Gross Bookings up 44% YoY, with Total Adjusted
EBITDA Increasing 154% YoY to $17.3 million
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
March 31, 2023 (“first quarter 2023” or “1Q23”). 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.
1Q23 Financial and Operating Highlights (For definitions,
see page 11)
- Gross Bookings of $1.1 billion, up 44% YoY as Latin American
travel demand continues to recover
- Travel Packages as a percentage of Gross Bookings reached 34%,
up 4 percentage points (“pps”) YoY
- ASPs increased 36% YoY to $558, while transactions increased 5%
YoY
- Revenues increased 41% YoY to $158.7 million, reaching a record
quarterly level and a 13.8% Take Rate
- Cost of Revenue as a percentage of Gross Bookings decreased 86
basis points (“bps”) to 4.4%, trending toward pre-pandemic
levels
- Total Adjusted EBITDA increased 154% YoY to $17.3 million, as
the Company continued to focus on profitable growth across markets
in Latin America
- Operating cash flow was positive $5.2 million, compared to
positive $32.2 million in 1Q22
- 1Q23 ending cash position of $228.0 million, including
restricted cash
- Members of Loyalty Program increased 343% YoY to 14.0
million
- Net Promoter Score (NPS) increased +8 pps YoY to 67.3%,
Message from the CEO
Commenting on the Company’s performance, Damian Scokin, CEO,
said:
Our Q1 performance was strong across the board, achieving
record-high revenue in the seasonally weakest travel period as well
as $17.3 million in EBITDA, our strongest since 1Q18. The quarter’s
performance reflects our ability to consistently deliver the best
travel experience to customers while maintaining our disciplined
focus on profitable growth and leveraging Despegar’s scale with
suppliers.
Our strategy to enhance the revenue mix resulted in a
significant rise in the proportion of higher margin vacation
packages - which accounted for 34% of total Gross Bookings, up from
30% in 1Q22. At the same time, we grew transactions 5% year-on-year
while maintaining a high Take Rate of 13.8%, supported by the
continuing recovery in Latam travel demand, particularly with
regards to international traffic.
From a geographic standpoint, we are particularly pleased with
the performance of our Brazilian business. Gross Bookings in Brazil
grew 89% YoY to $458 million, as demand for international traffic
continued to recover, while transactions increased 35% in the same
period.
Operating leverage helped drive profitability even higher during
the first quarter. Specifically, General and Administrative
expenses and Technology and Product Development costs as a
percentage of Gross Bookings declined 96 bps and 32 bps,
respectively. Our continued focus on operating efficiency yielded
an 11% EBITDA margin. In line with our margin expansion, we remain
on track to achieve the financial guidance that we gave during our
previous earnings call.
The performance of our Buy Now Pay Later business, Koin, also
continued to improve. Despite Brazil’s still challenging economy
and credit market, Koin’s EBITDA improved $2.1 million YoY to
negative $2.5 million, another step closer to reaching breakeven in
the second half of this year.
Innovation remains a cornerstone of our corporate strategy to
continually strengthen Despegar’s competitive position and extend
our leadership in Latin America. With that in mind, we have
implemented new features on our landing page and mobile app that
not only enhance customer engagement but also improve cross selling
opportunities, such as travel package sales. For customers
interested in being aided by an agent during the booking process,
we launched a video-assisted sales channel helping customers
transition from offline to online. This not only improves
conversion rates, but also enables our sales team to cross sell
travel products, such as travel insurance and extra baggage.
Initial results across all initiatives have been very encouraging,
helping us better monetize Despegar’s customer base.
In summary, our first quarter results demonstrate Despegar’s
growing earnings power as we leverage the ongoing recovery in
international travel, enabling us to meet both our near and
long-term performance guidance, all while continually improving the
overall customer experience that makes Despegar the preferred
choice for Latin American travelers.
2023 Financial Guidance
The Company reaffirms its 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. See our
Investor Relations website at www.investor.despegar.com.
