- Earnings call transcript Q3 2022

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Operator

Good morning, and welcome to the Despegar's Third Quarter 2022 Earnings Call. A slide presentation is accompanying today's webcast, and is available in the Investors section of the company's Web site, 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 now your ahead, go open. line Please is

Luca Pfeifer

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

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

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

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

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

Damián Scokin

we Despegar. in demand of third higher above their since interest At the with strong of word The about and transactions. balancing as to below respect EBITDA been A quarter the at the to take well to on center XX% for compared of customer put A Gross with higher we line highest quarter effectively sought in earnings innovation have cost to continued merchant we markets Koin, and Brazil, time, levels markets, always us At growth [Ph] Thank to market have to to recover. of share just on you pricing GBs, revenues we approval, risk. Thank third-party we of COVID-XX, bookings for our them all up the XXXX. year-on-year, revenues inroads. strength booked our the drove making our profitability make bookings travel [travel same joining across net conservative expenses credit XXXX reduced of revenue quarter as efforts X.X% long-term loan we your range continue of last basis four, final At each leverage. XX stepped and growth. time, above to deliver down consecutive our to year. from credit guidance fourth predominantly third you, accompany deliver take our positive Luca, the of where of the enabled quarter the advantage for structure growth we XX% and and expand strong good on our points what and to increased the XX.X% onset of upper XX% coupled top in same call our journey, below geographic with increased demand the rate origination, to certain our EBITDA. of Despegar's approach combined The ecosystem] we purchase. to slide their focus our nearly X% stood third us day, XX%, continued at everyone. result, including operating step in allowed a researching Operating OpEx slowed the on innovate

of implementing sections and innovation various always and improving the [Ph]. [a aim we continuously bit product to of [Ph] landing to customer site their the experience, brands our] travel To several our in [mighty] [needs] the mention across reflect customers' of categories. With customizing purchase history we're drive are a our few, and order tailoring initiatives [Ph] page of

provide most working results. we to quarter, of Best under also and hotel launch we channel a Day [indiscernible] This an with very launched for our and WhatsApp airlines prior in revealed In be markets, allows prices, as sourcing which to pilot the the [kilopacks] competitive access names This showing sales promising brand, customers effort options. already selected currently it's departure. such allows [Ph] month to on will aggressive one that customers are

[Ph] [XX%] we of Turning a connection preferences. is already we're to allows membership specific loyalty total to across X% able an to and This to are platforms point million members. quarter-on-quarter, our our establish travel Today, even that report closer their way accelerated our all X.X to another to include program, tailor transactions us of base, redemptions. reaching growth customer excited solutions

our the international driven the traffic region recovery gross decline X% sequentially. we continued recovered sequential market bookings position. In of doubled our than to bookings XX% by capitalized seasonal ASPs, XX% increased we of in level, gross average slide. as and sales bookings year-on-year more Let's hotels, and XX% gross international increase X% higher-margin continuing Brazil look traffic next travel a posted third to at October. products. effect recover in as market, quarter ASPs on to increased build of the in to Year-over-year, September rose Brazil, XXXX reached gross but XXs. due selling price, largest from which Mexico, added to on packaged transactions by both high sequentially Industry a on bookings In passenger of

gross domestic quarter XXXX, as other of third profitability. to XX% bookings year-on-year. continued increased drove in markets, lower-margin mix relative air this bookings XX% were decline, we on continued the Compared flat higher driving quarter-on-quarter. to increase Across ASPs to focus sales While our a

international traffic lower XX%. increased in to and by a Although markets, XX% to exploit to summarize than recovery levels we in order pace to effectively year-on-year, gradually respond ASPs the improve. mix a as greater our this other traffic continued the continued capture substantially these, overall, high as Brazil Mexico, travel quarter's tactically this recover our And ASPs To prioritizing reflect exceeding slide, its higher-margin The products at season, as Mexico, pre-pandemic profitability in in share market, international during travel of of quarter. well market. to second-largest on higher focus entered our continued

I a building Our turn over are with on lower structure, profitable we established. earning much growth Despegar's discipline, cost Alberto. to driving With call combined this, power have the the will and trajectory

Alberto López-Gaffney

Damián, to Thanks, all be with once great you again.

slide increase As even in we we in nearly above XX% during revenue the increase basis, at quarter of doubling more an can third reported XX% FX-neutral pronounced the see upper-left put the XXXX. the the six, chart was on XX%, in in level year-on-year The period.

