Gross Bookings up 46% quarter-over-quarter,
rising to 75% of pre-pandemic 4Q19 levels
13.0% Revenue Margin
Adjusted EBITDA of $9.0 million, 9% above that
reported in 4Q19
Despegar.com, Corp. (NYSE: DESP), (“Despegar” or the
“Company”), the leading online travel company in Latin America,
today announced unaudited financial results for the three-months
ended December 31, 2021 (“fourth quarter 2021” or “4Q21”).
Financial results are expressed in U.S. dollars and are presented
in accordance with U.S. generally accepted accounting principles
(“U.S. GAAP”). Financial results are preliminary and subject to
year-end audit and adjustment.
Fourth Quarter 2021 Financial and Operating Highlights (For
definitions, see page 12)
- Gross Bookings increased 46% quarter-over-quarter (“QoQ”) to
$958.8 million, reflecting higher travel demand across the region,
and reaching 75% of the pre-pandemic level in 4Q19.
- Transactions rose 22% QoQ and to 82% of 4Q19 volume.
- Room nights rose 32% QoQ to 71% of 4Q19 nights.
- Mobile represented 47% of Transactions in 4Q21, up 333 basis
points (“bps”) compared to 4Q19.
- Revenues increased 49% QoQ to $124.6 million, or 86% of 4Q19
levels.
- Adjusted EBITDA was $9.0 million, 9% higher than 4Q19, despite
Gross Bookings reaching only 75% of the same quarter’s level.
- Excluding Extraordinary Charges and Koin, Adjusted EBITDA would
have been $16.3 million, 30% above the comparable 4Q19 level.
- Loyalty Program nearly tripled QoQ to 2.8 million members in
4Q21.
- Reached an agreement to acquire a 51% ownership stake in Stays,
Brazil’s leading vacation rental channel manager for a total price
of approximately $3.1 million.
1 The Company has chosen to include
comparisons against 4Q19, a pre-pandemic period, in this press
release as a means for the investment community to compare 4Q21
results to a period not affected by the COVID-19 pandemic.
2 See definition on page 13
Message from the CEO
Commenting on the Company’s performance, Damian Scokin, CEO
stated:
“It is gratifying to report Adjusted EBITDA of $9.0 million, up
9% when compared to pre-pandemic profitability in 4Q19, especially
considering that our Gross Bookings were only 75% of that quarter’s
level. The improvement in profitability is even more impressive
when setting aside Koin, our merchant payments solution in Brazil,
in which we are investing to scale the business. When excluding
Koin and Extraordinary Charges, Adjusted EBITDA rose 30% to $16.3
million compared to 4Q19. Further, while Gross Bookings increased a
strong 46% sequentially, we effectively managed sales and marketing
expenses, which rose at a far slower rate of 32%. Despegar’s
encouraging fourth quarter results reflect the efforts we have made
over the last two years to reduce our cost structure, capture
synergies from acquisitions, diversify our revenue streams and
increase profitability. These initiatives have significantly
boosted our Company’s earnings power, which is growing with
improving demand conditions that we benefited from this
quarter.”
Our loyalty program also finished the year strongly, with
membership nearly tripling sequentially to 2.8 million customers.
We are also very pleased with the strong adoption of Koin´s
merchant payment solution, which is setting the stage to become
another key growth driver for Despegar.
Given the relevance of Brazil’s travel market and consistent
with our M&A strategy to acquire new core competencies and
broaden our product portfolio, we have agreed to acquire 51% of
Stays, the leading channel manager in the vacation rental segment
in that country.
Past inorganic as well as organic growth initiatives have
enabled us to not only capture demand in recovering markets but
also drive profitability, as Viajes Falabella demonstrated this
quarter, having benefited from strong travel demand in Chile and
Colombia.
While Omicron is still dampening travel trends in the current
quarter, we anticipate seeing a recovery in travel purchases next
quarter and expect to benefit from substantial pent-up demand
during the remainder of the year,” concluded Mr. Scokin.
