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1Q19 Earnings Conference Call
MAY 09, 2019
1Q19 Earnings Conference Call 1 Disclaimer This presentation - - PowerPoint PPT Presentation
MAY 09, 2019 1Q19 Earnings Conference Call 1 Disclaimer This presentation includes forward-looking statements. We have based these forward-looking statements largely on our current beliefs, expectations and projections about future events and
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MAY 09, 2019
This presentation includes forward-looking statements. We have based these forward-looking statements largely 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, including: political, social and macroeconomic conditions in Latin America; currency exchange rates and inflation; current competition and the emergence of new market participants in our industry; government regulation; our expectations regarding the continued growth of internet usage and e-commerce in Latin America; failure to maintain and enhance our brand recognition; our ability to maintain and expand our supplier relationships; our reliance on technology; the growth in the usage of mobile devices and our ability to successfully monetize this usage; our ability to attract, train and retain executives and other qualified employees; and our ability to successfully implement our growth strategies. We operate in a competitive and rapidly changing environment. 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 presentation. 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
statements after the date of this presentation because of new information, future events or other factors, except as required by law. In light of the risks and uncertainties described above, the future events and circumstances discussed in this presentation might not occur or come into existence and forward-looking statements are thus not guarantees of future performance. Considering these limitations, you should not make any investment decision in reliance on forward-looking statements contained in this presentation. This presentation includes industry, market and competitive position data and forecasts that we have derived from independent consultant reports, publicly available information, industry publications, official government information, other third-party sources and our internal data and estimates. Independent consultant reports, industry publications and other published sources generally indicate that the information contained therein was obtained from sources believed to be reliable. The inclusion of market estimations in this presentation is based upon information obtained from third-party sources and our understanding of industry conditions. Although we believe that this information is reliable, the information has not been independently verified by us. Trademarks and service marks appearing in this presentation are the property of their respective holders. This presentation includes data from Euromonitor. Information sourced to Euromonitor is from independent market research carried out by Euromonitor International Limited as part of its annual Passport research. Euromonitor makes no warranties about the fitness of this intelligence for investment decisions. This presentation is strictly confidential, is for informational purposes only and may not be relied upon in connection with the purchase or sale of any security. You may not disclose any of the information contained herein to any other parties without the company’s prior express written permission. This presentation is made pursuant to Section 5(d) of the Securities Act of 1933, as amended, and is intended solely for investors that are either qualified institutional buyers or institutions that are accredited investors (as such terms are defined under Securities and Exchange Commission (“SEC”) rules) solely for the purpose of determining whether such investors might have an interest in a securities offering contemplated by Despegar.com, Corp. Any such offering of securities will only be made by means of a registration statement (including a prospectus) filed with the SEC, after such registration statement is declared effective. No such registration statement has been declared effective as of the date of this
state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
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Disclaimer
Key Operating Metrics Reflect Successful Execution of Strategy Against Challenging Macro
Note: YoY comparisons except for 1Q19 information for NPS. * Measured in number of passenger air tickets sold by Despegar over total industry. Source: Company estimates based on GDS and OAG information.
NPS +580 bps Transactions +5%; +11% Ex-Argentina Non-Air Mix +400 bps to 63% of Revenues Top 100 Latam Hotels +300 bps of LatAm Hotel GB Share of Mobile Transactions +721 YoY to 38% of Total Estimated Air Market Share* +100 bps
Gross Bookings
+24% FX Neutral
