Gross Bookings up 10% YoY, with Total Adjusted
EBITDA of $12.5 million; Company Initiates 2023 Annual Guidance
Despegar.com, Corp. (NYSE: DESP), (“Despegar” or the
“Company”), Latin America’s leading online travel company, today
announced unaudited financial results for the three-months ended
December 31, 2022 (“fourth quarter 2022” or “4Q22”). Financial
results are expressed in U.S. dollars and are presented in
accordance with U.S. generally accepted accounting principles
(“U.S. GAAP”). Financial results are preliminary and subject to
year-end audit and adjustments. All comparisons in this
announcement are year-over-year (“YoY”), unless otherwise
noted.
4Q22 Financial and Operating Highlights (For definitions,
see page 11)
- Gross Bookings for 4Q of $1.1 billion, up 10% YoY and
representing 82% of 4Q19 levels
- ASPs increased 29% YoY to $539, while transactions decreased
15% YoY to 69% of 4Q19 volume due to high average prices and demand
weakness across markets
- Second-highest Take Rate of the year at 13.8%, increasing 79
bps YoY
- Revenues increased 17% YoY to $145.5 million, returning to 4Q19
levels
- Cost of Revenue as a % of Gross Bookings decreased 136 bps to
4.3%, trending toward pre-pandemic levels
- Total Adjusted EBITDA increased 39% YoY to $12.5 million,
marking the fifth consecutive positive quarter, as the Company
continued to focus on profitability across markets in Latin
America
- Operating cash flow was negative $17.8 million, compared to
positive $2.0 million in 4Q21
- Year-end 2022 cash position of $245 million
- Members of Loyalty Program increased 338% YoY to 12.1
million
- Net Promoter Score (NPS) increased 637 bps YoY to 65.1%,
approaching pre Covid levels
- Mobile represented 49% of Transactions, up 279 “bps” YoY and
613 bps above 4Q19
Message from the CEO
Commenting on the Company’s performance, Damian Scokin, CEO
said:
“A fifth consecutive quarter of positive Adjusted EBITDA
reflects our consistent and disciplined execution as well as a
still improving revenue mix. In what was expected to be a
challenging demand environment marked by steep inflation and
substantially higher airfares, we held fast with a Take Rate of
13.8%, above our long-term target, while maintaining a low cost
structure.
Adjusted EBITDA also benefited from ASPs that grew 29% over
fourth quarter 2021, thanks in part to a greater mix of more
profitable travel packages, which increased 265 basis points to 31%
of Gross Bookings. In Brazil, Gross Bookings grew 44%, while in
Mexico they increased 5% despite a sharp decrease in transactions
and as we continued to focus on profitability. ASPs also helped us
deliver a second consecutive quarter of consolidated revenue above
$140 million.
During the quarter, we maintained a portfolio approach to our
business, making select investments to further strengthen brand
awareness and gain additional market share in Brazil, as well as
bolster Despegar’s technology advantages.
We are nearing the end of the first quarter and I’m glad to
report that travel demand has picked up considerably, which bodes
well for the rest of 2023, particularly with regard to our
operating leverage. As such, we anticipate 1Q23 Adjusted EBITDA in
dollars to be in the “mid teens” area. We are also initiating
annual financial guidance, and expect to deliver 2023 consolidated
revenues in the range of $640 to $700 million and Adjusted EBITDA
between $80 and $100 million, in line with the projections we
provided during last year's Investor Day which assume a full
recovery in Latin America’s travel market by year-end 2023.
Continuous innovation plays a crucial role in achieving our
ambitious performance targets, especially in a market where the
needs of customers are evolving faster and they increasingly demand
tailored travel experiences. A recent innovation is Despegar’s
redesigned mobile app, which is integral to our customer engagement
strategy. Reaching an installed base of 23 million customers, our
app now offers a significantly streamlined and substantially faster
booking process, with 15% fewer information fields to fill and
auto-population of 40% of those that remain.
We also recently introduced travel packages that are preselected
for customers based on tailored travel preferences that are among
numerous customer data points that Despegar’s vast database
continuously captures. This new product feature significantly
reduces the amount of time a customer needs to conduct a travel
search and increases conversion rates by offering packages that are
more likely to appeal to them. Over time, such innovations help set
our brand apart and strengthen customer loyalty.”
Initiating 2023 Financial Guidance
The Company is introducing 2023 annual guidance, which is as
follows:
- Revenue: $640 million to $700 million
- Adjusted EBITDA: $80 million to $100 million
The above guidance assumes that the Latin American travel market
will continue recovering and reach 2019 demand levels by year-end
2023. Importantly, this guidance is in line with the 2024 financial
targets presented at the Company’s June 2022 Investor Day.
Disclaimer: The 2023 financial guidance reflects
management’s current assumptions regarding numerous evolving
factors that are difficult to accurately predict, including those
discussed in the Risk Factors set forth in the Company’s filings
with the United States Securities and Exchange Commission.
Reconciliations of forward-looking non-GAAP measures,
specifically the 2023 Adjusted EBITDA guidance, to the relevant
forward-looking GAAP measures are not being provided, as the
Company does not currently have sufficient data to accurately
estimate the variables and individual adjustments for such guidance
and reconciliations. Due to this uncertainty, the Company cannot
reconcile projected Adjusted EBITDA to projected net income without
unreasonable effort.
The 2023 financial guidance includes forward-looking statements.
For more information, please see the “Forward-Looking Statements”
section in this release.
Operating and Financial Metrics Highlights
The following table presents key operating metrics of Despegar’s
travel and financial services businesses as well as key financial
metrics on a consolidated basis, post-intersegment eliminations
between these businesses.