strong and bookings, cancellations profitability just rate on In more demand of that take on travel benefiting benefited Argentina, driving a normal growth. XX%, over from in higher higher fewer we to addition Mexico over rates drove we conditions from where gross focus levels

Cost which third As XX%, was compared was our the chart, when care of with it improved to got at related XXX quarter points customer also this [indiscernible], XX.X. revenue bookings, cost in XX% to ballooned improved a see operating well and it decreased And of this you our rate XXXX, take increase together XXX as the can rose to in thanks revenue. below percentage lower basis during pandemic. gross basis to points foreign leverage,

a basis points points quarter X.X%. with margins expanding XXXX. when result, over XXX more doubled than As gross compared profit to gross XXX And almost basis to year-on-year third

Let's operating seven. cost move on to slide

after XXXX and bookings specifically when are trend favorable strong pleased and our XX% several This cost as We fixed integrating the a slide. fixed product analyzing structure administrative, second-half cost and since evolved of terms, grew has successfully the percentage absolute our development cost how more becomes In only fixed in very general, gross XX% year-on-year expenses. technology with of are companies. evident

technology slight from we XXX points. Our expenses the while and product on development XX product our basis and G&A a tech brought Viajanet. points, Sequentially, IT team expenses in declined we basis development increase see as expenses decreased

fixed appreciate We will leverage as how a our also of our cost percentage operating revenues. comparing in kicking has when been

compared to to sought to see advantage demand increase this favor which when in Moving nature. decision then, you built expenses have share market evaluation. an regard. since drove by driven as of On adjusted operating particularly business our power and take EBITDA third also year-on-year slide EBITDA the summary, EBITDA graph, in improved absolute earnings which rise in Brazil we marketing in highest third in present travel gains in eight, its strengthen. geographies, The is increase we XX% certain we are adjusted our our was In the quarter by to mainly XXXX, tactical increase continues into selling The leverage to more $XX.X million. level

This our the quarter in closed allows cash maintain travel in million. to strong both the value financial and not also flow generated technology gradual to travel position thanks operating acquisitions addition, recent us $XXX Viajanet cash proposition core recovery we In of competencies strategic to million which reinforce our but demand, in make of Despegar's investments the flexibility as $XX.X sustainable competitive expand serve with and best-in-class strong market-leading advantages. as ecosystem our which states, such platform; a on only behind a and

an well Koin On on volatile some the would that slide, nine. about a and like remains also given and quarter, our This vigilant quality we complex to information share environment maintained of as operating a Brazil. we additional number metrics reflect Koin as in approach. economic present on on strict share this focus slide key this business asset has update provide

in even volume. been XX% rapid another can As client the important to is obtaining price stricter with cautious see to the months approach more right, to levels approximately you Despegar Koin's remember Also, to while can a on X chart of decline of adjustments portfolio we average, losses make which in approvals that In expected risk. attractively purchase rate have origination. loans take of of of our the declining, conservative the short comprised indicator high total it's you resulting took most allows in duration see sequential approach us a on left, on origination chart bar

of relatively most addition, that Koin verticals low the In travel. are risk serves light consumer

$X.X the loss Koin produced quarter, EBITDA For million. an of

let you and of new strategy, to the we as on who it as quarter, advantages. this market expands review average as that other are Despegar's of conversion remarks. rate addressable closing increases That those For back rate, take growth for some among to distinct me remind well our you tickets my call Koin concludes acquired Damián

Damián Scokin

a with key comment Alberto. We takeaways. our few would to Thanks, like wrap up

gradual sustained First, there finished a growth in gross of demand just XXXX. X% bookings, in the quarter strong take drove higher, which a continue XXXX. to in LatAm, be XX% quarter generating XX% in recovery growth quarter The bookings higher third and third and below quarter above the travel the rate revenues finished

with drove increasing cost growth last greater year, it efficiencies higher substantially quarter. Our combined line first continue versus positive power, EBITDA earnings consecutive top our and the making