Operating and Financial Metrics Highlights (In millions, except as
noted)
4Q21
4Q20
% Chg
4Q19
% Chg Operating metrics Number of transactions
2.339
1.257
86%
2.855
(18%)
Gross bookings
$958.8
$401.3
139%
$1,280.9
(25%)
Financial metrics Revenues
$124.6
$53.2
134%
$145.6
(14%)
Net income (loss)
($10.7)
($28.8)
n.m.
($2.6)
n.m. Net income (loss) attributable to Despegar.com, Corp
($10.2)
($28.6)
n.m.
($2.6)
n.m. Adjusted EBITDA
$9.0
($19.3)
n.m.
$8.3
9%
EPS Basic 2
($0.22)
($0.40)
n.m.
($0.04)
n.m. EPS Diluted 2
($0.22)
($0.40)
n.m.
($0.04)
n.m.
Extraordinary Charges Adjusted EBITDA
$9.0
($19.3)
n.m.
$8.3
n.m. Extraordinary cancellations due to COVID-19
(4.0)
(5.0)
n.m.
-
n.m. Extraordinary restructuring and integration charges
(0.8)
(0.4)
n.m.
(2.2)
n.m. Bad Debt due to exposure to Airlines in Chapter 11
0.9
1.1
n.m.
(2.0)
n.m.
Adjusted EBITDA (Excl. Extraordinary Charges)
$13.0
($14.9)
n.m.
$12.5
n.m. Average Shares Oustanding - Basic (1)
82,008
71,501
15%
69,503
18%
Average Shares Oustanding - Diluted (1)
82,008
71,501
15%
69,503
18%
EPS Basic (Excl. Extraordinary Charges) (2)
(0.17)
(0.34)
n.m.
0.02
n.m.. EPS Diluted (Excl. Extraordinary Charges) (2)
(0.17)
(0.34)
n.m.
0.02
n.m. (1) In thousands (2) Round numbers n.m.: Not Meaningful
Business Update on COVID-19
4Q21 Governmental Restrictions on Mobility and Impact on
Industry Travel Dynamics
In Brazil, international and domestic travel restrictions were
lifted in October and November, with the US opening its borders to
Brazilians holding complete vaccination cards.
In October, activities in most of Mexico’s states remained
subject to certain restrictions that were subsequently lifted in
November, when land borders with the US were reopened. However, in
December some activities were restricted again due to the spread of
the new Omicron variant.
In Argentina, entry quotas for air passengers were eliminated
starting in October, while the EU began accepting travelers from
Argentina. In November, all foreign nationals were allowed to enter
the country. On November 26, 2021, Argentina’s Central Bank banned
credit card operators from financing payments through installment
plans intended for purchasing international travel, including plane
tickets and car rentals.
Starting in October, Chile began lifting travel restrictions,
allowing non-vaccinated travelers to enter the country and ending
the quarantine country-wide. Toward the end of October, the city of
Santiago de Chile reinstated certain restrictions as a result of a
spike in COVID cases at the time. In early December, border
restrictions were lifted, although with the onset of the Omicron
variant some restrictions were imposed.
Travel restrictions in Colombia remained limited during the
quarter, although emergency measures and safety protocols were
again implemented in December and remained in effect in
February.
Overview of Fourth Quarter 2021 Results
Key Operating Metrics (In millions, except as noted)
4Q21
4Q20
% Chg FX Neutral% Chg
4Q19
% Chg $ % of total $ % of total $ % of total Gross Bookings
$958.8
$401.3
139%
158%
$1,280.9
(25%)
Average selling price (ASP) (in $)
$410
$319
28%
39%
$449
(9%)
Number of Transactions by Segment & Total Air
1.3
55%
0.7
54%
88%
1.7
58%
(23%)
Packages, Hotels & Other Travel Products
1.1
45%
0.6
46%
83%
1.2
42%
(11%)
Total Number of Transactions
2.3
100%
1.3
100%
86%
2.9
100%
(18%)
Transactions reached 2.3 million in 4Q21, increasing 22% QoQ,
mainly due to higher domestic travel demand in Brazil and Colombia
and a recovery in both domestic and international travel in
Argentina. On a year-over-year (“YoY”) basis, Transactions rose
86%, but were 18% below 4Q19 levels.