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.
(In millions, except as noted)
1Q23
1Q22
% Chg
Operating metrics Number of
transactions
2.062
1.955
5%
Gross bookings
$1,148.2
$799.5
44%
TPV Financial Services (1)
$18.0
$20.3
(12%)
Financial metrics Total Revenue
$158.7
$112.4
41%
Net loss
($0.7)
($30.9)
n.m.
Net loss attributable to Despegar.com, Corp
($0.7)
($30.9)
n.m.
EPS Basic (2)
($0.10)
($0.50)
n.m.
EPS Diluted (2)
($0.10)
($0.50)
n.m.
Total Adjusted
EBITDA
$17.3
$6.8
154%
Average Shares Oustanding - Basic (3)
77,081
77,334
n.m.
Average Shares Oustanding - Diluted (3)
77,081
77,334
n.m.
Note that Despegar’s 1Q22 earnings press release indicated that
weighted common average shares outstanding totaled 84,140 thousand
(basic and diluted) at March 31, 2022 when the amount should have
been 77,334 thousand as presented in the table above. More
information is available in Item 5.A of our 2022 20-F filing
published on April 27, 2023 with the SEC. (1) Presented on a
pre intersegment elimination basis. Intersegment TPV amounted to
$14.9 million in 1Q23 and $15.9 million in 1Q22. (2) Round numbers
(3) In thousands n.m.: Not Meaningful
Key Operating Metrics
(In millions, except as noted)
1Q23
1Q22
% Chg FX Neutral % Chg
$ % of
total $ % of total Gross Bookings
$1,148.2
$799.5
44%
59%
TPV Financial Services (1)
$18.0
$20.3
(12%)
(12%)
Average selling price (ASP) (in $)
$558
$411
36%
50%
Number of Transactions by Segment & Total
Air
1.0
47%
1.0
51%
(4%)
Packages, Hotels & Other Travel Products
1.1
52%
0.9
48%
14%
Financial Services
0.0
1%
0.0
1%
n.m.
Total Number of Transactions
2.1
100%
2.0
100%
5%
(1) Presented on a pre intersegment elimination basis. Intersegment
TPV amounted to $14.9 million in 1Q23 and $15.9 million in 1Q22.
Transactions increased 5% YoY to 2.1 million, mainly due to a
241 bps YoY increase in travel package sales together with 9%
increases both in international Air and Lodging transactions,
respectively, as the Latin American travel market continues to
recover. The Company is effectively capitalizing on the recovery in
other ways as well by leveraging its multibrand and highly scalable
platform. In particular, Despegar saw promising results from cross
selling its travel packages to Viajanet’s large customer base,
reaching nearly 10% of this brand´s Gross Bookings in the first
quarter. Accordingly, the consolidated share of higher-margin
travel packages, hotels and other travel product transactions
increased to 52% from 48% a year ago, while Air transactions
declined by a similar amount due to a decrease in lower margin
domestic transactions in Mexico and Colombia and in line with
Despegar´s focus on prioritizing international transactions in
those markets.
The ASP in 1Q23 increased 50% YoY on an FX neutral basis and 36%
on an as reported basis to $558 per transaction. The FX neutral
increase in ASPs was mostly driven by a combination of a growing
proportion of international travel as well as an improving product
mix, with higher average ticket package sales gaining share.
The combined YoY growth in both transactions and ASPs resulted
in total Gross Bookings increasing 59% YoY on an FX neutral basis
and 44% on an as reported basis, reaching $1.1 billion for the
quarter. Specifically, international Gross Bookings grew 60% YoY
while domestic gross bookings increased 27% over the same
period.
Geographic Breakdown of Select Operating and Financial
Metrics
The following table presents key operating metrics of Despegar’s
travel business and key financial metrics on a consolidated basis,
post-intersegment eliminations between Despegar's travel and
financial services businesses.