Operating and Financial Metrics Highlights (In millions,
except as noted)
4Q22
4Q21
% Chg
4Q19
% Chg
Operating metrics Number of transactions
1.959
2.298
(15
%)
2.855
(31
%)
Gross bookings
$1,053.4
$957.0
10
%
$1,280.9
(18
%)
TPV Financial Services (1)
$15.1
$17.3
(13
%)
–
–
Financial metrics Total Revenue
$145.5
$124.6
17
%
$145.6
(0
%)
Net loss
($15.2
)
($13.0
)
n.m.
($2.6
)
n.m.
Net loss attributable to Despegar.com, Corp
($15.2
)
($12.5
)
n.m.
($2.6
)
n.m.
Total Adjusted EBITDA
$12.5
$9.0
39
%
$8.3
51
%
EPS Basic (2)
($0.30
)
($0.26
)
n.m.
($0.04
)
n.m.
EPS Diluted (2)
($0.30
)
($0.26
)
n.m.
($0.04
)
n.m.
Total Adjusted EBITDA
$12.5
$9.0
39
%
$8.3
51
%
(1) Presented on a pre intersegment elimination basis. Intersegment
TPV amounted to $12.7 million in 4Q22 and $15.5 million in 4Q21.
(2) Round numbers n.m.: Not Meaningful
Key Operating Metrics
(In millions, except as noted)
4Q22
4Q21
% Chg
FX Neutral
% Chg
4Q19
% Chg
$
% of total
$
% of total
$
% of total
Gross Bookings
$1,053.4
$957.0
10
%
20
%
$1,280.9
(18
%)
TPV Financial Services (1)
$15.1
$17.3
(13
%)
(18
%)
–
–
Average selling price (ASP) (in $)
$539
$417
29
%
40
%
$449
20
%
Number of Transactions by Segment & Total Air
1.0
52
%
1.3
55
%
(20
%)
1.7
58
%
(38
%)
Packages, Hotels & Other Travel Products
0.9
47
%
1.0
44
%
(9
%)
1.2
42
%
(23
%)
Financial
0.0
0
%
0.0
1
%
n.m.
-
-
-
Total Number of Transactions
2.0
100
%
2.3
100
%
(15
%)
2.9
100
%
(31
%)
(1) Presented on a pre
intersegment elimination basis. Intersegment TPV amounted to $12.7
million in 4Q22 and $15.5 million in 4Q21.
Transactions decreased 15% YoY to 2.0 million, reaching 69% of
4Q19 levels, mainly due to a 20% YoY decline in Air transactions,
as average ticket prices increased in an inflationary environment
and upward price pressure due to a combination of post-Covid market
recovery, holiday travel and still limited airline capacity. Given
weak travel demand, the Company maintained its focus on
profitability, thus improving the relative importance of Packages,
Hotels & Other Travel Products within the revenue mix.
Consequently, Air transactions remained 38% below pre-pandemic
levels, while non-Air transactions declined 9% YoY, principally due
to weakness in lodging transactions across the region.
Total Gross Bookings increased 10% YoY to $1.1 billion, or 82%
of 4Q19 levels, mainly due to a 26% YoY increase in international
Gross Bookings, which reached 69% of 4Q19 levels. This positive
trend was partially offset by a 3% YoY decline in domestic Gross
Bookings which nevertheless exceeded 4Q19 levels.
ASPs increased 29% YoY to $539, principally reflecting inflation
as well as average price increases, which affected international
trips particularly. Compared to 4Q19, ASPs increased 20%.
1 Total number of transactions for Packages, Hotels & Other
Travel Products was adjusted to 1.0 million in 4Q21. As a result,
total transactions were 2.3 million in the same quarter.
Geographic Breakdown of Select Operating and Financial
Metrics
The following table presents key operating metrics of Despegar’s
travel business and key financial metrics on a consolidated basis,
post-intersegment eliminations between Despegar's travel and
financial services businesses.
(In millions, except as noted)
4Q22 vs. 4Q21 - As Reported
Brazil
Mexico (1)
Rest of Latin America
Total
4Q22
4Q21
% Chg.
4Q22
4Q21
% Chg.
4Q22
4Q21
% Chg.
4Q22
4Q21
% Chg.
Transactions ('000)
808
778
4
%
351
467
-25
%
801
1053
-24
%
1959
2298
-15
%
Gross Bookings
395
275
44
%
198
188
5
%
461
494
-7
%
1054
957
10
%
TPV Financial Services (2)
15
17
-13
%
-
-
-
%
-
-
-
%
15
17
-13
%
ASP ($)
492
356
38
%
564
403
40
%
575
469
23
%
539
417
29
%
Revenues
146
125
17
%
Gross Profit
101
71
42
%
4Q22 vs. 4Q21 - FX Neutral
Basis
Brazil
Mexico (1)
Rest of Latin America
Total
4Q22
4Q21
% Chg.
4Q22
4Q21
% Chg.
4Q22
4Q21
% Chg.
4Q22
4Q21
% Chg.
Transactions ('000)
808
778
4
%
351
467
-25
%
801
1053
-24
%
1959
2298
-15
%
Gross Bookings
373
275
36
%
188
188
0
%
585
494
18
%
1145
957
20
%
TPV Financial Services (2)
14
17
-18
%
-
-
-
%
-
-
-
%
14
17
-18
%
ASP ($)
464
356
31
%
535
403
33
%
730
469
56
%
586
417
40
%
Revenues
158
125
27
%
Gross Profit
110
71
56
%
(1) Transactions in Mexico were
adjusted from 508 thousand to 467 thousand in 4Q21 following the
integration process.
