3Q19 Earnings Conference Call 1 Disclaimer This presentation - - PowerPoint PPT Presentation

1

3Q19 Earnings Conference Call

NOVEMBER 07, 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

• ur 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 competition. 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 after the date of this presentation because of new information, future events

• r 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 presentation. This presentation shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any 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.

2

Disclaimer

• Strong growth in Gross Bookings, Revenue and

Profitability

• Performing well and gaining share in the region despite

industry contraction in Argentina

• Making progress on strategic initiatives deepening the

value proposition

• Positive cashflow generation
• Share buyback reflects confidence in long term

business potential

3Q19 - Strong Quarterly Results, Outperforming the Industry

Advancing on Long-Term Strategy Despite Current Challenging Macro Environment

(1) Measured in number of passenger air tickets sold by Despegar over total industry. Source: Company estimates based on GDS and OAG information.

NPS +150 bps Transactions +5%; +7% Ex-Argentina Non-Air Mix + 288bps to 61% of Revenues Top 100 Latam Hotels

• f LatAm Hotel GB flat at 22%

Share of Mobile Transactions +418 bps to 39% of Total Estimated Air Market Share (1) +30 bps

Gross Bookings

+26% FX Neutral

(+8% as reported)

ASPs +21% FX Neutral

(+3% as reported)

Room Nights +5%

(Ex-Argentina +10%) 4 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

FX Neutral Gross Bookings +26% (+8% As Reported) Drives Further Share Gains in a Contracting Market

Total Transactions by Segment

In millions

• Transactions +5% YoY with As Reported Gross Bookings +14% excluding Argentina
• Focus on cross-selling drove 26% YoY increase in stand-alone package transactions, fastest growing product
• ASPs of $433 per transaction, up 21% YoY on an FX neutral basis, and 3% YoY as reported
• Gained +30 bps in market share YoY, in a high single digit contracting Latin American travel industry

Gross Bookings

In US$ Bn

5

1.5 1.6 4.4 4.6 1.1 1.1 3.3 3.3 2.6 2.7 7.7 7.8

• 0.5

3Q18 3Q19 9M18 9M19

+1%

+5% +5% +4%

• 2%

1.1 1.2 3.5 3.5

3Q18 3Q19 9M18 9M19

+8%

• 2%

+26% FX Neutral +22% FX Neutral +5% Note: 3Q19 results include three months Viaje Falabella’s transactions in Argentina, Chile and Peru; and two months in Colombia. Packs, Hotel & OTPs Air

Launched First Phase of Loyalty Program in Brazil

• Enhancing our value proposition while further driving cross selling and boosting customer life-time

value Despegar: Partner of Choice in the Latin American Travel Market

• Jul 31 ’19: acquisition of 100% of Viajes Falabella and Long-Term Strategic Alliance with Falabella Financiero
• Oct 24 ’19: API Connectivity Agreement with Ctrip allows for the integration of Despegar’s direct accommodation
• ffering in Latin America with Ctrip’s platform
• Oct 29 ’19: 10-year Exclusive Co-Branded Credit Card Agreement with ICBC in Argentina in partnership with

Mastercard

New Tech Developments

• Pre-Travel: Upgraded call center with automation services which assist customers with accurate and timely

response.

• Destination: Launched “Bundles” which allows us to direct demand towards to preferred suppliers, delivering both

best commercial agreements and, stronger customer reviews

Investments in Business Development

6

7

Gross Bookings (% growth) (1)

3%

• 4%

12% 5%

Transactions (% growth) (1)

16% 11% 52%

• 8%

8% 1% 21% 3%

Average Selling Price (% growth) (1)

• Brazil: transactions +3%, recovering from a 14% drop in 2Q19 on lower exposure to Avianca Brasil. Gross bookings

+19% (+15% as reported) while FX neutral ASPs +16% (+11% as reported). Higher ASPs reflect: i) 21% growth in package transactions; ii) higher domestic air fares; and iii) continued mix-shift from domestic to international travel.

• Argentina: remains impacted by adverse macro (53% inflation and 36% FX depreciation) leading to a 4% decline in

transactions, mostly explained by lower international travel. On an FX neutral basis, gross bookings +47% YoY and ASPs +52%, while as reported gross bookings and ASPs decreased YoY by 11% and 8%, respectively.

• Rest of Latam: strong transaction growth.

(1) Note: figures reflect YoY increases in 3Q19 Brazil Argentina Other 19% 15% 47%

• 11%

21% 13% 26% 8% Total Brazil Argentina Other Total Brazil Argentina Other Total

As Reported Fx Neutral As Reported Fx Neutral

Transactions, Gross Bookings and ASP Growth Rates, Rebound

65.2 71.1 70.1 70.8

3Q18 3Q19 9M18 9M19

42% 39% 41% 39% 58% 61% 59% 61%

3Q18 3Q19 9M18 9M19

FX Neutral Revenues +19% (As Reported 9%) With Solid Growth in Packages, Hotels & Other Travel Products

Total Revenue*

In US$ mllions 121.2 132.0 398.1 379.2

3Q18 3Q19 9M18 9M19

Revenue Mix

% of total revenue

• Revenue margin up 11 bps YoY to 11.2% YoY reflecting: i) growth in higher-margin standalone packages; and ii) the

positive impact from Viajes Falabella. This more than offsets reductions in customer fees and discounts in package transactions to support market share growth and ii) lower air supplier volume bonuses.