(In millions, except as noted) 1Q23 vs. 1Q22 - As
Reported
Brazil Mexico Rest of Latin America
Total
1Q23
1Q22
% Chg.
1Q23
1Q22
% Chg.
1Q23
1Q22
% Chg.
1Q23
1Q22
% Chg.
Transactions ('000)
896
664
35%
374
377
-1%
792
914
-13%
2062
1955
5%
Gross Bookings
458
243
89%
218
177
23%
472
380
24%
1148
799
44%
TPV Financial Services (1)
18
20
-12%
-
-
-%
-
-
-%
18
20
-12%
ASP ($)
514
372
38%
584
469
24%
596
416
43%
558
411
36%
Revenues
159
112
41%
Gross Profit
108
70
54%
1Q23 vs. 1Q22 - FX Neutral
Brazil Mexico (1) Rest of
Latin America Total
1Q23
1Q22
% Chg.
1Q23
1Q22
% Chg.
1Q23
1Q22
% Chg.
1Q23
1Q22
% Chg.
Transactions ('000)
896
664
35%
374
377
-1%
792
914
-13%
2062
1955
5%
Gross Bookings
456
243
88%
198
177
12%
616
380
62%
1270
799
59%
TPV Financial Services (1)
18
20
-12%
-
-
-%
-
-
-%
18
20
-12%
ASP ($)
512
372
38%
530
469
13%
778
416
87%
617
411
50%
Revenues
176
112
57%
Gross Profit
119
70
69%
(1) Presented on a pre intersegment elimination basis. Intersegment
TPV amounted to $14.9 million in 1Q23 and $15.9 million in 1Q22.
Brazil, Despegar’s largest market, accounted for
43% of total Transactions in 1Q23, increasing 35% YoY. This
increase was mainly driven by recovering international traffic, as
the Company continued to invest in growing its presence in this
segment. In addition to the YoY increase in transactions, ASPs grew
38% YoY, both on an as reported and FX neutral basis, as airfares
increased due to rising travel demand and inflation as well as to
an increase in higher ASP travel packages. As a result of the above
factors, Gross Bookings in Brazil grew 89% YoY or 88% on an FX
neutral basis.
Mexico represented 18% of 1Q23 Transactions. During the
quarter, ASPs increased 24% (+13% FX neutral). Transactions were
almost flat YoY, as the Company maintained its focus on profitable
growth, which is mainly aimed at growing in Packages, Hotels and
Other Travel Products and the international air segment of Mexico.
The growth in ASPs was mainly due to an overall improvement in
product mix and inflation. As a result of these factors, Gross
Bookings increased 23% YoY.
Across the rest of Latin America, Transactions decreased
13% YoY, primarily due to a decrease in air transactions in
Colombia. ASPs grew 43% (+87% FX neutral) during the same period,
mainly due to an improving revenue mix and a recovery in
international demand in Chile and Argentina. Accordingly, as
reported Gross Bookings grew 24% compared to 1Q22.
Revenue Breakdown
We organize our business into three segments: (1) Air, which
consists of facilitation services for the sale of airline tickets
on a stand-alone basis; (2) Packages, Hotels and Other Travel
Products, which consists of facilitation services for the sale of
travel packages (which can include airline tickets and hotel rooms,
among other products); and (3) Financial Services, which primarily
consists of loan origination to our travel business’ customers and
to customers of other merchants in various industries. Our
“Financial Services” segment also consists of processing, fraud
identification, credit scoring and IT services to our travel
business, and to third-party merchants.
The following table reconciles the intersegment revenues of the
Company’s three business segments for the quarters ended March 31,
2023 and 2022:
1Q23
1Q22
% Chg
$ % of total $ % of total Revenue by
business segment (in $Ms)
Travel Business Air
Segment
$58.5
37%
$43.7
39%
34%
Packages, Hotels & Other Travel Products Segment
$98.0
62%
$68.0
60%
44%
Total Travel Business
$156.4
99%
$111.7
99%
40%
Financial Business
Financial Services Segment
$7.1
4%
$0.8
1%
n.m.