Gross Bookings increased 46% QoQ to $958.8 million, principally
driven by 50% growth in Brazil together with increases of 128% and
112% in Chile and Argentina, respectively. On a YoY basis, Gross
Bookings increased 139% and were 25% lower than 4Q19 levels.
Total international gross bookings increased 76% sequentially
and reached 59% of 4Q19 levels, while domestic gross bookings were
31% higher QoQ, surpassing 4Q19 levels by 7%. Despite the solid
growth in international travel, its recovery significantly trails
the growth in domestic demand across the region, when compared to
4Q19 levels.
ASPs in 4Q21 increased 19% QoQ, mainly reflecting higher
international travel, and rose 28% YoY to $410.0 per transaction.
However, ASPs remained 9% below 4Q19 levels. On an FX neutral
basis, ASPs increased 39% YoY.
Geographic Breakdown
Geographic Breakdown of Select Operating and Financial Metrics (In
millions, except as noted) 4Q21 vs. 4Q20 - As Reported
Brazil Mexico Rest of Latam Total %
Chg. % Chg. % Chg. % Chg. Transactions
('000)
34%
51%
209%
86%
Gross Bookings
81%
62%
274%
139%
ASP ($)
35%
7%
21%
28%
Revenues
134%
Gross Profit
169%
4Q21 vs. 4Q20 - FX Neutral Basis
Brazil Mexico
Rest of Latam Total % Chg. % Chg. %
Chg. % Chg. Transactions ('000)
34%
51%
209%
86%
Gross Bookings
86%
63%
325%
158%
ASP ($)
39%
8%
38%
39%
Revenues
153%
Gross Profit
186%
Brazil represented 33% of total Transactions in 4Q21,
rising from 29% in 3Q21, a 40% QoQ increase in volume, reflecting
an improvement in domestic air travel demand and also supported by
growth in international transactions.
Gross Bookings increased 50% QoQ and 81% YoY. Compared to 4Q19,
Gross Bookings were 44% lower, as a result of the pandemic’s impact
on travel demand. ASPs increased 8% QoQ and 35% YoY, but were 20%
below 4Q19 levels.
Mexico accounted for 22% of total Transactions in 4Q21,
down from 27% in the previous quarter, reflecting a rise in travel
demand in other geographies. Transactions decreased 1% QoQ while
Gross Bookings increased 9% as a result of a 10% rise in ASPs.
Transactions and Gross Bookings in Mexico increased YoY by 51%
and 62%, respectively, due to a rise in travel demand. Compared to
4Q19, Transactions increased 24% while Gross Bookings rose 20%,
reflecting the contribution of Best Day, acquired in October 2020.
ASPs posted an increase of 7% YoY and a decrease of 3% when
compared to 4Q19.
Across the Rest of Latin America, Transactions and Gross
Bookings increased QoQ by 25% and 64%, respectively, as Chile and
Colombia benefitted from a recovery in international ASPs. Compared
to 4Q20, Transactions and Gross Bookings rose 209% and 274%. In
comparison with 4Q19, Transactions and Gross Bookings were 21% and
22% lower, respectively. ASPs increased 31% QoQ, 21% YoY and
decreased 1% compared to 4Q19.
Revenue
Revenue Breakdown
4Q21
4Q20
% Chg
4Q19
% Chg $ % of total $ % of total $ % of total Revenue by business
segment (in $Ms) (Excluding Cancellations) Air
$48.7
39%
$19.1
36%
156%
$53.3
37%
(9%)
Packages, Hotels & Other Travel Products
$74.7
60%
$34.2
64%
119%
$92.3
63%
(19%)
Unallocated
$1.1
1%
–
n.m n.m
–
n.m. n.m Total Revenue
$124.6
100%
$53.2
100%
134%
$145.6
100%
(14%)
Total revenue margin
13.0%
13.3%
(28) bps
11.4%
+162 bps
Extraordinary Charges Extraordinary Cancellations
due to COVID-19
($4.0)
–
($5.0)
–
n.m.
