro mechanisms U.S. in accelerated going higher what the that, that. representing the interest impact for The perspective, here

may of not before, that summarized. signs on I any recovery As a lower contracting. the of optimistic we the very but seeing We recovery said see remain are Alberto pace growth, we just of pace

Kevin Kopelman

trends stable Thank improving? you quarter-to-date, XXXX. relative Thanks. the slower Are gross you. what as quarter you that seeing could on give quarter, second we're had just than you or you're in us -- And seeing the or color to through could the booking you more being halfway over seeing that maybe

Damián Scokin

are the basis we The was but saw But So different seeing I far far, stable we as a that QX, surprise we what in catch-up acceleration XXXX vis-à-vis doesn't where said, trend much not from QX. that faster. from key was in in without difference pleasant level [Indiscernible] acceleration a were remain, Same we percentage QX.

Kevin Kopelman

you Thank very much. helpful. That’s

Operator

Please next go ahead. The Instructions] [Operator from Itau. Alejandra comes from Aranda question

Alejandra Aranda

if expect to you give results. Hi, I costs me those the bit what forward? color and little wondering good was morning. going more on on could marketing a Congratulations

Alberto Lopez-Gaffney

place when we're the to is, profitability all here. Alberto actually traffic more know, you expenditure, importantly, levers look different What okay, as drive transactions with actually play morning. and with course, We seeing on Ale. with prices, and certainly financing than promotions. okay. Sure, more the with at value of levers, We we four play different traffic taking our Good play website, program. loyalty we marketing a and,

what seeing that the potential quarter, as and So gross increase a similar of pointed very bookings, quarter sales and -- still sales for demand levels see for in strong that marketing. time okay. hand we Damián particularly same slight but goes and very, the is marketing slowdown. upcoming light we're at a the hand in But Again, out, actually with

very the beginning could Like least, points understand that given from level in of positioning, actually see certainly, peaked has of you XX as demand hemisphere see, at important situation August. the the solid. think about the higher last to And not overall So of you a Northern actually that, -- we activity, Overall, Mexico, already XX, important seasonality. perspective as vis-à-vis QX. think remains between expenditure let's marketing XX, QX but about you say, basis situation

while fourth the third in picks South softer up really nicely So we very quarter. a end of America have quarter, the

Alejandra Aranda

ask Okay, what Could you some thank account you. color another more did Can changes give you quarter? for little noticed this We us went way I on you a that question? Koin you the on with costs bit there. on

I have of the impact on how bit Koin that like actually So more to little your a and much was clarity would EBITDA? on

Alberto Lopez-Gaffney

Sure.

been all believe G&A we there's a P&L, Koin bad much -- debt. is that have look that First, different G&A we pretty bad to in Despegar a okay, tourist stand-alone the the nutshell of from or included moving that the used on the section the at reclassification the debt and you when reclassification brands,

Koin makes a we push Given starts lot momentum, okay the the thought business sense revenue debt. cost of more into the gathering bad item it that P&L overall to up the of line

So at that's the the think profitability one. overall simple in more Actually, we breakeven. EBITDA be the okay, accordingly presenting stated to Then regards of around doesn't profitability million a about business. the $X.X of at just the quarter, what's loss first by we it second reclassification. we the Koin I going to business Koin With shared that's Koin XXXX, year impact next that expect on very half it in and to of

The Despegar driving at are continue path. but particular nicely, at has both We merchants. Volumes Koin Koin in that EBITDA decreased. with third-party

So entity of the as we half second are Koin an XXXX. that a are of by standalone trajectory EBITDA the breakeven we having -- we confirm in for

Alejandra Aranda

Okay.

this for lower it So the than I in terms should the loss assume lower was than first X.X? Q, those in of quarter,

Alberto Lopez-Gaffney

case. Ale. Positive. Yes, That's exactly. the

to next of sorry. -- second last trajectory We half the EBITDA the year breakeven year, be by are in

Alejandra Aranda

that of cost Okay. you And moved to on Koin line? I about now going revenues that forward, think how should those

Alberto Lopez-Gaffney

the okay, you Importantly, periods. release when actually Ale, adjustment the all have for made the earnings look we at

just normalized apples-to-apples. to have the make we periods So it all full

but business that at the grow the strong. So importantly, same quality, loans for rate you very meaning Koin only take debt you of certain actually higher vis-à-vis nonperforming a asset for as the at particularly will asset level grows look And increases, quality gap Koin when have clearly, But profitability given the is Koin. volume. of

Alejandra Aranda

Okay. Alberto. you Thank

Alberto Lopez-Gaffney

welcome. You’re

Operator

from go question next The Please comes ahead. [Indiscernible].

Unidentified Analyst

taking questions. actually. for I good hi two, Thanks my have Yes, morning.

this at loan is The receivables, is looking increase million, $X.X the one Koin? to related cash first the flow, this in

Alberto Lopez-Gaffney

precisely That's Exactly. okay. the case,

business investing activities is not for to flow are for with not plus accounting receivables the when receivables flow nature they are the the that So related okay, Despegar that related section flow the at accounted that are look cash in receivables financial -- -- cash are fact delta statement, these from given cash of of the the customers third-party to operating the you Koin. the Despegar

Unidentified Analyst

okay. Perfect,

like is on on collect the is so in this the net discounting line financing inventory this in to -- your So they -- the Is issuance, side, this receivables quarter. other growth cash million. the Brazil? $X.X of And the related on the the the then flow, the

Alberto Lopez-Gaffney

the also capital, is it to structure to Koin and a way in investors which That related manage has that discounts effect. Koin, okay. its importantly, is receivables Koin itself is And with private the working that finances actually just

have You actually to investments that's you then it and have you the appears loans, those okay, first, actually of loans. have these first in impact -- the of the how line securitization the negative

Unidentified Analyst

CDI what's Koin? Just cost And spread? the the plus This cost? of -- how funding to Okay. understand is much this

Alberto Lopez-Gaffney

Yes. might we disclose It CDI as okay, a that. is plus imagine, is -- it don't you spread,

Unidentified Analyst

Thank you. Okay.

Alberto Lopez-Gaffney

You’re welcome.

Operator

We registered. currently further no Instructions] have [Operator questions

Damián, will to hand back So you. I it

Damián Scokin

you In may team us the additional is, interest nice as you Have all and thank call. forward next have. Thank meantime for much, you a to your seeing any joining today We the our questions usual, in Despegar. and on day. for for very look available you

Operator

you Thank lines. concludes for today's call. your Please now joining. all disconnect This

Despegar.com (DESP) 18 Aug 222022 Q2 Earnings call transcript