Total Financial Business
$7.1
4%
$0.8
1%
n.m. Intersegment Eliminations
($4.9)
-3%
($0.1)
0%
n.m
Total Revenue
$158.7
100%
$112.4
100%
41%
Total Revenue margin
13.8%
14.0%
(20) bps
On a YoY basis, Total Revenue increased 41% to $158.7 million,
mainly driven by an ongoing recovery in international demand as
well as an ongoing product shift towards Packages Hotels &
Other Travel Products which drove margin expansion particularly in
Brazil, Mexico, Argentina and Chile related to supplier incentive
fees, loyalty revenues and other margin improvements. Despegar
continues to maintain its focus on profitable growth, with a
particular emphasis on increasing the proportion of Packages, Hotel
& Other Travel Products, which increased 44% and reached $98.0
million, or 62% of Total Revenue (versus 60% in 1Q22). Revenue
margin, while ahead of the Company's long-term guidance of
12%-12.5%, declined 20 bps to 13.8%.
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)
1Q23
1Q22
% Chg Revenue
$158.7
$112.4
41%
Revenue Margin
13.8%
14.0%
(20) bps Cost of Revenue (1)
$51.0
$42.6
20%
Cost of Revenue as a % of GB
4.4%
5.3%
(86) bps Gross Profit
$107.7
$69.9
54%
Gross Profit as a % of GB
9.4%
8.7%
+66 bps
Cost of Revenue consists mainly of credit card processing fees,
bank fees related to customer financing installment plans, and
fulfillment center expenses as well as credit loss expenses.
On a YoY basis, Cost of Revenue as a percentage of Gross
Bookings decreased 86 bps to 4.4%, moving toward the Company’s
long-term target as it continued to drive operating leverage. The
absolute increase was mainly due to rising credit card processing
fees as well as higher installments costs, both reflecting the
overall demand recovery across the region that led to improved
Gross Bookings. This cost increase was partially offset by
efficiency gains in Despegar’s call center following the automation
of certain workflows as well as the renegotiation of certain
outsourcing contracts. On an absolute basis Cost of Revenue
increased 20% YoY.
As reported Gross Profit increased 54% to $107.7 million from
$69.9 million in 1Q22. As a percentage of Gross Bookings, Gross
Profit increased to 9.4% from 8.7% when compared to the same period
last year. On an FX neutral basis Gross Profit increased 69% to
$119 million.
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)
1Q23
1Q22
% Chg Selling and marketing
$51.9
$30.5
70%
S&M as a % of GB
4.5%
3.8%
+71 bps General and administrative
$22.7
$23.5
(4%)
G&A as a % of GB
2.0%
2.9%
(96) bps Technology and product development
$26.0
$20.7
25%
T&C as a % of GB
2.3%
2.6%
(32) bps Total operating expenses
$100.5
$74.8
34%
Operating Expenses as a % of GB
8.7%
9.3%
(57) bps
On a YoY basis, Operating Expenses increased 34% to $100.5
million, mainly due to a 70% increase in Selling and Marketing
spend, as the Company increased investments in direct
marketing.
Selling and Marketing (“S&M”) expenses increased 70%
YoY to $51.9 million and rose 71 bps as a percentage of Gross
Bookings. The increase was principally driven by higher investments
in performance marketing, as compared to an unusually low level of
marketing spend in 1Q22, when travel demand was impacted by the
spread of the Omicron variant. In addition, the Company further
invested in growth initiatives, particularly in the expanding
Brazilian market, among others, through promotional activities
under the Company’s newly integrated Viajanet brand, while also
heavily investing in brand awareness in Brazil. Approximately half
of the YoY increase in S&M expenses was related to an expansion
of the Company's high margin B2B and Offline Sales channels,
enabling the Viajes Falabella and BestDay brands to increase Gross
Bookings more than 80% and 50%, respectively YoY.