–
–
n.m. Total Revenue (Excluding Extraordinary Charges)
$128.5
$58.2
121%
$145.6
(12%)
Total revenue margin (Excluding Extraordinary Charges)
13.4%
14.5%
(110) bps
11.4%
+204 bps
On a QoQ basis, Revenues increased
49% to $124.6 million in 4Q21, consistent with growth in Gross
Bookings and Revenue Margin. Extraordinary cancellations declined
39% in the period to $4.0 million, following reduced travel
restrictions. Excluding Extraordinary Cancellations in both
quarters, Revenues would have increased 43% to $128.5 million.
Revenue Margin increased 31 bps to 13.0%. When excluding
extraordinary cancellations in both quarters, revenue margin
decreased 27 bps to 13.4%, reflecting additional investments in
Despegar’s business levers in specific markets demonstrating a
strong recovery in demand.
On a YoY basis, Revenues grew 134%
to $124.6 million, while Extraordinary Cancellations decreased 20%
to $4.0 million. Excluding extraordinary cancellations, Revenues
would have risen 121% to $128.5 million.
Compared to 4Q19, Revenues
decreased only 14%, a result of a 25% comparable decline in Gross
Bookings that was partially offset by a higher Revenue Margin.
During this period, industry air passenger traffic in the region
contracted 31%. When Excluding Extraordinary Cancellations,
revenues would have been 12% below 4Q19 levels.
Revenue Margin in 4Q21 was 13.0%, up 162 bps as compared to
4Q19, driven by the contribution from Best Day, and higher up-front
incentives and customer fees. Revenue Margin Excluding
Extraordinary Cancellations would have increased 204 bps to 13.4%,
from 11.4% in 4Q19.
Cost of Revenue and Gross Profit
Cost of Revenue and Gross Profit (In millions, except as noted)
4Q21
4Q20
% Chg
4Q19
% Chg Revenue
$124.6
$53.2
134%
$145.6
(14%)
Revenue Margin
13.0%
13.3%
(28) bps
11.4%
+162 bps Cost of Revenue
$50.9
$25.8
97%
$51.4
(1%)
Cost of Revenue as a % of GB
5.3%
6.4%
(113) bps
4.0%
+129 bps Gross Profit
$73.7
$27.4
169%
$94.2
(22%)
Gross Profit as a % of GB
7.7%
6.8%
+86 bps
7.4%
+33 bps
Extraordinary Charges Total Revenue
$124.6
$53.2
$145.6
Extraordinary Cancellations due to COVID-19
($4.0)
($5.0)
n.m.
-
n.m.
Total Revenue (Excl. Extraordinary Charges)
$128.5
$58.2
121%
$145.6
(12%)
Revenue (Excl. Extraordinary Charges) as a % of GB
13.4%
14.5%
(110) bps
11.4%
+204 bps
Total Cost of Revenue
$50.9
$25.8
$51.4
Extraordinary restructuring and integration charges
($0.2)
(0.2)
n.m.
-
n.m.
Total Cost of Revenue (Excl. Extraordinary Charges)
$50.7
$25.6
98%
$51.4
(1%)
Cost of Revenue (Excl. Extraordinary Charges) as a % of GB
5.3%
6.4%
(109) bps
4.0%
+127 bps Gross Profit / (Loss) (Excl. Extraordinary Charges)
$77.9
$32.6
139%
$94.2
(17%)
Gross Profit / (Loss) (Excl. Extraordinary Charges) as a % of GB
8.1%
8.1%
(1) bps
7.4%
+76 bps
Cost of Revenue is mainly comprised of credit card processing
fees, bank fees related to customer financing installment plans and
fulfillment center expenses.
Gross profit increased 73% QoQ during 4Q21 to a record $73.7
million since the onset of the pandemic, with the gross margin
expanding 799 bps to 59%. Excluding Extraordinary Charges, Gross
Profit would have been $77.9 million, with a gross margin of
61%.
On a QoQ basis, Cost of Revenue
increased 25%, reflecting the 22% increase in Transactions,
together with increased installment costs related to Company
investments in markets with higher demand. Credit card purchasing
fees also contributed to this increase, partially offset by
operating leverage associated with fulfillment center costs.