(2) Presented on a pre
intersegment elimination basis. Intersegment TPV amounted to $12.7
million in 4Q22 and $15.5 million in 4Q21.
Brazil, Despegar’s largest market, accounted for
41% of total Transactions in 4Q22, increasing 4% YoY as the Company
remained focused on leveraging the strong recovery in international
traffic to gain market share. Total industry passenger traffic in
Brazil remained 21% lower than 2019 levels, while domestic traffic
reached 91% of pre-pandemic levels. ASPs increased 38% YoY, as
airfares increased due to rising travel demand as well as
inflation, with the latter also affecting the pricing of other
travel services. As a result of the above factors, Gross Bookings
grew 44% YoY in Brazil to 81% of 4Q19 levels.
Mexico represented 18% of 4Q22 Transactions. Gross
Bookings increased 5% YoY, as ASPs increased 40% during the period.
Transactions decreased 25% YoY, as relatively high ASPs affected
demand for domestic travel, mainly in the Air segment, while the
Company continued to focus on its profit taking strategy in this
particular market. Compared to 4Q19, transactions declined 15%
while ASPs rose 47%. Due to these factors, Gross Bookings increased
26%, but this growth also reflects the contribution of Best Day,
acquired in October 2020.
Across the rest of Latin America, Transactions and Gross
Bookings decreased YoY by 24% and 7%, respectively, as demand for
both domestic and international travel across the region weakened
on ASP increases of 23% YoY and 22% when compared to 4Q19.
Accordingly, Transactions and Gross Bookings lagged 4Q 2019 levels
by 40% and 27%, respectively.
Revenue Breakdown
We organize our business into three segments: (1) Air, which
consists of selling airline tickets; (2) Packages, Hotels and Other
Travel Products, which consists of travel packages (which can
include airline tickets and hotel rooms, among other products); and
(3) Financial Services, which consists of point-of-sale installment
loans and Buy Now Pay Later services. A significant portion of the
revenues generated in the Financial Services segment are generated
with the Packages, Hotels and Other Travel Products segment of
Despegar.
The following table reconciles the intersegment revenues of the
Company’s three business segments for the quarters ended December
31, 2022, 2021 and 2019:
4Q22
4Q21
% Chg
4Q19
% Chg
$
% of total
$
% of total
$
% of total
Revenue by business segment (in $Ms) Travel Business Air Segment
$59.5
41
%
$48.7
39
%
22
%
$53.3
37
%
12
%
Packages, Hotels & Other Travel Products Segment
$84.3
58
%
$75.4
60
%
12
%
$92.3
63
%
(9
%)
Total Travel Business
$143.9
99
%
$124.2
99
%
16
%
$145.6
100
%
(1
%)
Financial Business Financial Services Segment
$4.4
3
%
$0.7
1
%
n.m.
–
n.m.
n.m
Total Financial Business
$4.4
3
%
$0.7
1
%
n.m.
–
n.m.
n.m
Intersegment Eliminations
($2.7
)
-2
%
($0.4
)
0
%
n.m
–
n.m.
n.m
Total Revenue
$145.5
100
%
$124.6
100
%
17
%
$145.6
100
%
(0
%)
Total Revenue margin
13.8
%
13.0
%
+79 bps
11.4
%
+242 bps
On a YoY basis, Total Revenues
increased 17% to $145.5 million, while revenue margin increased 79
bps to 13.8%, mainly driven by a significant decrease in trip
cancellations as well as continued margin expansion in Mexico and
Chile related to supplier incentive fees, loyalty revenues and
other margin improvements. Despegar continues to maintain its focus
on profitable growth, with the intention of further capitalizing on
the projected recovery in travel demand.
Compared to 4Q19, Total Revenues
were unchanged, while revenue margin improved 242 bps, principally
reflecting higher up-front incentives from suppliers and customer
fees as a percentage of Gross Bookings.
Consolidated Cost of Revenue and Gross Profit
The following table shows Cost of Revenue and Gross Profit on a
consolidated basis, post-intersegment eliminations between
Despegar’s travel and financial services businesses.
(In millions, except as noted)
4Q22
4Q21
% Chg
4Q19
% Chg
Revenue
$145.5
$124.6
17
%
$145.6
(0
%)
Revenue Margin
13.8
%
13.0
%
+79 bps
11.4
%
+242 bps
Cost of Revenue (1)
$44.9
$53.8
(16
%)
$53.7
(16
%)
Cost of Revenue as a % of GB
4.3
%
5.6
%
(136) bps
4.2
%
+6 bps
Gross Profit
$100.6
$70.8
42
%
$91.9
10
%
Gross Profit as a % of GB
9.5
%
7.4
%
+215 bps
7.2
%
+236 bps
(1) Starting 2Q22, the Company
reclassified for each of the periods shown bad debt related to Koin
and Despegar from General and Administrative expenses to Cost of
Revenue to more accurately reflect Despegar´s cost structure.
Cost of Revenue consists mainly of credit card processing fees,
bank fees related to customer financing installment plans, and
fulfillment center expenses.
On a YoY basis, Cost of Revenue
decreased 16% despite a 10% YoY increase in Gross Bookings and was
mainly due to efficiency gains in Despegar’s call center following
the automation of certain workflows as well as the renegotiation of
certain outsourcing contracts. Declining transaction volumes and
customer claims as well as increasing fiscal credits further
reduced cost of revenue. As a percentage of Gross Bookings, Cost of
Revenue decreased 136 bps to 4.3%, trending toward pre-pandemic
levels as Despegar continued to drive operating leverage, which
moves towards the Company’s long-term target, while demand for
customer care is also converging toward lower pre-pandemic
levels.