General and Administrative (“G&A”) expenses decreased
4% YoY to $22.7 million. As such, G&A expenses as a percentage
of Gross Bookings declined 96 bps to 2.0%, reflecting higher
operating leverage. The decline in G&A expenses was mainly due
to a decrease in stock-based compensation as well as lower
severance payments. This trend was partially offset by FX
variations and local currency inflation in Argentina, particularly
in connection with wages.
Technology and Product Development (“T&PD”) expenses
totaled $26.0 million, increasing 25% YoY. Approximately half of
this increase was related to expanding the Company’s developer team
(onboarding of Viajanet team), a key resource to further extend
Despegar’s 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 decreased 32 bps to 2.3%.
Financial result, net
Despegar reported net financial expenses of $12.6 million in
1Q23, compared to $7.0 million in 1Q22. The YoY increase was
primarily due to FX losses and higher financing costs associated
with the factoring of receivables in Brazil, where interest rates
rose, partially offset by interest income gains.
Income Taxes
The Company reported an income tax benefit of $4.6 million in
1Q23, compared to an income tax expense of $19.1 million in 1Q22.
The effective tax rate in 1Q23 was 87%, compared to 162% in
1Q22.
The variation in the effective tax rate was mainly driven by:
i) increase in taxable income in US; ii) a decrease in Valuation
Allowance for Mexico and the US based on updated recoverability
analyses for future years; iii) a decrease in uncertain tax
positions related to Mexico; and iv) a decrease in tax holiday in
Brazil, due to the effect of PERSE on accumulated deferred tax
balances in 1Q 2022
Total Adjusted EBITDA Reconciliation
(In millions, except as noted)
1Q23
1Q22
% Chg Net loss
($0.7)
($30.9)
n.m. Add (deduct): Financial result, net
$12.6
$7.0
79%
Income tax expense
($4.6)
$19.1
n.m. Depreciation expense
$1.7
$1.7
3%
Amortization of intangible assets
$6.8
$6.6
3%
Share-based compensation expense
$1.5
$3.3
(55%)
Total Adjusted EBITDA
$17.3
$6.8
154%
Total Adjusted EBITDA in 1Q23 was $17.3 million, 154% above the
$6.8 million reported in 1Q22.
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 March
31, 2023, was $228.0 million. During the quarter, Cash and cash
equivalents decreased $17.0 million, mainly due to preferred
dividend payments to L Catterton and Waha Capital, as well as tax
payments of prior periods in Mexico. Aggregate Net Operational
Short-term Obligations were $219.0 million, increasing 5% on a
sequential basis due to a seasonal increase in supplier
payables.
Despegar generated $5.2 million in Cash from operating
activities during 1Q23, mainly due to changes in working capital
related to the increase in Packages, Hotels and Other Travel
Products Gross Bookings that resulted in higher Outstanding Days
Payables. This compares with cash generation of $32.2 million in
1Q22.
Financial Services Segment Analysis
Koin, Despegar’s financial services segment, provides: (i)
point-of-sale installment loans, (ii) 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 (iii) fraud prevention
services.
Koin maintained its conservative approach to loan origination
throughout 1Q23, given still challenging market and credit
conditions in Brazil. As such, TPV decreased 12% YoY to $18 million
in the quarter. For 1Q23, the financial services segment reported a
Total Adjusted EBITDA of negative $2.5 million compared to negative
$4.6 million in 1Q22, as the company improved the spread between
the Take Rate and projected losses. Koin remains on track to reach
EBITDA breakeven in the second half of 2023.
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.
1Q23 Earnings Conference Call
When: 10:00 a.m. Eastern time, May 18, 2023 Who:
Mr. Damián Scokin, Chief Executive Officer Mr. Luca
Pfeifer, Investor Relations Dial-in: 1-404-975-4839
(U.S. domestic); 1-833-470-1428 (International) Access Code:
601540
Pre-Register: You may pre-register at any time: click
here. Callers who pre-register will be given a unique PIN to gain
immediate access to the call and bypass the live operator.