Gross Profit, excluding Extraordinary Cancellations and other
one-time charges in both periods, would have increased 56% QoQ to
$77.9 million, exceeding the 43% increase in comparable
Revenues.
On a YoY basis, Cost of Revenue
rose 97% to $50.9 million, mainly resulting from (i) higher
installment costs and credit card processing fees, and (ii) an
increase in fulfillment center costs related to travel arrangements
impacted by COVID-19.
Gross Profit increased 169% to $73.7 million, from $27.4 million
in 4Q20. Excluding Extraordinary Charges, Gross Profit would have
been $77.9 million, compared to $32.6 million in the same period
last year, an increase of 139%.
Compared to 4Q19, Cost of Revenue
decreased 1% due to lower Transaction volume, partially offset by
increased fulfillment center costs associated with higher customer
service demand in the context of the pandemic. During the same
period, Gross Profit declined 22%, or a decrease of 17% when
excluding Extraordinary Charges.
Operating Expenses
Operating Expenses (In millions, except as noted)
4Q21
4Q20
% Chg
4Q19
% Chg Selling and marketing
$34.6
$13.2
163%
$49.6
(30%)
S&M as a % of GB
3.6%
3.3%
+33 bps
3.9%
(27) bps General and administrative
$21.6
$29.5
(27%)
$26.0
(17%)
G&A as a % of GB
2.3%
7.3%
(510) bps
2.0%
+22 bps Technology and product development
$19.5
$17.2
14%
$18.7
5%
T&C as a % of GB
2.0%
4.3%
(224) bps
1.5%
+58 bps Impairment of long-lived assets
–
$0.6
n.m.
–
n.m. Total operating expenses
$75.7
$60.4
25%
$94.2
(20%)
Operating Expenses as a % of GB
7.9%
15.0%
(716) bps
7.4%
+53 bps
Extraordinary Charges Total Operating
Expenses
$75.7
$60.4
25%
$94.2
(20%)
Extraordinary restructuring and integration charges
(0.6)
(9.9)
n.m.
(2.2)
n.m. Bad Debt due to exposure to Airlines in Chapter 11
0.9
1.1
n.m.
(2.0)
n.m.
Total operating expenses (Excl. Extraordinary Charges)
$75.9
$51.5
47%
$90.0
(16%)
Operating expenses (Excl. Extraordinary Charges) as a % of GB
7.9%
12.8%
(492) bps
7.0%
+88 bps
On a QoQ basis, Operating Expenses
increased 16% to $75.7 million, a similar level when excluding
Extraordinary Charges in both periods. The increase in operating
expenses was below the growth in Transactions and Gross Bookings.
When excluding the Best Day and Koin acquisitions as well as
Extraordinary Charges, Operating Expenses would have risen 27%,
principally reflecting investments in performance marketing in some
of the Company’s core markets.
Structural Costs (management proxy for fixed costs)1 increased
3% sequentially to $37.9 million in 4Q21, mainly due to a 6%
increase in payroll costs related to salary adjustments in
Argentina.
On a YoY basis, Operating Expenses
rose 25% to $75.7 million, mainly due to increased S&M spending
in the context of improving travel demand and higher marketing
investments. This was partially offset mainly by lower one-time
G&A expenses in 4Q21.
When excluding Extraordinary Charges and the Best Day and Koin
acquisitions, total operating expenses would have risen 30% to
$57.1 million.
Structural Costs (management proxy for fixed costs)1 increased
31% YoY to $37.9 million, reflecting the impact of accelerated
salary inflation in Argentina and the reinstatement of short-term
incentives.
Compared to 4Q19, Operating
Expenses declined 20% to $75.7 million, principally resulting from
lower S&M expenses related to lower Gross Bookings. Excluding
Extraordinary Charges and the Best Day and Koin acquisitions,
Operating Expenses would have declined 37% to $57.1 million, mainly
due to decreases in both S&M and G&A expenses.