As reported Gross Profit increased 42% to $100.6 million from
$70.8 million in 4Q21. As a percentage of Gross Bookings, Gross
Profit increased to 9.5% from 7.4% in the year-ago quarter.
Compared to 4Q19, Cost of Revenue
decreased 16%, due to a decline in fulfillment center expenses and
in customer claims as well as an increase in fiscal credits.
Accordingly, Cost of Revenue as a percentage of Gross Bookings was
only 6 bps above 2019 levels, while Gross Profit increased 10% as
the Company improved its revenue margin by 242 bps.
Operating Expenses
The following table shows operating expenses on a consolidated
basis, post-intersegment eliminations between Despegar’s travel and
financial services businesses.
(In millions, except as
noted)
4Q22
4Q21
% Chg
4Q19
% Chg
Selling and marketing
$46.2
$34.6
34
%
$49.6
(7
%)
S&M as a % of GB
4.4
%
3.6
%
+77 bps
3.9
%
+51 bps
General and administrative (1)
$26.1
$18.7
40
%
$23.6
10
%
G&A as a % of GB
2.5
%
1.9
%
+52 bps
1.8
%
+63 bps
Technology and product development
$25.0
$19.5
28
%
$18.7
34
%
T&C as a % of GB
2.4
%
2.0
%
+33 bps
1.5
%
+91 bps
Total operating expenses
$97.4
$72.8
34
%
$91.9
6
%
Operating Expenses as a % of GB
9.2
%
7.6
%
+163 bps
7.2
%
+205 bps
(1) Starting 2Q22, the Company
reclassified for each of the periods shown bad debt related to Koin
and Despegar from General and Administrative expenses to Cost of
Revenue to more accurately reflect Despegar´s cost structure.
On a YoY basis, Operating Expenses
increased 34 % to $97.4 million. The rise in Operating Expenses was
partly driven by a 34% increase in Selling and Marketing spend, as
the Company increased investments in direct marketing.
Selling and Marketing (“S&M”) expenses increased 34%
YoY to $46.2 million and rose 77 bps as a percentage of Gross
Bookings. The increase was principally driven by higher investments
in building brand awareness and by performance marketing in Brazil,
as the Company invested in growing its presence in this market. In
addition, the Company increased headcount as it expanded telesales
capabilities as well as its Destination Management Company (“DMC”)
team to capitalize on growth in Mexico’s travel market.
General and Administrative (“G&A”) expenses increased
40% YoY to $26.1 million. The increase is partly explained by a
$2.4 million reversal in export taxes in 4Q21, which reduced the
comparable base from $21.1 million to $18.7 million in that
quarter. Also contributing to the increase in G&A expenses was
$3.2 million of one-time costs related to the consolidation of
Viajanet, while another $1.7 million in costs were related to FX
variations and local currency inflation in Argentina, particularly
in connection with wages. G&A expenses increased 52 bps YoY as
a percentage of Gross Bookings.
Technology and Product Development (“T&PD”) expenses
totaled $25.0 million, increasing 28% YoY. Approximately two thirds
of the increase was related to expanding the Company’s developer
team (including Viajanet integration), a key resource to further
extend its competitive advantage in the region. The remainder of
the increase was due to FX variations and local currency inflation
related to IT personnel expenses. As a percentage of Gross
Bookings, T&PD expenses increased 33 bps YoY.
Financial result, net
Despegar reported net financial expenses of $12.5 million in
4Q22, compared to $3.8 million in 4Q21. The YoY increase was
primarily due to FX losses and higher financing costs associated
with the factoring of receivables in Brazil, as a result of higher
interest rates, and partially offset by interest income gains.
Income Taxes
The Company reported an Income Tax expense of $5.7 million in
4Q22, compared to an expense of $7.5 million in 4Q21. The effective
tax rate in 4Q22 was 61%, compared to 58% in 4Q21.
The increase in the effective tax rate was mainly driven by: i)
an increase in valuation allowance of deferred tax assets primarily
in the US and Mexico, due to a recoverability analysis for the
upcoming years; ii) a decrease in the unrecognized tax benefits;
and iii) a decrease in non-deductible expenses.
Total Adjusted EBITDA Reconciliation
(In millions, except as
noted)
4Q22
4Q21
% Chg
4Q19
% Chg
Net loss
($15.2
)
($13.0
)
n.m.
($2.6
)
n.m.
Add (deduct): Financial expense, net
$12.5
$3.8
229
%
$6.7
87
%
Income tax expense
$5.7
$7.5
(24
%)
($4.1
)
(241
%)
Depreciation expense
$1.5
$1.5
0
%
$1.1
37
%
Amortization of intangible assets
$8.6
$6.9
24
%
$5.1
68
%
Share-based compensation expense
($0.7
)
$2.2
(130
%)
$2.1
(132
%)
Total Adjusted EBITDA
$12.5
$9.0
39
%
$8.3
51
%
Total Adjusted EBITDA in 4Q22 was $12.5 million, 39% above the
$9.0 million reported in 4Q21.
Balance Sheet and Cash Flows
The majority of Despegar’s excess cash balance is held in U.S.
dollars in the United States and the United Kingdom. Foreign
currency exposure is minimized by managing natural hedges, netting
the Company’s current assets and current liabilities in similarly
denominated foreign currencies, and by managing short term loans
and investments for hedging purposes.
