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4Q19 Earnings Conference Call
DATE _
March 5, 2020
Conference Call DATE _ March 5, 2020 1 DISCLAIMER This - - PowerPoint PPT Presentation
4Q19 Earnings Conference Call DATE _ March 5, 2020 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
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4Q19 Earnings Conference Call
DATE _
March 5, 2020
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
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
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.
DISCLAIMER
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WIN-WIN VALUE PROPOSITION FOR CUSTOMERS AND PARTNERS EFFICIENT CUSTOMER ACQUISITION & RETENTION BEST-IN-CLASS DIGITAL PRODUCT RAPID ADAPTION TO LOCAL MARKETS LOW-COST DELIVERY MODEL UNIQUELY SUITED FOR LATAM STRONG FINANCIAL POSITION TO LEAD INDUSTRY CONSOLIDATION
CUSTOMERS
BRAND
+4,300 initiatives were deployed on 2019
2019 Closes with a Strong Competitive Position
TRAFFIC
PARTNERS
by leading companies
(i) Cross channel interfaces, (ii) bundling abilities and (iii) differentiated shopping experience
market
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Best Day Acquisition, a Leading Player in Mexico Commercial Agreement with Tarjeta Naranja in Argentina High-margin Packages, Hotels & Other Products Increasing Share of Sales Business Levers Helping to Drive Growth in Gross Bookings and Maximize Profitability Leading Mobile App in the Region, Increasing 466 bps as % of Sales Launch of Loyalty Program in Brazil and co-branded credit card with Santander in Brazil
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4Q19 - Further Strengthening Our Competitive Levers
3 4 DRIVE HIGHER MARGIN PACKAGES BUILDING ON LEADING MOBILE APP POSITION ENHANCE CUSTOMER LOYALTY 1 EXPAND REACH ACROSS PLATFORMS
DESPEGAR - Q4 EARNINGS RELEASE
1.6 1.7 5.9 6.2 1.1 1.2 4.4 4.5 2.7 2.9 10.4 10.7 4Q18 4Q19 2018 2019 Air Hotels, Packages & Other Travel Products Total
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Total Transactions by Segment
In millions +6% +7% +0% +5%
Gross Bookings
In US$ Bn
+26% FX Neutral
FX Neutral Gross Bookings +26% Growth (6% As Reported) in Challenging Context
+7% +3% +6%
+23% FX Neutral
0%
1.2 1.3 4.7 4.7 4Q18 4Q19 2018 2019
DESPEGAR - Q4 EARNINGS RELEASE
Despegar Agrees to Acquire Best Day, a Leading Player in Mexico
High Brand Recognition in Mexico
35 years of Experience with unique insight into Mexico as destination
Consolidates
6m customers annually
Increases inventory in higher value add products, while introducing In Destination Services business In-destination services for Best Day and other customers
B2C Focus
2/3 of revenues
Source: Estimated 2019 figuresCross-platform Travel Agency
Hotel Wholesaler Aggregator
White labels for major travel vendors and Strategic Partnership
partners
retails stores, banks)
B2B
1/3 of revenues
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DESPEGAR - Q4 EARNINGS RELEASE
Despegar, A Partner of Choice among Leading Well-Known Companies in the Region
Launched Co-branded Credit Card in Brazil in Partnership with Santander and Visa to Complement Loyalty Program
to get the card approved online in one click
purchase
used to purchase any product at Decolar Announced Commercial Partnership Agreement with Tarjeta Naranja to provide a white label
marketplace to sell Despegar’s travel products
Link to video
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DESPEGAR - Q4 EARNINGS RELEASE
5% 61% 4% 18%
1% 1%
Brazil Argentina Other Total FX Neutral As Reported 7% 81% 12% 26%
13% 9% 6% Brazil Argentina Other Total FX Neutral As Reported 2% 13% 8% 7% Brazil Argentina Other Total
Solid Growth in Transactions and Gross Bookings while Mixed Performance in ASPs Reflects FX Volatility in Brazil and Chile
Transactions +2%, Gross bookings +7% FX Neutral (-1% as reported) while FX neutral ASPs +5% (-2% as reported). Results reflect: i) Package transactions +8% shifting however from international to domestic due to a capacity reduction in international air travel; ii) Brazilian real depreciation leading to a slight contraction in Gross Bookings as reported.
Brazil
Remains impacted by adverse macro. However, advancement of purchases lead to a 13% increase in
bookings grow 13% and ASPs 1% YoY.
Argentina
Good overall performance in Mexico more than offset a significant industry contraction in Chile due to the social unrest events that took place towards the end of 2019.