1
See definition on page 12
Selling and Marketing (“S&M”) expenses rose 163% YoY
to $34.6 million, an increase of 33 bps as a percentage of Gross
Bookings when compared to 4Q20. This increase reflects branding and
performance marketing investments in countries with strong recovery
trends. This spend was partially offset by operating leverage
gained in offline channels. Compared to 4Q19, S&M expenses as a
percentage of Gross Bookings were 27 bps lower. Excluding
Extraordinary Charges in 4Q21 and the contribution of Best Day and
Koin in both quarters, S&M expenses would have increased 389%
YoY to $26.0 million, although 47% below the level reported in
4Q19, reflecting increases in marketing investments.
General and Administrative (“G&A”) expenses
declined 27% YoY to $21.6 million and were 17% below those in 4Q19.
G&A expenses would have declined 36% YoY to $14.2 million, when
excluding Extraordinary Charges and the cost contribution of Best
Day and Koin in both quarters. Higher efficiencies achieved through
the Company’s reorganization implemented in 2020 yielded a 39%
decrease in G&A compared to 4Q19, when adjusting for Best Day,
Koin and Extraordinary Charges.
Technology and Product Development expenses totaled $19.5
million, increasing 14% YoY and 5% when compared to 4Q19. Both
increases resulted mainly from the inclusion of Best Day and Koin,
which added $2.5 million in related expenses. Excluding
Extraordinary Charges and costs associated with Best Day and Koin
in both periods, Technology and Product Development costs would
have increased 3% YoY. Comparable Technology and Product
Development costs were 4% below 4Q19 levels, as Despegar
streamlined related operations, while maintaining its development
capabilities.
Financial Income/Expense
In 4Q21, Despegar reported a net financial loss of $3.8 million,
compared to a net financial loss of $2.1 million in 4Q20. This was
mainly due to costs associated with hedging activities and to FX
losses incurred as a result of intercompany transactions. These
costs were partially offset by certain FX gains in connection with
Despegar’s cash position and current liabilities, among other
balance sheet items.
Income Taxes
The Company reported an income tax gain of $5.3 million in 4Q21,
compared to $8.2 million in 4Q20. The effective tax rate in 4Q21
was 107%, compared to 24% in 4Q20. The variation in the effective
tax rate was mainly due to the following: i) a reduction in a
portion of valuation allowances related to net operating losses in
Brazil, Colombia, Peru and Argentina, following updated
recoverability analyses for the coming years, and ii) incremental
income tax withholdings.
Adjusted EBITDA
Adjusted EBITDA Reconciliation (In millions, except as noted)
4Q21
4Q20
% Chg
4Q19
% Chg Net income/ (loss)
($10.7)
($28.8)
(63%)
($2.6)
306%
Add (deduct): Financial expense, net
$3.8
$2.1
83%
$6.7
(43%)
Income tax expense
$5.3
($8.3)
(164%)
($4.1)
(230%)
Depreciation expense
$1.5
$1.8
(15%)
$1.1
37%
Amortization of intangible assets
$6.9
$6.9
0%
$5.1
35%
Share-based compensation expense
$2.2
$2.6
(14%)
$2.1
6%
Impairment of long-lived assets
–
$0.6
n.m.
–
n.m. Restructuring charges
–
$2.4
n.m.
–
n.m. Acquisition transaction costs
–
$1.5
n.m.
–
n.m. Adjusted EBITDA
$9.0
($19.3)
n.m.
$8.3
n.m.
Extraordinary Charges Adjusted EBITDA
$9.0
($19.3)
$8.3
Extraordinary cancellations due to COVID-19
(4.0)
(5.0)
n.m.
-
n.m. Extraordinary restructuring and integration charges
(0.8)
(0.4)
n.m.
(2.2)
n.m. Bad Debt due to exposure to Airlines in Chapter 11
0.9
1.1
n.m.
(2.0)
n.m.
Adjusted EBITDA (Excl. Extraordinary Charges)
$13.0
($14.9)
n.m.
$12.5
n.m.
During 4Q21, Adjusted EBITDA increased to $9.0 million, from
$8.3 million in 4Q19, even while Gross Bookings reached only 75% of
4Q19 levels. 4Q21 profitability compares with Adjusted EBITDA
losses of $10.3 million in 3Q21 and $19.3 million in 4Q20.