Cash and cash equivalents, including restricted cash, at
December 31, 2022, was $245.0 million. During the quarter, Cash and
cash equivalents decreased $ 18.0 million, mainly due to a change
in working capital dynamics. Aggregate Net Operational Short-term
Obligations were $209.5 million, decreasing 6.0% on a QoQ
basis.
Despegar used $17.8 million in Cash from operating activities
during 4Q22, mainly due to working capital changes in line with an
increase in credit card receivables, predominantly in the Brazilian
market. This compares with cash generation of $1.9 million in 4Q21
and cash generation of $15.3 million in 4Q19.
Financial Services Segment Analysis
Despegar’s financial services segment consists of point-of-sale
installment loans, Buy Now Pay Later (“BNPL”) services, which
enable the Company’s customers as well as customers of third-party
merchants to make online purchases and pay off interest bearing
debt in installments, and fraud prevention services.
Despegar’s financial services business maintained its
conservative approach to loan origination throughout 4Q22 given
still challenging market conditions in Brazil. In line with the
declining trend observed throughout the third quarter TPV reached
$15.1 million down 13% YoY. Throughout the 4Q we continued to price
risk adequately as the spread between Take Rate and projected
losses remain positive. For the quarter, the financial segment
reported a Total Adjusted EBITDA of negative $4.1 million compared
to a negative Total Adjusted EBITDA of $3.0 million in 4Q21.
Argentina Considered Hyperinflationary Economy
As of July 1, 2018, as a result of a three-year cumulative
inflation rate greater than 100% and following the guidance of ASC
830, the U.S. dollar became the functional currency of the
Company’s Argentine subsidiary. This change in functional currency
is recognized prospectively in the Company's financial statements.
As a result, the impact of any change in currency exchange rate on
the Company’s balance sheet accounts is reported in the net
financial income/(expense) line of the income statement instead of
other comprehensive income.
4Q22 Earnings Conference Call
When:
10:00 a.m. Eastern time, March
16, 2023
Who:
Mr. Damián Scokin, Chief
Executive Officer
Mr. Alberto López-Gaffney, Chief
Financial Officer
Mr. Luca Pfeifer, Investor
Relations
Dial-in:
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+1-929-526-1599 (International)
Access Code: 159148
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Webcast: CLICK HERE
Definitions and concepts
Aggregate Net Operational Short-term Obligations: consists of
travel accounts payable plus related party payables and accounts
payable and accrued expenses, minus trade accounts receivable net
of credit expected loss and related party receivables.
Average Selling Price (“ASP”): reflects Gross Bookings divided
by the total number of Transactions.
Foreign Exchange (“FX”) Neutral: calculated by using the average
monthly exchange rate of each month of the quarter and applying it
to the corresponding months in the current year, so as to calculate
what the results would have been had exchange rates remained
constant. These calculations do not include any other macroeconomic
effects such as local currency inflation effects.
Gross Bookings: Gross Bookings is an operating measure that
represents the aggregate purchase price of all travel products
booked by the Company’s customers through its platform during a
given period. The Company generates substantially all of its
revenue from commissions and other incentive payments paid by its
suppliers and service fees paid by its customers for transactions
through its platform, and, as a result, the Company monitors Gross
Bookings as an important indicator of its ability to generate
revenue.
In this presentation the Company has also recast previously
reported segment financial information for the quarters ended
December 31, 2021 to reflect its new reportable segments. The
segment change has no impact on the Company’s historical
consolidated financial results.
Seasonality: Despegar’s financial results experience
fluctuations due to seasonal variations in demand for travel
services. Despegar’s most significant market, Brazil, and much of
South America where Despegar operates, are located in the southern
hemisphere where summer runs from December 1 to February 28 and
winter runs from June 1 to August 31. Despegar’s most significant
market in the Northern hemisphere is Mexico where summer runs from
June 1 to August 31 and winter runs from December 1 to February 28.
Accordingly, traditional leisure travel bookings in the Southern
hemisphere are generally the highest in the third and fourth
quarters of the year as travelers plan and book their winter and
summer holiday travel. The number of bookings typically decreases
in the first quarter of the year. In the Northern hemisphere,
bookings are generally the highest in the first three quarters as
travelers plan and book their spring, summer and winter holiday
travel. The seasonal revenue impact is exacerbated with respect to
income by the nature of variable cost of revenue and direct S&M
costs, which are typically realized in closer alignment to booking
volumes, and the more stable nature of fixed costs.
Total Adjusted EBITDA: is calculated as net income/(loss)
exclusive of financial income/(expense), income tax, depreciation
and amortization, impairment charges, stock-based compensation
expense, restructuring charges and acquisition transaction
costs.
Total Revenue: The Company reports its revenue on a net basis
for the majority of its transactions, deducting cancellations and
amounts collected as sales taxes. The Company presents its revenue
on a gross basis for some transactions when it pre-purchases flight
seats. These transactions have been limited to date. Despegar
derives substantially all of its revenue from commissions and
incentive fees paid by its travel suppliers and service fees paid
by the travelers for transactions through its platform. To a lesser
extent, Despegar also derives revenue from advertising, its
installment loans and Buy Now Pay Later offered through the
company’s fintech platform Koin and other sources (i.e. destination
services, loyalty and interest revenue). For more additional
information regarding Despegar’s revenue recognition policy, please
refer to “Summary of significant accounting policies” note of
Despegar’s Financial Statements.
Total Revenue Margin: calculated as revenue divided by Gross
Bookings.
