Despegar.com, Corp. (DESP) Q1 2024 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
Gross Bookings $1.3 billion (up 12% year-over-year); constant currency growth of 42%. Strong performance in Brazil (27% growth) and Mexico (26% growth) driven by demand for package deals and hotel bookings.
Revenue $174 million (up 9.2% year-over-year); constant currency growth of 36%. Negative impact from foreign exchange, but improved revenue mix with non-air revenue accounting for 65% of sales.
Adjusted EBITDA $39 million (up 126% year-over-year); adjusted EBITDA margin of 22.4%, up from 10.9% in the same quarter last year, reflecting improved operating leverage and cost efficiencies.
Adjusted Net Income $22.4 million (up 68% year-over-year); compared to $13.3 million in Q1 2023, indicating strong underlying profitability.
B2C Bookings $1.1 billion (up 10% year-over-year); driven by robust hotel and package sales, particularly in Brazil and Mexico.
B2B Gross Bookings Up 47% year-over-year; highlighting significant growth in this segment.
White Label Operations Up 11% year-over-year; expansion of partnerships, notably with Livelo, Brazil's largest loyalty program.
Operating Cash Flow Used $2.6 million during the quarter; compared to $5.2 million generated in Q1 2023.
Total Cash and Cash Equivalents $213 million; a decline of $15 million year-over-year due to $15 million in dividends paid and cash used to reduce factoring expenses.
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Operating Highlights
SOFIA AI Travel Assistant: Launched SOFIA, a Generative AI travel assistant, which has seen thousands of customer interactions and provides appropriate responses in over 80% of cases. Enhancements include integration of hotel inventory and improved filtering capabilities.
Gross Bookings Growth: Gross bookings increased 12% year-over-year to $1.3 billion, with a 42% growth in constant currency. Key markets Brazil and Mexico saw gross bookings rise by 27% and 26%, respectively.
B2B and White Label Growth: B2B bookings grew 47% year-on-year, while white label operations increased by 11%. Notably, the partnership with Livelo, Brazil's largest loyalty program, has become the largest white label operation in Brazil.
Adjusted EBITDA: Adjusted EBITDA increased 126% year-on-year to $39 million, with an adjusted EBITDA margin of 22.4%, the highest in Despegar's history.
Loyalty Program Growth: Total loyalty program membership reached 26 million, an 83% year-on-year increase, with points redemption activity exceeding 12.7% of total transactions.
Expansion into Offline Sales: Successfully launched an offline sales channel in Brazil and Argentina to penetrate the offline segment, which accounts for roughly 50% of travel sales in Latin America.
Focus on Non-Air Revenue: Non-air revenue now accounts for around 65% of total sales, reflecting a strategic shift towards more profitable offerings.
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Risk or Challenges
Foreign Exchange Impact: Foreign exchange had a significant negative impact on revenue growth in Q1, affecting reported figures despite strong constant currency growth.
Regulatory and Compliance Risks: The company mentioned risks related to regulatory compliance and uncertainties that could affect business operations, particularly in the context of acquisitions.
Supply Chain Challenges: There were mentions of supply chain challenges, particularly in the context of travel services and product availability, which could impact customer satisfaction.
Economic Factors: Economic pressures in key markets, particularly in Argentina and Chile, led to a decrease in gross bookings, highlighting vulnerability to local economic conditions.
Competitive Pressures: The company faces competitive pressures in the travel market, necessitating continuous innovation and strategic execution to maintain market leadership.
Cash Flow Management: The company reported a cash outflow during the quarter, indicating potential challenges in cash flow management and the need for prudent capital allocation.
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Guidance & Outlook
Gross Bookings Growth: Gross bookings increased 12% year-over-year to $1.3 billion, with a 42% growth in constant currency.
Market Performance: Brazil and Mexico saw gross bookings increase by 27% and 26% respectively.
Non-Air Revenue Growth: Non-air revenue now accounts for around 65% of total sales, with travel packages reaching 36% of gross bookings.
B2B and White Label Growth: B2B bookings grew 47% year-on-year, and white label operations increased by 11%.
SOFIA AI Assistant: Continued development of SOFIA, the AI travel assistant, enhancing customer engagement and personalization.
Loyalty Program Growth: Pasaporte Despegar membership reached 26 million, an 83% year-on-year increase.
App Engagement: App downloads increased by 30%, with 49% of transactions processed through the app.
Revenue Guidance: Maintaining revenue guidance of at least $820 million for 2024, equating to at least 16% annual growth.
Adjusted EBITDA Guidance: Raising adjusted EBITDA guidance from at least $150 million to at least $155 million for 2024, implying at least 34% year-over-year growth.
Cash Position: Total cash and cash equivalents reported at $213 million, with expectations to rebuild cash balance in the second half of the year.
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Shareholder Return Plan
Dividends Paid: $15 million paid to holders of preferred A shares, including a catch-up payment on interest from 2021.
Share Buyback Program: None
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Key Q&A
Q:Can you help us break down some of the drivers for revenue acceleration and what countries can contribute?
A:We see an increasing growth trend in the B2B business and strong market conditions in Brazil and Mexico.
Q:What are you doing on the commercial side to attribute the significant step up in app penetration?
A:The app's performance is due to its user-friendliness and tailored offers, which enhance customer loyalty and reduce acquisition costs.
Q:What are you assuming in terms of exchange rates or currencies when you gave this guidance?
A:We have significant FX headwinds, but we expect overall revenue growth to pick up in the second half.
Q:What areas are you investing in that might affect margins?
A:We are investing in B2B, B2C capabilities, and our loyalty program to drive long-term growth.
Q:What percent does the Livelo partnership represent of the overall B2B business?
A:Livelo is a significant revenue opportunity, but we do not disclose specific percentages.
Q:What level of market share are you at currently in Brazil?
A:We do not disclose market share by country, but we are still small relative to the total Latin American travel market.
Q:Can you talk about the AI investments and how they're helping customer service?
A:We use AI to improve customer service efficiency and predict potential issues, enhancing overall productivity.
Q:Are you seeing competition from Airbnb in Brazil?
A:Vacation rentals represent less than 15% of searches in Latin America, and we are growing strongly in that category.
Q:Review of Unclear Management Responses
A:Management avoided providing specific percentages for the Livelo partnership and market share in Brazil, which lacked clarity.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI tool
FX
SOFIA capability
Technical Difficulty
accommodation
acquisition
agent
amount
balance sheet
case
cash balance
category
consumer
conversation
country
customer service
day
decrease
effort
example
factoring expense
feedback
focus market
headwind
increase account
interaction
leverage margin
momentum
receivables
relationship partner
rental
retention
side
supervisor
thing
thought
travel assistant
understanding
user
vacation
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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