• Packages, Hotels, and Other Travel Products contributed with a 14% YoY revenue increase while Air revenues rose 1% in

the period. Revenue per Transaction

In US$ 33.4 32.3 37.5 32.5

3Q18 2Q19 9M18 9M19 8

• 3%

+19% FX Neutral 15% FX Neutral + 1% Packs, Hotel & OTPs Air Packs, Hotel & OTPs Air

Gross Profit & Margin

In US$ millions and % of revenues 84.6 89.5 275.7 251.1

3Q18 3Q19 9M18 9M19

69.8%

Implementing Strategic Initiatives while Balancing Near-Term Growth & Profitability

• As reported gross profit up 6% YoY (+9% FX Neutral).
• Cost of revenue up 16% YoY driven by: i) increased installment plan costs in Argentina; and ii) higher credit card merchant

fee expense. Partially offset by a decline in fulfillment costs due to efficiency gains.

• S&M expenses +12% YoY, primarily due to acquisition of Viajes Falabella and associated costs of operating stores within

stores and telesales operations; partially offset by efficiencies gained in Direct Marketing.

Selling & Marketing (S&M) Expenses

In US$ millions, % of revenues and US$ per transaction Gross Margin % of Revenues (1)

9

67.7% 69.3% 66.2%

41.6 46.7 131.4 138.3

3Q18 3Q19 9M18 9M19

34.3% 33.0%

FX Neutral 3Q19 Gross Profit

• f $92 million, 9% YoY

Per Transaction (1)

$16.0

35.0% $16.0

+6%

• 9%

+12% +5% (1) Excluding Viajes Falabella

Adjusted EBITDA and margin (%)

In US$ millions and % of revenues

10

.

Adjusted EBITDA Margin

12.0% 12.6% 13.5% 4.6% 7.3%

Adjusted EBITDA Driven by Successful New Business Initiatives in Adverse Macro Environment

• Reported Adjusted EBITDA of $9.4 M compared to $14.5 M in 3Q18, but up from negative $7.3 M in 2Q19, impacted by
• ne-time costs associated with the rebranding campaign, and to a lesser extent to the suspension of operations of Avianca

Brasil along with weak macro in Argentina.

• Comparable Adj. EBITDA margin contracted 551 bps YoY to 7.1% from 12.6% reflecting: i) challenging macro in Argentina

and to a lesser extent in Brazil resulting in higher YoY price discounts in packages to drive growth, and lower fees from lodging and car rental transactions; ii) higher installment expenses and credit card processing fees; and iii) higher G&A costs.

14.5 15.3 9.4 53.8 17.3 27.5 3Q18 3Q18 - Comp 3Q19 9M18 9M19 9M19 - Comp

• 68%
• 49%

7.1%

• 39%
• 35%

11

.

Solid Cash Flow Generation and Robust Balance Sheet Supports Shareholder Enhancing Initiatives

Operating Cash Flow 3Q19 Operating Cash Flow Bridge (in US$ millions)

In US$ millions In US$ millions

• 24.2
• 43.3

61.2

• 17.6
• 26.7

25.6 2015 2016 2017 2018 3Q18 3Q19

• Cash flow generation of $25.6 M, mainly driven by: i) a lower credit card receivables balance from shorter

collections in Brazil, Chile and Ecuador; ii) higher Tourist Payables from higher sales; and ii) lower advances to suppliers.

• Cash and cash equivalents, including restricted cash of $300.1 M.
• Repurchased $39.3 million repurchased in 3Q19 and $42.2 million in shares in year-to-date.

Looking Ahead:

• Following a strong Q3, we reiterate our bullishness on the long-term

potential of Latin America and the Online Travel Industry

• Q3 showed encouraging signs of recovery, despite a tough start

impacted by currency devaluation in July/ August

• Volatile environment drove some advance purchases ahead of peak Q4
• Despegar was able to tactically achieve higher profitability in the quarter,

posting margin expansion and attractive YoY growth

• Potential for short-term margin challenges as we adjust our operating

structure to integrate Viajes Falabella and macro recovery strengthens

• Efficiency opportunities exist given attractive business model with high
• perating leverage
• One-time investments / charges expected in Q4, as we further push
• ur initiatives and capture efficiencies
• Loyalty program deferred revenue
• Investments to capture cost improvements as initiatives get implemented

12

13

Q&A

Appendix

Trends in Key Financial & Operating Metrics

(in thousands U.S. dollars, unless otherwise stated)

15

• Adj. Net Income tax expense

Trends in Key Financial & Operating Metrics

(in thousands U.S. dollars and thousand transactions, unless otherwise stated)

16

1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 KEY METRICS Operational Gross bookings $1,019,102 $1,061,026 $1,116,022 $1,258,398 $1,231,496 $1,184,355 $1,092,287 $1,207,186 $1,157,512 $1,118,134 $1,177,728

• YoY growth

• YoY growth

• YoY growth

• YoY growth

• YoY growth

• YoY growth

• YoY growth

• YoY growth

Pro Forma

Unaudited Consolidated Balance Sheets

(in thousands U.S. dollars)

17

18

INVESTOR RELATIONS CONTACT Natalia Nirenberg Investor Relations Phone: (+54911) 2668 4490 E-mail: Natalia.nirenberg@despegar.com