ASPs +17% FX Neutral Room Nights +4% Ex-Argentina +22%
3 INCREASE REPEAT PURCHASE RATE ATTRACT NEW CUSTOMERS CONTINUE TO GROW HIGH MARGIN NON-AIR BUSINESS INCREASE & OPTIMIZE INVENTORY DRIVE SHARE GAINS IN CHALLENGING MACRO BROADEN PLATFORM & MARKET SHARE GAIN IMPROVE CUSTOMER EXPERIENCE INCREASE CONSUMER ENGAGEMENT & SATISFACTION EXPAND REACH IN THE REGION ENHANCE PRODUCT OFFERING & CROSS-SELL DEEPEN RELATIONSHIPS WITH SUPPLIERS FURTHER INVESTMENT IN MOBILE PRODUCTS REINVEST OPERATING LEVERAGE IN CUSTOMER ACQUISITION PURSUE STRATEGIC ACQUISITIONS
Increases of 5% in Transactions and 24%inFXNeutralGross Bookings Drove Share Gains Despite Industry Contraction
Total Transactions by Segment
In millions
was the fastest growing product more than tripling growth in total transactions
devaluation in Argentina, more than offsetting positive mix-shift from domestic to international across some key markets. Gross Bookings
In US$ Bn
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1,4 1,5 5,3 5,9 1,2 1,1 3,8 4,4 2,5 2,7 9,1 10,4
0,8 2,0 3,3 4,5 5,8 7,0 8,3 9,5 10,8 12,0
1Q18 1Q19 2017 2018
+11% +12% +18%
1,2 1,2 4,5 4,7
0,3 0,8 1,4 1,9 2,5 3,0 3,6 4,1 4,7 5,2
1Q18 1Q19 2017 2018
+24% FX Neutral +29% FX Neutral
Customer Centric Focus Supported by Investments in Innovation and Customer Service
entered into long-term strategic alliance with Falabella Financiero
in more than 17,800 Oxxo stores nationwide
Despegar’s customer centric focus, strong technological commitment and new product initiatives
getaway packages
and a unique luggage scanner that confirms if the baggage size is accepted by the airline
technology across the app and customer call center
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Customized offering short getaway packages
Customer Centric Focus Supported by Investments in Innovation and Customer Service
preferences
6 Choose When…. ... the Type of Place… … the Activities… and we get you there … with Whom
Sustained Growth in FX Neutral Gross Bookings and Gaining Share Across Key Geographies
7 20% 3% 34%
18% 12% 24%
Gross Bookings (% growth)
3%
20% 5%
Transactions (% growth)
16% 0% 46%
17%
Average Selling Price (ASPs) (% growth)
zil: l: transactions +3% beating market growth driven by international travel, particularly packages and air. On an FX neutral basis, gross bookings rose 20% and ASPs rose 16%. As Reported Gross Bookings +3% YoY, while ASPs remained flat as positive mix-shift to international from domestic and higher share of ASP packages offset the 16% FX devaluation.
entina: ina: continued to gain market share despite 9% decline in transactions reflecting overall market contraction (inflation +55% and FX depreciation 54%). On an FX neutral basis, gross bookings +34% YoY and ASPs +46%. As reported gross bookings and ASPs down 32% and 26%, respectively.
Note: figures reflect YoY increases in 1Q19 Brazil Argentina Other Total Brazil Argentina Other Total Brazil Argentina Other Total
As Reported Fx Neutral As Reported Fx Neutral
76,2 73,5 76,3 71,0
1Q18 1Q19 2017 2018
41% 37% 46% 40% 59% 63% 54% 60%
0,25 0,5 0,75 1 1,25
1Q18 1Q19 2017 2018
Air Packages, Hotels & OTPs
Revenue Up 19% on FX Neutral Basis but Down As Reported Impacted by FX Depreciation & Share Gain Initiatives
Total Revenue*
In US$ millions 148,6 133,1 529,4 530,6
'- 65,0 130,0 195,0 260,0 325,0 390,0 455,0 520,0 585,0
1Q18 1Q19 2017 2018
Revenue Mix
% of total revenue
environment, and ii) lower air supplier bonuses due to soft demand.
Revenue per Transaction
In US$ 44,7 32,8 45,7 36,1
1Q18 1Q19 2017 2018 8
+0%
Note: Since 1Q18 revenues recognized at completion of transaction versus booking
+19% FX Neutral +22% FX Neutral
Gross Profit & Margin
In US$ millions and % of revenues
104,9 87,9 387,0 358,5
1Q18 1Q19 2017 2018
70.6%
Strategic Initiatives Driving Market Share Gains and Customer Satisfaction while Balancing Growth & Profitability
With slightly better market conditions in 1Q19, Despegar increased Air customer fees and lowered Package discounts driving a 350 bps sequential increase in gross margin.
Fulfillment costs increased reflecting focus on customer service, but declined per transaction. Partially offset by lower fraud.
transaction.
Selling & Marketing Expenses
In US$ millions, % of revenues and US$ per transaction
Gross Margin % of Revenues
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66.0% 73.1% 67.6%
46,4 40,9 166,3 174,4
1Q18 1Q19 2017 2018
31.2%
30.8%
31.4% 32.9%
FX Neutral 1Q19 Gross Profit
Per Transaction $18.5
$15.4 $18.4 $16.8
Adjusted EBITDA and margin (%)
In US$ millions and % of revenues
Initiatives to Further Support Leading Market Position
27,3 15,2 94,9 67,6
1Q18 1Q19 2017 2018
customer fees & Package discounts in 2018 to drive growth, ii) lower supplier bonuses from softer volumes, iii) higher installment costs, and iv) lower operating leverage on reduced revenue.
driven by positive mix-shift to international and higher Air customer fees and lower package discounts.
