Despegar.com Corporation (DESP) Q4 2023 Earnings Call Transcript
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Overview
The earnings call shows strong financial performance with significant growth in revenue, bookings, and profitability across various segments. The new partnership with Banco Davivienda and improved cost efficiencies support a positive outlook. Despite the lack of specific targets for packages and Koin, the overall guidance and expected improvements in EBITDA and free cash flow conversion suggest a positive market reaction. The Q&A reinforces confidence with no observed demand slowdown and stable financial expectations. The absence of market cap data limits the precise prediction, but the overall sentiment is positive.
Key Financial Performance
Gross Bookings (Q4 2023) $1.5 billion, up 44% year-over-year (78% in constant currency). This growth was driven by strong demand in Brazil and Mexico, and the highest gross bookings since the company's IPO.
Total Gross Bookings (Full Year 2023) $5.3 billion, an increase of 31% year-over-year (52% FX adjusted). This reflects a significant recovery from the pandemic.
Revenue (Q4 2023) $204 million, a 40% year-over-year increase (82% in constant currency). The increase is attributed to a higher take rate of 13.4% and a focus on travel packages.
Revenue (Full Year 2023) $706 million, growing 31% year-over-year in US dollars (55% in constant currency). This exceeded the upper end of the revenue guidance.
Adjusted EBITDA (Q4 2023) $43.6 million, representing a 248% year-over-year increase. This was achieved through improved operational efficiencies and a focus on profitable non-air revenue.
Adjusted EBITDA (Full Year 2023) $116 million, the highest full-year EBITDA ever, with a margin expansion of 8.6 percentage points year-over-year to 16.4%. This reflects strong commercial execution and cost efficiencies.
Operating Cash Flow (Q4 2023) $26 million, compared to $18 million cash used in Q4 2022. This indicates improved cash generation.
Adjusted Net Income (Q4 2023) $21.1 million, a significant increase from $2.7 million in Q4 2022. This reflects the company's improved profitability.
Adjusted Net Income (Full Year 2023) $49.3 million, compared to an adjusted net loss of $6.2 million in 2022. This marks a strong turnaround in financial performance.
B2C Gross Bookings (Q4 2023) $1.3 billion, a 41% year-over-year increase, driven by effective commercial strategies.
B2B Gross Bookings Growth (Q4 2023) 63% year-over-year increase, indicating strong performance in the B2B segment.
White-label Operations Growth (Q4 2023) 69% year-over-year increase, showcasing the success of white-label partnerships.
Cash and Cash Equivalents (End of 2023) $251 million, an increase from the previous year's cash position.
Loyalty Program Members (End of Q4 2023) 23 million, a 90% year-over-year increase, indicating strong growth in customer loyalty.
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Operating Highlights
New Product Launch: Despegar launched an AI trip planner named SOFIA, a digital travel assistant that offers personalized travel solutions using large language models.
Market Expansion: Despegar's gross bookings in Brazil grew 56% year-over-year, reaching $670 million, while Mexico saw a 28% increase to $253 million.
B2B Growth: B2B gross bookings expanded by 63% year-over-year.
White-label Growth: White-label operations grew 69% year-over-year.
Operational Efficiency: Despegar streamlined its cost structure, achieving a reduction in technology and G&A expenses, and lowered cost per order by over 30% since 2018.
Adjusted EBITDA: Adjusted EBITDA for Q4 2023 was $44 million, a 248% increase year-over-year.
Strategic Shift: Despegar is focusing on enhancing its technology platform and expanding its loyalty program, which now has 23 million members, a 90% increase year-over-year.
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Risk or Challenges
Competitive Pressures: Despegar faces competitive pressures in the travel technology sector, particularly in Brazil and Mexico, where strong demand trends are driving growth. The company must maintain its competitive edge through effective commercial strategies and innovative technology.
Regulatory Issues: The company acknowledges potential regulatory challenges that could arise from its business activities and acquisitions, which may impact operational performance.
Supply Chain Challenges: Despegar's growth is dependent on the travel supply chain, which can be affected by external factors such as economic downturns or disruptions in travel services.
Economic Factors: The overall travel market in Latin America is projected to grow, but economic fluctuations could impact consumer spending on travel and experiences, posing a risk to revenue growth.
Integration Risks: The integration and performance of acquired businesses pose risks that could affect Despegar's operational efficiency and financial results.
Operational Efficiency: The company is focused on improving operational efficiency, but any setbacks in this area could hinder margin expansion and overall profitability.
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Guidance & Outlook
Gross Bookings Q4 2023: Achieved highest gross booking since IPO at $1.5 billion, a 44% year-on-year increase.
Revenue Growth: Total revenues for 2023 reached $706 million, a 31% year-on-year increase.
Adjusted EBITDA: Achieved adjusted EBITDA of $116 million for 2023, highest ever, with a margin expansion of 8.6 percentage points to 16.4%.
AI Trip Planner SOFIA: Launched AI-powered digital travel assistant SOFIA, enhancing customer interaction and personalization.