TPV: means Total Purchase Volume, and is equivalent to the
volume processed by the BNPL financing solution during a specific
period of time. Reporting Business Segments: In 2022, in connection
with a new strategy by management to expand the financial services
business, the relevance of this business to the consolidated
results of operations of the Company has increased significantly.
In addition to the Company’s plans for expanding the financial
services business outside of Brazil, the Company is incorporating
into the business other service offerings, such as fraud
identification, analysis and credit scoring for the Company’s
travel business and other merchants, as well as providing
technology/IT services to the Company’s travel business and other
merchants. As a consequence the Company’s business is organized
into the following segments: (1) Air, which primarily consists of
facilitation services for the sale of airline tickets on a
stand-alone basis and excludes airline tickets that are packaged
with other non-airline flight products, (2) Packages, Hotels and
Other Travel Products, which primarily consists of facilitation
services for the sale of travel packages (which can include airline
tickets and hotel rooms), as well as stand-alone sales of hotel
rooms (including vacation rentals), car rentals, bus tickets,
cruise tickets, travel insurance and destination services. Both
segments also include sale of advertisements and, to a lesser
extent, incentives earned from suppliers and interest revenue, and
(3) one financial services segment, which consists of point of sale
installment loans and buy now pay later services that allow
customers to make purchases and pay off the interest bearing debt
in installments.
Transactions: The number of transactions for a period is an
operating measure that represents the total number of customer
orders completed on Despegar’s platforms in such period. The number
of transactions is an important metric because it is an indicator
of the level of engagement with the Company’s customers and the
scale of its business from period to period. However, unlike Gross
Bookings, the number of transactions is independent of the average
selling price of each transaction, which can be influenced by
fluctuations in currency exchange rates among other factors.
About Despegar.com
Despegar is the leading online travel company in Latin America.
For over two decades, it has revolutionized the tourism industry
through technology. Despegar today is a consolidated group that, in
addition to the Despegar and Decolar brands, also includes Best
Day, Viajes Falabella, Koin, the Company's fintech business,
Viajanet and Stays. With its continuous commitment to the
development of the sector, Despegar has become one of the most
relevant companies in the region able to offer a tailor-made
experience for more than 29 million customers.
Despegar operates in 20 countries in the region, accompanying
Latin Americans from the moment they dream of traveling until they
share their memories. With the purpose of improving people's lives
and transforming the shopping experience, it has developed
alternative payment methods and financing, democratizing access to
consumption and bringing Latin Americans closer to their next
travel experience. Despegar is traded on the New York Stock
Exchange (NYSE: DESP). For more information, please visit
www.despegar.com.
About This Press Release
This press release does not contain sufficient information to
constitute a complete set of interim financial statements in
accordance with U.S. GAAP. The financial information is this
earnings release has not been audited.
Forward-Looking Statements
This press release includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. We base these forward-looking statements on our current
beliefs, expectations and projections about future events and
financial trends affecting our business and our market. Many
important factors could cause our actual results to differ
substantially from those anticipated in our forward-looking
statements. Forward-looking statements are not guarantees of future
performance. Forward-looking statements speak only as of the date
they are made, and we undertake no obligation to update publicly or
to revise any forward-looking statements. New risks and
uncertainties emerge from time to time, and it is not possible for
us to predict all risks and uncertainties that could have an impact
on the forward-looking statements contained in this press release.
The words “believe,” “may,” “should,” “aim,” “estimate,”
“continue,” “anticipate,” “intend,” “will,” “expect” and similar
words are intended to identify forward-looking statements.
Forward-looking statements include information concerning our
possible or assumed future results of operations, business
strategies, capital expenditures, financing plans, competitive
position, industry environment, potential growth opportunities, the
effects of future regulation and the effects of competition. In
particular, the COVID-19 pandemic, and governments’ extraordinary
measures to limit the spread of the virus, are disrupting the
global economy and the travel industry, and consequently adversely
affecting our business, results of operation and cash flows and, as
conditions are uncertain and changing rapidly, it is difficult to
predict the full extent of the impact that the pandemic will have
or when travel will resume at pre-pandemic levels. Considering
these limitations, you should not make any investment decision in
reliance on forward-looking statements contained in this press
release.
-- Financial Tables Follow --
Unaudited Consolidated Statements of Operations for the
three-month periods ended December 31, 2022 and 2021 (in thousands
of U.S. dollars, except as otherwise indicated)
4Q22
4Q21
% Chg
Total Revenue
145,542
124,556
17
%
Cost of revenue
44,897
53,765
(16
%)
Gross profit
100,645
70,791
42
%
Operating expenses Selling and marketing
46,245
34,582
34
%
General and administrative (1)
26,092
18,689
40
%
Technology and product development
25,015
19,508
28
%
Total operating expenses
97,352
72,779
34
%
Loss from equity investments
(192
)
343
n.m.
Operating income / (loss)
3,101
(1,645
)
n.m.
Financial result, net
(12,543
)
(3,809
)
n.m.
Net loss before income taxes
(9,442
)
(5,454
)
n.m.
Income tax benefit
5,717
7,545
(24
%)
Net loss
(15,159
)
(12,999
)
n.m.
Net income attributable to non controlling interest
-
526
n.m.
Net loss attributable to Despegar.com, Corp
(15,159
)
(12,473
)
n.m.
(1) Starting 2Q22, the Company reclassified for each of the
periods shown bad debt related to Koin and Despegar from General
and Administrative expenses to Cost of Revenue to more accurately
reflect Despegar´s cost structure.