As Alberto Stays. our discussed, benefit now revenue position, flow integrated cost the with million expect also the from cash in we and technology our further in to business. that With strong also synergies we're Viajanet this we generating a [indiscernible] into achieving finished operating and cash with strategic platform, investments the $XX.X Viajanet fully quarter

conversion beyond we're we're on hope we focused as With Brazil, rates helpful selling to its with Stays, rates in very example, our in home increase vacation higher-margin average the air analysis. already now encouraged having additional had about improvement prices packages seek been market, success all Koin transactions. an segment. primarily your cross-selling We across the the We're through in which information seeing Viajanet, As expanding it respect rental to is also and transactions. significant Viajanet take is

with over margin can you business time. importantly, remain expect risk effectively of the to us improve credit approvals, pricing disciplined the More this to and continue

our Therefore, gradually we based expect Looking trends. quarter to year. we current maintain levels travel the positive of demand in expect fourth momentum pre-pandemic on in EBITDA to ahead, approach this market

However, and concludes business. nor optimistic please its third we questions. how will our cannot potential we Notwithstanding This businesses Operator, impact remain open demand of on near-term the for in predict uncertainties, long-term the of about travel quarter our call inflation cost. our review. the trend terms

Operator

go Please Thank you. Kevin from question ahead, Cowen. Instructions] First [Operator from comes Kevin. Kopelman

Kevin Kopelman

Great, and lot. a thanks

what give one stands you to revenue idea little of expect where and of into a us summarize there Just a lot it how fourth gave more fourth bookings the quarter, better of a on things color and Thanks. and quarter, clarity of couple maybe questions, helpful the is, those recovery, are on in could first today? you the a recovery, trending terms

Alberto López-Gaffney

Yes, Kevin, Alberto here. Good morning.

travel similar to fourth okay, to with Okay, demand to very the regard quarter actually third seeing be quarter, we're levels. stable and

profitability we course, addition, see okay. will also In follow that same the

And we're a is is, day, of the pretty what end so, stable. seeing at business the that's

in a to particularly gained, the quarters, customers program purchase, an of the was Argentina, past have We transactions. case purchases advanced for that advance [indiscernible] in program, local in non-air incentivizing from

how that's quarter So, see we shaping the fourth up.

Kevin Kopelman

so is absolute XXXX a typically, to that uptake quarter? thinking q-over-q -- you relative -- clarify dollar Alberto, instead stable are to of that stable an basis is in just or you there, fourth because, on the have

Alberto López-Gaffney

Kevin. quarter-over-quarter, Sequential,

Kevin Kopelman

it. got it, got Okay,

dollars booking volume revenue and and similar q-over-q? So,

Alberto López-Gaffney

You are right.

Kevin Kopelman

update the about thinking repurchases? And, you consider an a instituting in year, you new would program? a whether perfect. how other you you share repurchase Okay, earlier then And can talk could you us program had on give are about share one one,

Alberto López-Gaffney

As Ended that capital that our equivalent liquidity $XX we in purchasing million or we funding to different you position pleased financial are to actually of want to evaluating very that allocation, finalized operations. regards payment pointed we reinvest the growth. certainly provides okay? preserve inorganic such require up program out, additional in are may to With of with mid-August. with shares, the grow the Today, actually worth either or pursue as business opportunities we us to flexibility flexibility

we despite advancing fact on a our our that So do And are the this restarting program we stage, shares at undervalued. grossly we that are buyback planning share appreciate not continue agenda.

Kevin Kopelman

you. then markets, that in seeing particularly And the follow-up, now just latest bit see a are and little Okay, you maybe what's a your you understood. Brazil just color Thank how on environment could give the you Mexico, there? more right key macro

Damián Scokin

your Hi, Kevin. This for is Thanks question. Damián.

Europe. few been months, have the U.S. last in see out in situation we pointing one Latin the we slightly As or as over America the macro different

early inflation Mexico months of on couple you Although if has in deflation is see year, picked the of last stable. the Brazil there stages up more the and remains

is region and say view effectively. the see the we we in to with the on optimistic been in that has Keep when our So, compared Latin for that used in Europe. what more U.S. general inflationary mind to macro dealing America very when situations

are optimistic more and for market U.S. this what Europe. on So, and we the we remain

Kevin Kopelman

Thanks, Alberto. got Okay, it. Thanks, Damián.

Operator

at we appears It Instructions] [Operator questions time. have no further this

Damián am So, for going to hand back final remarks. to I it

Damián Scokin

to on for you your Thanks of in stay all seeing forward interest Bye. look release. and earnings your very next you to on and Despegar participation the call. Thank much our We safe. you

Operator

today's your for lovely joining have and rest a concludes Thank day. call. you of This

Despegar.com (DESP) 17 Nov 222022 Q3 Earnings call transcript