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 and loan receivables 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.
Net Promoter Score (“NPS”): a customer loyalty and
satisfaction metric that measures the willingness of customers to
recommend a company, product, or service to others.
Gross Bookings (“GB”): 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. In its quarterly earnings releases, Despegar
presents Gross Bookings net of withholding taxes on international
trips in Argentina which have been in effect since 2020. 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 March 31, 2022 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 travel season 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 travel season 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 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 timed with
booking volumes, and the more stable nature of fixed costs.
Total Adjusted EBITDA: is calculated as net income/(loss)
exclusive of financial result, net, 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 (also “Take Rate”): calculated as
revenue divided by the sum of Gross Bookings and Total Payment
Volume.
Total Payment Volume (“TPV”): is an operating measure
that represents the US dollar loan volume processed by "Buy Now,
Pay Later" financing solution during a specific period of time.
Reporting Business Segments: The Company operates a
Travel Business and a Financial Services Business which are
structured as follows :
Our travel business is comprised of two reportable segments:
“Air” and “Packages, Hotels and Other Travel Products. Our “Air”
segment 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. Our
“Packages, Hotels and Other Travel Products” segment 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 the sale of
advertisements and incentives earned from suppliers.
Our financial services business is comprised of one reportable
segment: “Financial Services”. Our “Financial Services” segment
primarily consists of loan origination to our travel business’
customers and to customers of other merchants in various
industries. Our “Financial Services” segment also consists of
processing, fraud identification, credit scoring and IT services to
our travel business, and to third-party merchants.
Transactions: We define the number of transactions as the
total number of travel customer orders completed on our platform or
financing merchant customers (excluding Decolar) of the "Buy Now,
Pay Later" solution during a given 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, Viajanet, Stays and the Company's fintech
business Koin.
Despegar operates in 19 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
Despegar’s new Investor Relations website
www.investor.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 March 31, 2023 and 2022 (in thousands of
U.S. dollars, except as otherwise indicated)
1Q23
1Q22
% Chg Total Revenue
158,707
112,414
41%
Cost of revenue
51,027
42,558
20%
Gross profit
107,680
69,856
54%
Operating expenses Selling and marketing
51,892
30,517
70%
General and administrative
22,672
23,523
(4%)
Technology and product development
25,971
20,735
25%
Total operating expenses
100,535
74,775
34%
Gain from equity investments
113
117
(3%)
Operating income / (loss)
7,258
(4,802)
n.m. Financial result, net
(12,595)
(7,023)
n.m. Net loss before income taxes
(5,337)
(11,825)
n.m. Income tax (benefit) / expenses
(4,640)
19,093
n.m. Net loss
(697)
(30,918)
n.m. Net loss attributable to Despegar.com, Corp
(697)
(30,918)
n.m.