Key Financial & Operating Trended Metrics (in thousands
of U.S. dollars, except as otherwise indicated)
1Q21
2Q21
3Q21
4Q21
1Q22
2Q22
3Q22
4Q22
FINANCIAL RESULTS Total Revenue
$51,850
$63,069
$83,368
$124,556
$112,414
$134,421
$145,596
$145,542
Cost of revenue
30,092
38,429
37,953
53,765
42,558
45,149
50,305
44,897
Gross profit
21,758
24,640
45,415
70,791
69,856
89,272
95,291
100,645
Operating expenses Selling and marketing
15,382
19,188
26,138
34,582
30,517
42,214
46,174
46,245
General and administrative
20,148
22,696
22,162
18,689
23,523
27,037
24,873
26,092
Technology and product development
17,460
18,344
19,432
19,508
20,735
21,407
22,834
25,015
Impairment of long-lived assets
5,106
-
-
-
-
-
-
-
Total operating expenses
58,096
60,228
67,732
72,779
74,775
90,658
93,881
97,352
(Loss) / Gain from equity investments
376
(348
)
(29
)
343
117
16
(105
)
(192
)
Operating (loss) / Income
(35,962
)
(35,936
)
(22,346
)
(1,645
)
(4,802
)
(1,370
)
1,305
3,101
Financial result, net
(1,309
)
(1,835
)
(3,254
)
(3,809
)
(7,023
)
(10,529
)
(15,359
)
(12,543
)
Loss before income taxes
(37,271
)
(37,771
)
(25,600
)
(5,454
)
(11,825
)
(11,899
)
(14,054
)
(9,442
)
Income tax (benefit) / expenses
292
(6,413
)
(1,654
)
7,545
19,093
1,266
(4,767
)
5,717
Net loss
(37,563
)
(31,358
)
(23,946
)
(12,999
)
(30,918
)
(13,165
)
(9,287
)
(15,159
)
Net income attributable to non controlling interest
$180
$258
$273
$526
Net loss attributable to Despegar.com, Corp
(37,383
)
(31,100
)
(23,673
)
(12,473
)
(30,918
)
(13,165
)
(9,287
)
(15,159
)
Total Adjusted EBITDA
($20,024
)
($22,256
)
($10,346
)
$9,002
$6,787
$10,594
$12,015
$12,525
Net loss
($37,563
)
($31,358
)
($23,946
)
($12,999
)
($30,918
)
($13,165
)
($9,287
)
($15,159
)
Add (deduct): Financial expense, net
1,309
1,835
3,254
3,809
7,023
10,529
15,359
12,543
Income tax expense
292
(6,413
)
(1,654
)
7,545
19,093
1,266
(4,767
)
5,717
Depreciation expense
1,569
1,401
2,451
1,497
1,672
1,699
2,144
1,504
Amortization of intangible assets
7,095
6,827
6,457
6,909
6,584
6,937
6,871
8,593
Share-based compensation expense
2,149
5,444
3,092
2,241
3,333
3,328
1,305
(673
)
Impairment charges
5,106
–
–
–
–
–
–
–
Restructuring charges
19
8
–
–
–
–
–
–
Acquisition transaction costs
–
–
–
–
–
–
390
–
Total Adjusted EBITDA
($20,024
)
($22,256
)
($10,346
)
$9,002
$6,787
$10,594
$12,015
$12,525
1. In thousands
2. Starting 2Q22, the Company
reclassified bad debt related to Koin and Despegar from General and
Administrative expenses to Cost of Revenue to more accurately
reflect Despegar´s cost structure.
Unaudited Consolidated Balance Sheet as of December 31, 2022
and September 30, 2022 (in thousands of U.S. dollars, except as
otherwise indicated)
As of December 31, 2022
As of September 30, 2022
ASSETS Current assets Cash and cash equivalents
219,167
222,682
Restricted cash
25,879
40,397
Trade accounts receivable, net of credit expected loss
147,806
121,171
Loan receivables, net
15,385
15,042
Related party receivable
10,676
16,603
Other current assets and prepaid expenses
46,193
37,075
Total current assets
465,106
452,970
Non-current assets Other assets and prepaid expenses
69,784
77,619
Loan receivables, net
1,185
1,349
Lease right-of-use assets
22,428
23,278
Property and equipment net
15,532
16,802
Intangible assets net
91,500
91,109
Goodwill
138,637
134,512
Total non-current assets
339,066
344,669
TOTAL ASSETS
804,172
797,639
LIABILITIES AND SHAREHOLDERS’ DEFICIT Current liabilities Accounts
payable and accrued expenses
58,024
51,926
Travel suppliers payable
287,834
282,354
Related party payable
37,472
41,395
Short-term debt
29,931
25,373
Deferred Revenue
23,348
21,059
Other liabilities
113,794
85,522
Contingent liabilities
7,982
16,714
Lease Liabilities
6,081
6,174
Total current liabilities
564,466
530,517
Non-current liabilities Other liabilities
20,845
39,842
Contingent liabilities
30,593
24,589
Long term debt
5,119
8,023
Lease liabilities
17,151
17,747
Related party liability
125,000
125,004
Total non-current liabilities
198,708
215,205
TOTAL LIABILITIES
763,174
745,722
Series A non-convertible preferred shares
121,449
114,354
Series B convertible preferred shares
46,700
46,700
Mezzanine Equity
168,149
161,054
SHAREHOLDERS’ DEFICIT Common stock
287,553
285,014
Additional paid-in capital
323,705
334,518
Other reserves
(728
)
(728
)
Accumulated other comprehensive loss
(16,091
)
(21,509
)
Accumulated losses
(643,323
)
(628,165
)
Treasury Stock
(78,267
)
(78,267
)
Total Shareholders' Deficit Attributable to Despegar.com Corp
(127,151
)
(109,137
)
TOTAL LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ DEFICIT
804,172
797,639
Unaudited Statements of Cash Flows for the three-month
periods ended December 31, 2022 and 2021 (in thousands of U.S.