Excluding Extraordinary Charges of $3.9 million principally
related to cancellations in 4Q21 and restructuring charges in both
periods, Adjusted EBITDA would have been $13.0 million in 4Q21, a
record since 1Q19, and 4% higher compared to $12.5 million in 4Q19.
In 3Q21 and 4Q20, Despegar posted comparable Adjusted EBITDA losses
of $10.3 million and $14.9 million, respectively.
Balance Sheet and Cash Flow
The majority of Despegar’s cash balance is held in U.S. dollars
in the United States and United Kingdom. Foreign currency exposure
is minimized by managing natural hedges, netting the Company’s
current assets and current liabilities in similarly denominated
foreign currencies, and by managing short term loans and
investments for hedging purposes.
Despegar generated $0.5 million in cash from operating
activities in 4Q21, compared with use of cash of $30.8 million in
3Q21 and $43.1 million in 4Q20 and with cash generation of $15.3
million in 4Q19.
In 4Q21, funds from operations reflected (i) a net loss of $10.7
million, (ii) more than offset by $16.5 million in non-cash
adjustments, mainly amortization of intangible assets, and by stock
based compensation expenses, among other costs, and (iii) a $5.2
million investment in operating working capital.
Working capital investments in 4Q21 reflect increases of $54.0
million in accounts receivables and related party receivables,
partially offset by an increase of $42.5 million in travel payables
and related party payables.
Cash and cash equivalents, including restricted cash, increased
$3.0 million QoQ to $279.2 million as of December 31, 2021, mainly
due to an $11.9 million short term loan obtained in Chile.
Aggregate Net Operational Short-term Obligations remained
relatively flat at $197.9 million on a QoQ basis.
Recent Events
On January 13 2022, the Company reached an agreement to acquire
a 51% ownership stake in Stays, Brazil’s leading vacation rental
channel manager for a total price of R$15.7 million (approximately
$3.1 million). Stays is also a preferred integration partner of
alternative accommodations for leading international booking
platforms. Completion of the transaction is subject to customary
closing conditions.
Argentina Considered Hyperinflationary Economy
As of July 1, 2018, as a result of a three-year cumulative
inflation rate greater than 100% and following the guidance of ASC
830, the U.S. dollar became the functional currency of the
Company’s Argentine subsidiary. This change in functional currency
is being recognized prospectively in the financial statements. As a
result, starting 3Q18 the impact of any change in currency exchange
rate on the Company’s balance sheet accounts is reported in the net
financial income/(expense) line of the income statement instead of
other comprehensive income.
Non-GAAP Financial Information
This earnings release includes certain references to Adjusted
EBITDA, a non-GAAP financial measure. For the year ended December
31, 2020, Despegar changed the calculation of Adjusted EBITDA
reported to the chief operating decision maker to exclude
restructuring charges and acquisition costs.
Despegar has calculated Adjusted EBITDA as net loss for the
quarter exclusive of financial income/(expense), income tax,
depreciation and amortization, impairment charges, stock-based
compensation expense, restructuring charges and acquisition
transaction costs. Adjusted EBITDA is not prepared in accordance
with U.S. GAAP. Accordingly, you are cautioned not to place undue
reliance on this information and should note that Adjusted EBITDA,
as calculated by us, may differ materially from similarly titled
measures reported by other companies, including our
competitors.
4Q21 Earnings Conference Call
When:
8:00 a.m. Eastern time, Mar 10, 2022
Who:
Mr. Damián Scokin, Chief Executive
Officer
Mr. Alberto López-Gaffney, Chief Financial
Officer
Ms. Natalia Nirenberg, Investor
Relations
Dial-in:
1 844 200 6205 (U.S. domestic); 1 646 904
5544 (International)
Pre-Register: Please use this link to pre-register for
this conference call. Callers who pre-register will be given a
unique PIN to gain immediate access to the call and bypass the live
operator.
Webcast: CLICK HERE
Definitions and concepts
In 4Q21
Adjusted EBITDA: is calculated as net income/(loss) exclusive of
financial income/(expense), income tax, depreciation and
amortization, impairment charges, stock-based compensation expense,
restructuring charges and acquisition transaction costs.