Rest of LatAm
Gross Bookings (% growth) (1) Transactions (% growth) (1) Average Selling Price (% growth) (1)
(1) Note: figures reflect YoY increases in 4Q19
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DESPEGAR - Q4 EARNINGS RELEASE
Packages, the positive impact from Viajes Falabella and increased customer fees in Argentina
32.3 32.2 36.1 32.4
4Q18 4Q19 2018 2019 73.5 77.1 71.0 72.5 4Q18 4Q19 2018 2019
FX Neutral Revenues +34% (As Reported 10%); Take Rate up to 11.4%
Total Revenue* (In US$ millions) Revenue Mix (% of total revenue)
+34% FX Neutral +19% FX Neutral 9
+10%
+5% +2% 0%
Air Non - Air
Revenue Mix per Transaction (In U$S)
132.5 145.6 530.6 524.9 4Q18 4Q19 2018 2019 38% 37% 40% 38% 62% 63% 60% 62% 4Q18 4Q19 2018 2019 Hotels, Packages & Other Travel Products Air
DESPEGAR - Q4 EARNINGS RELEASE
82.8 94.2 4Q18 4Q19
Strategic Levers Drive +34% FX Neutral Gross Profit (+14% Reported)
Gross Profit & Margin
In US$ millions and % of revenues
64.7%
Selling & Marketing (S&M) Expenses
In US$ millions, % of revenues and US$ per transaction
Gross Margin % of Revenues
62.5% 65.8% 67.6% 32.4% 32.9% 35.8%
FX Neutral 4Q19 Gross Profit
Per Transac tion
$16.0 $16.8 $17.6 34.1% $17.4 66.1% 33.7% $17.2 34.1% $16.7
merchant fee expense
Program in Brazil, partially offset by efficiencies gained in Direct Marketing
+14%
+14% +3% +8% +16%
42.9 49.6 49.1 174.4 187.9 178.8
4Q18 4Q19 4Q19 Comp 2018 2019 2019 Comp
358.5 345.3 346.5 2018 2019 2019 Comp
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DESPEGAR - Q4 EARNINGS RELEASE
67.6 68.4 25.6 40.0 2018 2018 - Comp 2019 2019 - Comp 13.9 8.3 12.5 4Q18 4Q19 4Q19 - Comp
Adjusted EBITDA and margin (%)
In US$ millions and % of revenues
Adjusted EBITDA Margin
10.5% 12.7% 4.9% 5.7% 8.6% 12.9% 7.6%
declined 10%
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
EBITDA Reflects Company Response to Challenging Environment
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DESPEGAR - Q4 EARNINGS RELEASE
collections, a decrease in incentives & commissions receivables and in advances to suppliers. Partially offset by lower Tourist Payables due to slower sales growth compared with 4Q18.
Operating Cash Flow (In US$ millions) 4Q19 Operating Cash Flow Bridge (in US$ millions)
In US$ millions
Strong Balance Sheet and Healthy Cash Flow Generation Support Growth Initiatives
.
61.2
51.2
15.3 2015 2016 2017 2018 2019 4Q18 4Q19
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DESPEGAR - Q4 EARNINGS RELEASE
(1) Measured in number of passenger air tickets sold by Despegar over total industry. Source: Company estimates based on GDS and OAG information.
NPS
Transactions +7%; +5% Ex-Argentina Non-Air Mix + 130 bps to 63% of Revenues Top 100 Latam Hotels
Share of Mobile Transactions +466 bps to 41% of Total Estimated Air Market Share (1) +20 bps
Gross Bookings
+26% FX Neutral
(+6% as reported)
ASPs +18% FX Neutral
(-1% as reported)
Room Nights +3%
INCREASE REPEAT PURCHASE RATE INCREASE CONSUMER ENGAGEMENT & SATISFACTION ATTRACT NEW CUSTOMERS EXPAND REACH IN THE REGION CONTINUE TO GROW HIGH MARGIN NON- AIR BUSINESS ENHANCE PRODUCT OFFERING & CROSS-SELL INCREASE & OPTIMIZE INVENTORY DEEPEN RELATIONSHIPS WITH SUPPLIERS IMPROVE CUSTOMER EXPERIENCE FURTHER INVESTMENT IN MOBILE PRODUCTS DRIVE SHARE GAINS IN CHALLENGING MACRO REINVEST OPERATING LEVERAGE IN CUSTOMER ACQUISITION BROADEN PLATFORM & MARKET SHARE GAIN PURSUE STRATEGIC ACQUISITIONS
Advancing on Long-Term Strategy Despite Current Challenging Macro Environment
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performance
Coronavirus and its related effects - Industry and macro consequences
at the Investor Day remains intact
LOOKING AHEAD
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4Q19 Earnings Conference Call
Appendix
DESPEGAR - Q4 EARNINGS RELEASE
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Trends in Key Financial & Operating Metrics
(in thousands U.S. dollars, unless otherwise stated)
DESPEGAR - Q4 EARNINGS RELEASE
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Trends in Key Financial & Operating Metrics
(in thousands U.S. dollars and thousand transactions, unless otherwise stated)
DESPEGAR - Q4 EARNINGS RELEASE
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Unaudited Consolidated Balance Sheets
(in thousands U.S. dollars)
THANK YOU!
CONTACT _
INVESTOR RELATIONS Natalia Nirenberg +54 911 2665 4490 natalia.niremberg@despegar.com 20