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.
Adjusted EBITDA Margin
18.4% 11.4% 17.9% 12.7%
Looking Ahead: Continue Investing to Extend Lead and Benefit from Industry Comeback
by recent downward GDP revisions in key geographies
participation
capture better economics and, emerge as a stronger player when macro environment improves
structure and lowest online penetration, providing significant growth
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Appendix
Trends in Key Financial & Operating Metrics
(in thousands U.S. dollars, unless otherwise stated)
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2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 FINANCIAL RESULTS Revenue $123,462 $131,468 $144,011 $148,593 $128,259 $121,247 $132,515 $133,114 Revenue Recognition Adjustment ($59) $1,310 $7,578 Cost of revenue 35,087 37,869 38,383 43,646 42,088 36,673 49,703 45,245 Gross profit 88,316 94,909 113,206 104,947 86,171 84,574 82,812 87,869 Operating expenses Selling and marketing 43,289 41,097 46,356 46,410 43,450 41,572 42,925 40,933 General and administrative 18,618 15,318 19,821 15,888 16,986 17,130 17,599 20,638 Technology and product development 17,644 18,907 19,349 19,225 18,732 16,821 16,376 18,713 Total operating expenses 79,551 75,322 85,526 81,523 79,168 75,523 76,900 80,284 Operating income 8,765 19,587 27,680 23,424 7,003 9,051 5,912 7,585 Net financial income (expense) (1,611) (2,880) (6,232) (2,831) (5,292) (11,026) (18) (5,220) Net income before income taxes 7,154 16,707 21,448 20,593 1,711 (1,975) 5,894 2,365Trends in Key Financial & Operating Metrics
(in thousands U.S. dollars and thousand transactions, unless otherwise stated)
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2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 KEY METRICS Operational Gross bookings $1,061,026 $1,116,022 $1,258,398 $1,231,497 $1,184,355 $1,092,287 $1,207,186 $1,157,512Unaudited Consolidated Balance Sheets
(in thousands U.S. dollars)
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As of March 31, 2019 As of December 31, 2018 ASSETS Current assets Cash and cash equivalents $311,657 $346,480 Restricted cash and cash equivalents $4,390 $5,709 Accounts receivable, net of allowances $214,173 $228,448 Related party receivable 8,606 8,653 Other current assets and prepaid expenses 75,877 68,471 Total current assets 614,703 657,761 Non-current assets Other Assets 14,119 12,751 Restricted cash and cash equivalents – – Right of use 5,818 – Property and equipment net 19,767 19,716 Intangible assets, net 40,745 37,512 Goodwill 36,162 36,207 Total non-current assets 116,611 106,186 TOTAL ASSETS 731,314 763,947 As of March 31, 2019 As of December 31, 2018 LIABILITIES AND SHAREHOLDERS’ DEFICIT Current liabilities Accounts payable and accrued expenses 46,086 42,353 Travel suppliers payable 160,988 185,450 Related party payable 82,378 83,904 Loans and other financial liabilities 8,423 31,162 Deferred Revenue 8,560 8,229 Other liabilities 35,345 33,270 Contingent liabilities 4,082 4,794 Total current liabilities 345,862 389,162 Non-current liabilities Other liabilities 361 243 Contingent liabilities 2,052 1,968 Lease liabilities 5,456 – Related party liability 125,000 125,000 Total non-current liabilities 132,869 127,211 TOTAL LIABILITIES 478,731 516,373 SHAREHOLDERS’ EQUITY (DEFICIT) Common stock 259,781 255,254 Additional paid-in capital 320,099 321,627 Other reserves (728) (728) Accumulated other comprehensive income 3,175 3,051 Accumulated losses (303,714) (305,600) Treasury Stock (26,030) (26,030) Total Shareholders' Equity Attributable / (Deficit) to Despegar.com Corp 252,583 247,574 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 731,314 763,94717
INVESTOR RELATIONS CONTACT Javier Kelly Grinner Investor Relations Phone: (+5411) 5173 3501 E-mail: investorrelations@despegar.com