dollars, except as otherwise indicated)
3 months ended December
31,
2022
2021
Cash flows from operating activities Net loss
($15,159
)
($12,999
)
Adjustments to reconcile net income / (loss) to net cash flows from
operating activities: Net income attributable to redeemable
non-controlling interest
–
$526
Unrealized foreign currency translation income / (losses)
$1,536
($997
)
Depreciation expense
$1,504
$1,497
Amortization expenses
$8,593
$6,909
Disposals of property and equipment
–
($1,016
)
Earnout
($290
)
($925
)
Indemnity
$290
$925
Loss from equity investments
$192
($343
)
Stock based compensation expense
($673
)
$2,241
Amortization of lease right-of-use assets
$919
$1,318
Interest and penalties
$884
$561
Income taxes
$1,969
$2,028
Allowance for credit expected losses
$3,510
$2,910
Provision for contingencies
$10,827
$2,655
Changes in assets and liabilities net of non-cash transactions:
Increase in trade accounts receivable, net of credit expected loss
($28,889
)
($43,855
)
Increase in Loans receivables
($2,131
)
($5,508
)
Decrease / (increase) in related party receivables
$5,934
($8,227
)
Increase in other assets and prepaid expenses
($122
)
($7,498
)
Increase in accounts payables and accrued expenses
$5,144
$12,779
(Decrease) / increase in travel suppliers payables
($25
)
$39,322
Increase in other liabilities
$4,380
$5,115
(Decrease) / increase in contingent liabilities
($13,611
)
$159
(Decrease) / increase in related party liabilities
($4,040
)
$4,360
Decrease in leases liability
($481
)
($1,345
)
Increase in deferred revenue
$1,987
$1,389
Net cash flows (used in) / provided by operating activities
(17,752
)
1,981
Cash flows from investing activities: Increase in Loan Receivables
($2,195
)
($1,731
)
Collection on Loan Receivables
$2,082
$291
Acquisition of property and equipment
($534
)
($802
)
Increase of intangible assets including internal-use software and
website development
($8,266
)
($5,893
)
Cash flows from financing activities: Net (decrease) / increase of
short term debt
($2,082
)
$11,412
Increase in long-term debt
$555
$88
Decrease in long-term debt
($1
)
($1,564
)
Payment of dividends to stockholders
($504
)
($504
)
Exercise of stock-based awards
–
$201
Collect on debenture issuance by securitization program
$4,016
–
Net cash flows provided by financing activities
1,984
9,633
Effect of exchange rate changes on cash and cash equivalents
$6,648
($449
)
Net decrease in cash and cash equivalents
($18,033
)
$3,030
Cash and cash equivalents as of beginning of the year
$263,079
$276,192
Cash and cash equivalents as of end of the period
$245,046
$279,223
Use of Non-GAAP Financial Measures
This earnings release includes certain references to Total
Adjusted EBITDA, a non-GAAP financial measure. For the year ended
December 31, 2020, Despegar changed the calculation of Total
Adjusted EBITDA reported to the chief operating decision maker to
exclude restructuring charges and acquisition costs. The Company
defines:
Total Adjusted EBITDA as net
income/(loss) exclusive of financial income/(expense), income tax,
depreciation and amortization, impairment charges, stock-based
compensation expense, restructuring charges and acquisition
transaction costs.
Adjusted EBITDA is not a measure recognized under U.S. GAAP.
Accordingly, readers are cautioned not to place undue reliance on
this information and should note that these measures as calculated
by the Company, differ materially from similarly titled measures
reported by other companies, including its competitors.
To supplement its consolidated financial statements presented in
accordance with U.S. GAAP, the Company presents foreign exchange
(“FX”) neutral measures.
This non-GAAP measure should not be considered in isolation or
as a substitute for measures of performance prepared in accordance
with U.S. GAAP and may be different from non-GAAP measures used by
other companies. In addition, this non-GAAP measure is not based on
any comprehensive set of accounting rules or principles. Non-GAAP
measures have limitations in that they do not reflect all of the
amounts associated with our results of operations as determined in
accordance with U.S. GAAP. This non-GAAP financial measure should
only be used to evaluate our results of operations in conjunction
with the most comparable U.S. GAAP financial measures.
On page 5 of this earnings release the company shows FX neutral
measures to the most directly comparable GAAP measure. The Company
believes that comparing FX neutral measures to the most directly
comparable GAAP measure provides investors an overall understanding
of our current financial performance and its prospects for the
future. Specifically, we believe this non-GAAP measure provides
useful information to both management and investors by excluding
the foreign currency exchange rate impact that may not be
indicative of our core operating results and business outlook.
The FX neutral measures were calculated by using the average
monthly exchange rates for each month during 2021 and applying them
to the corresponding months in 2022, so as to calculate what
results would have been had exchange rates remained stable from one
year to the next. The table below excludes intercompany allocation
FX effects. Finally, this measure does not include any other
macroeconomic effect such as local currency inflation effects, the
impact on impairment calculations or any price adjustment to
compensate for local currency inflation or devaluations.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230316005308/en/
IR Contact Luca Pfeifer Investor Relations Phone:
(+57)3153824802 E-mail: luca.pfeifer@despegar.com
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