Key Financial & Operating Trended Metrics (in thousands
of U.S. dollars, except as otherwise indicated)
2Q21
3Q21
4Q21
1Q22
2Q22
3Q22
4Q22
1Q23
FINANCIAL RESULTS
Total Revenue
$63,069
$83,368
$124,556
$112,414
$134,421
$145,596
$145,542
$158,707
Cost of revenue
38,429
37,953
53,765
42,558
45,149
50,305
44,897
51,027
Gross profit
24,640
45,415
70,791
69,856
89,272
95,291
100,645
107,680
Operating expenses Selling and marketing
19,188
26,138
34,582
30,517
42,214
46,174
46,245
51,892
General and administrative
22,696
22,162
18,689
23,523
27,037
24,873
26,092
22,672
Technology and product development
18,344
19,432
19,508
20,735
21,407
22,834
25,015
25,971
Total operating expenses
60,228
67,732
72,779
74,775
90,658
93,881
97,352
100,535
Gain / (loss) from equity investments
(348)
(29)
343
117
16
(105)
(192)
113
Operating (loss) / income
(35,936)
(22,346)
(1,645)
(4,802)
(1,370)
1,305
3,101
7,258
Financial result, net
(1,835)
(3,254)
(3,809)
(7,023)
(10,529)
(15,359)
(12,543)
(12,595)
Loss before income taxes
(37,771)
(25,600)
(5,454)
(11,825)
(11,899)
(14,054)
(9,442)
(5,337)
Income tax (benefit) / expenses
(6,413)
(1,654)
7,545
19,093
1,266
(4,767)
5,717
(4,640)
Net loss
(31,358)
(23,946)
(12,999)
(30,918)
(13,165)
(9,287)
(15,159)
(697)
Net loss attributable to non controlling interest
$258
$273
$526
–
–
–
–
–
Net loss attributable to Despegar.com, Corp
(31,100)
(23,673)
(12,473)
(30,918)
(13,165)
(9,287)
(15,159)
(697)
Total Adjusted EBITDA
($22,256)
($10,346)
$9,002
$6,787
$10,594
$12,015
$12,525
$17,272
Net loss
($31,358)
($23,946)
($12,999)
($30,918)
($13,165)
($9,287)
($15,159)
($697)
Add (deduct):
Financial result, net
1,835
3,254
3,809
7,023
10,529
15,359
12,543
12,595
Income tax (benefit) / expenses
(6,413)
(1,654)
7,545
19,093
1,266
(4,767)
5,717
(4,640)
Depreciation expense
1,401
2,451
1,497
1,672
1,699
2,144
1,504
1,716
Amortization of intangible assets
6,827
6,457
6,909
6,584
6,937
6,871
8,593
6,813
Share-based compensation expense
5,444
3,092
2,241
3,333
3,328
1,305
(673)
1,485
Impairment charges
–
–
–
–
–
–
–
–
Restructuring charges
8
–
–
–
–
–
–
–
Acquisition transaction costs
–
–
–
–
–
390
–
–
Total Adjusted EBITDA
($22,256)
($10,346)
$9,002
$6,787
$10,594
$12,015
$12,525
$17,272
1. In thousands
Unaudited Consolidated Balance Sheet as of March 31, 2023 and
December 31, 2022 (in thousands of U.S. dollars, except as
otherwise indicated)
As of March 31, 2023 As of December 31, 2022 ASSETS
Current assets Cash and cash
equivalents
205,143
219,167
Restricted cash
22,015
25,879
Trade accounts receivable, net of credit expected loss
170,672
147,398
Loan receivables, net
18,057
15,385
Related party receivable
9,277
10,676
Other current assets and prepaid expenses
40,993
46,621
Total current assets
466,157
465,126
Non-current assets Other assets and prepaid expenses
76,798
69,784
Loan receivables, net
857
1,185
Restricted cash
864
–
Lease right-of-use assets
19,820
22,428
Property and equipment net
15,959
15,532
Intangible assets net
94,083
91,500
Goodwill
147,216
138,637
Total non-current assets
355,597
339,066
TOTAL ASSETS
821,754
804,192
LIABILITIES AND SHAREHOLDERS’ DEFICIT Current
liabilities Accounts payable and accrued expenses
60,087
58,024
Travel suppliers payable
314,714
287,426
Related party payable
42,226
37,472
Short-term debt
21,392
29,931
Deferred Revenue
26,001
23,348
Other liabilities
110,763
114,221
Contingent liabilities
9,488
7,982
Lease Liabilities
5,506
6,081
Total current liabilities
590,177
564,485
Non-current liabilities Other liabilities
17,786
20,845
Contingent liabilities
30,786
30,593
Long term debt
3,433
5,119
Lease liabilities
15,252
17,151
Related party liability
125,000
125,000
Total non-current liabilities
192,257
198,708
TOTAL LIABILITIES
782,434
763,193
Series A non-convertible preferred shares
120,582
121,449
Series B convertible preferred shares
46,700
46,700
Mezzanine Equity
167,282
168,149
SHAREHOLDERS’ DEFICIT Common stock
287,844
287,553
Additional paid-in capital
317,526
323,706
Other reserves
(728)
(728)
Accumulated other comprehensive loss
(10,318)
(16,092)
Accumulated losses
(644,019)
(643,322)
Treasury Stock
(78,267)
(78,267)
Total Shareholders' Deficit Attributable to Despegar.com Corp
(127,962)
(127,150)
TOTAL LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ DEFICIT
821,754
804,192
Unaudited Statements of Cash Flows for the three-month
periods ended March 31, 2023 and 2022 (in thousands of U.S.