Loyalty Program Growth: Total loyalty members reached 23 million, a 90% year-on-year increase.
White-label Partnerships: Expanded white-label partnerships to 80, with significant growth opportunities.
2024 Revenue Guidance: Forecasting at least $820 million in revenues for 2024, implying at least 16% year-over-year growth.
2024 Adjusted EBITDA Guidance: Expecting at least $150 million in adjusted EBITDA for 2024, representing at least a 28% year-over-year increase.
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Shareholder Return Plan
Preferred Dividends Paid: $17.8 million paid to preferred A and preferred B shareholders during the year.
Share Repurchase Program: None
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Key Q&A
Q:Where do you think the mix of package would be as a percentage of overall mix in two, three, five years?
A:We haven't set a fixed target, but we expect our company-wide growth in the other 20%. In Latin America, packages have low penetration, and we expect that to grow.
Q:Is it fair to assume that the implied 16% growth is what you're seeing for the quarter?
A:The overall demand trend remains strong, and we are optimistic about 2024. The second half of the year is generally stronger for us.
Q:What are your expectations in terms of Koin contribution to the EBITDA for '24?
A:Koin is expected to be a positive contributor to our EBITDA and cash flow, but we haven't specifically guided to its contribution.
Q:Is the take rate expected to remain stable in 2024?
A:Yes, we expect the take rate to remain largely stable at around 13%, with some fluctuations.
Q:Can you talk about where you expect leverage to show up on the income statement for 2024?
A:We expect to drive adjusted EBITDA margins higher through operating leverage and cost efficiencies.
Q:What should we be looking for in the net financial results line for 2024?
A:It should remain largely the same as 2023, but we are working on driving efficiencies.
Q:Did you see a slowdown in travel in LatAm similar to the US?
A:We haven't seen any dips in demand into Q4, and the beginning of the year is shaping up as expected.
Q:Will adjusted EBITDA free cash flow conversion improve in 2024?
A:Yes, we expect continued improvement in cash conversion as we streamline costs.
Q:Can you provide more color on margin expansion in each of the countries?
A:We generally don't go into detail on margins by country, but margin expansion has been strong across all regions.
Q:Can you provide more granularity on the areas of margin expansion?
A:We are driving efficiencies in all line items above EBITDA, and we expect to grow faster than the industry.
Q:Could you give more detail on increasing the related party payable this quarter?
A:The increase is related to strong growth in bookings and demand.
Q:How is Koin expected to perform during 2024?
A:Koin reached breakeven and is expected to generate positive EBITDA and cash flow in 2024.
Q:Review of Unclear Management Responses
A:Management avoided giving specific growth or profitability targets for Koin, and they did not provide detailed information on margin expansion by country.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
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Damian
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SOFIA intelligence
accessibility
cash conversion
country
customer interaction
customer reaction
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demand trend
efficiency cost
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journey
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metric
order
partnership
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platform travel
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DESP Transcript
Despegar.com, Corp. (DESP) Q3 2024 Earnings Call Transcript
Positive11-15
The earnings call summary indicates strong financial performance with a record gross margin and significant adjusted net income growth. The strategic partnership with Expedia and positive trends in Argentina are promising. Despite FX headwinds and lowered revenue guidance, the raised EBITDA guidance and strong cash position are positive indicators. The Q&A suggests analysts are cautiously optimistic, with concerns about FX impacts and sustainability of take rates. Overall, the strong earnings, strategic partnerships, and optimistic guidance outweigh the negatives, suggesting a positive stock price movement.
Despegar.com, Corp. (DESP) Q2 2024 Earnings Call Transcript
Unknown8-16
The earnings call reveals mixed signals. While there is strong growth in constant currency and a significant increase in adjusted net income, the company faces FX headwinds and a reduced cash balance. The Q&A highlighted concerns about FX impacts and unclear guidance on the divestiture's effects. The EBITDA guidance raise is a positive, but elevated marketing expenses and the divestiture create uncertainties. The neutral rating reflects these balanced positives and negatives, predicting a stock price movement within -2% to 2% over the next two weeks.
Despegar.com, Corp. (DESP) Q1 2024 Earnings Call Transcript
Positive5-17
The earnings call highlights strong financial performance with record bookings and revenue growth. The positive guidance for 2024, strategic partnerships, and successful AI implementation indicate continued growth. While some management responses were vague, the overall sentiment from the Q&A was optimistic, especially regarding market expansion and investment strategies. The improved EBITDA and margins further support a positive outlook, suggesting a likely stock price increase.
Despegar.com Corporation (DESP) Q4 2023 Earnings Call Transcript
Positive3-15
The earnings call shows strong financial performance with significant growth in revenue, bookings, and profitability across various segments. The new partnership with Banco Davivienda and improved cost efficiencies support a positive outlook. Despite the lack of specific targets for packages and Koin, the overall guidance and expected improvements in EBITDA and free cash flow conversion suggest a positive market reaction. The Q&A reinforces confidence with no observed demand slowdown and stable financial expectations. The absence of market cap data limits the precise prediction, but the overall sentiment is positive.
DESP Report
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