dollars, except as otherwise indicated)
3 months ended March
31,
2023
2022
Cash flows from operating activities Net loss
($697)
($30,918)
Adjustments to reconcile net income / (loss) to net cash flows from
operating activities: Unrealized foreign currency
translation losses
$7,020
$6,723
Depreciation expense
$1,716
$1,672
Amortization expenses
$6,813
$6,584
Earnout
$174
$175
Indemnity
($174)
($175)
Gain from equity investments
($113)
($117)
Stock based compensation expense
$1,485
$3,333
Amortization of lease right-of-use assets
$1,402
$1,886
Interest and penalties
$881
$565
Income tax (benefit) / expenses
($7,179)
$16,684
Allowance for credit expected losses
$3,117
$4,487
Provision for contingencies
$3,530
$6,376
Changes in assets and liabilities net of non-cash transactions:
(Increase) / decrease in trade accounts receivable,
net of credit expected loss
($17,308)
$30,648
Increase in Loans receivables
($4,213)
($11,904)
Decrease in related party receivables
$1,565
$4,389
Decrease in other assets and prepaid expenses
$3,595
$39,473
Increase / (Decrease) in accounts payable and accrued expenses
$313
($4,257)
Increase / (Decrease) in travel suppliers payable
$11,524
($2,786)
Decrease in other liabilities
($5,961)
($33,564)
Decrease in contingent liabilities
($4,020)
($6,204)
Increase / (Decrease) in related party liabilities
$1,095
($1,277)
Decrease in lease liability
($1,464)
($2,071)
Increase in deferred revenue
$2,078
$2,478
Net cash flows provided by operating activities
5,179
32,200
Cash flows from investing activities: Origination of
loans receivable, net of allowance
($4,252)
($4,664)
Collection on Loan Receivables
$3,375
$1,680
Acquisition of property and equipment
($1,387)
($1,057)
Capital expenditures, including internal-use software and website
development
($6,786)
($7,098)
Net cash flows used in investing activities
(9,050)
(11,139)
Cash flows from financing activities: Net (decrease)
/ increase of short term debt
$4,885
($424)
Payment of short-term debt
($12,136)
($5,658)
Proceeds from issuance of long-term debt
–
$1,492
Payment of long-term debt
($5,234)
($1,942)
Payment of dividends to stockholders
($8,241)
($15,838)
Exercise of stock-based awards
–
$86
Collect on debenture issuance by securitization program
$2,378
$605
Payments of debenture issuance by securitization program
($3,448)
–
Payments for acquired non-controlling interest
–
($1,200)
Net cash flows used in financing activities
(21,796)
(22,879)
Effect of exchange rate changes on cash and cash equivalents and
restricted cash
$8,643
$8,359
Net increase / (decrease) in cash and cash equivalents and
restricted cash
($17,024)
$6,541
Cash and cash equivalents as of beginning of the year and
restricted cash
$245,046
$279,223
Cash and cash equivalents as of end of the period and restricted
cash
$228,022
$285,764
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 result, net, 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 6 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 2022 and applying them
to the corresponding months in 2023, 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/20230518005179/en/
IR Contact Luca Pfeifer Investor Relations Phone:
(+57)3153824802 E-mail: luca.pfeifer@despegar.com
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