Aggregate Net Operational Short-term Obligations: consists of
travel accounts payable plus related party payables and accounts
payable and accrued expenses, minus trade accounts receivable net
of credit expected loss and related party receivable.
Average Selling Price (“ASP”): reflects Gross Bookings divided
by the total number of Transactions.
Gross Bookings: Gross Bookings is an operating measure that
represents the aggregate purchase price of all travel products
booked by the Company’s customers through its platform during a
given period. The Company generates substantially all of its
revenue from commissions and other incentive payments paid by its
suppliers and service fees paid by its customers for transactions
through its platform, and, as a result, it monitors Gross Bookings
as an important indicator of its ability to generate revenue.
Extraordinary Charges: extraordinary events that lead to further
non regular expenses, such as: i) Extraordinary Cancellations; ii)
extraordinary restructuring charges and bad debt provisions for
airlines that have entered into Chapter 11, among others.
Foreign Exchange (“FX”) Neutral calculated by using the average
monthly exchange rate of each month of the quarter and applying it
to the corresponding months in the current year, so as to calculate
what the results would have been had exchange rates remained
constant. These calculations do not include any other macroeconomic
effect such as local currency inflation effects.
Transactions: The number of Transactions for a period is an
operating measure that represents the total number of customer
orders completed on Despegar’s platforms in such period. The number
of Transactions is an important metric because it is an indicator
of the level of engagement with the Company’s customers and the
scale of its business from period to period but, unlike Gross
Bookings, the number of Transactions is independent of the average
selling price of each transaction, which can be influenced by
fluctuations in currency exchange rates among other factors.
Reporting Business Segments: The Company’s business is organized
into two segments: (1) Air, which primarily consists of
facilitation services for the sale of airline tickets on a
stand-alone basis and excludes airline tickets that are packaged
with other non-airline flight products, and (2) Packages, Hotels
and Other Travel Products, which primarily consists of facilitation
services for the sale of travel packages (which can include airline
tickets and hotel rooms), as well as stand-alone sales of hotel
rooms (including vacation rentals), car rentals, bus tickets,
cruise tickets, travel insurance and destination services. Both
segments also include sale of advertisements and, to a lesser
extent, incentives earned from suppliers and interest revenue.
Revenue: The Company reports its revenue on a net basis for the
majority of its transactions, deducting cancellations and amounts
collected as sales taxes. The Company presents its revenue on a
gross basis for some transactions when it pre-purchases flight
seats. These transactions have been limited to date. Despegar
derives substantially all of its revenue from commissions and
incentive fees paid by its travel suppliers and service fees paid
by the travelers for transactions through its platform. To a lesser
extent, Despegar also derives revenue from advertising and other
sources (i.e. destination services, loyalty and interest
revenue).
Revenue Margin: calculated as revenue divided by Gross
Bookings.
Seasonality: Despegar’s financial results experience
fluctuations due to seasonal variations in demand for travel
services. Despegar’s most significant market, Brazil, and the rest
of South America where Despegar operates, are located in the
Southern hemisphere where summer runs from December 1 to February
28 and winter runs from June 1 to August 31. Despegar’s most
significant market in the Northern hemisphere is Mexico where
summer runs from June 1 to August 31 and winter runs from December
1 to February 28. Accordingly, traditional leisure travel bookings
in the Southern hemisphere are generally the highest in the third
and fourth quarters of the year as travelers plan and book their
winter and summer holiday travel. The number of bookings typically
decreases in the first quarter of the year. In the Northern
hemisphere, bookings are generally the highest in the first three
quarters as travelers plan and book their spring, summer and winter
holiday travel. The seasonal revenue impact is exacerbated with
respect to income by the nature of variable cost of revenue and
direct sales and marketing costs, which is typically realized in
closer alignment to booking volumes, and the more stable nature of
fixed costs.
Structural Costs: Structural Costs represents management’s
estimations of the fixed portion of the Company’s cost of revenue
and operating expenses, which includes call center fees (included
in cost of revenue), plus the fixed portion of selling and
marketing expenses (i.e. primarily personnel expenses), general and
administrative expenses, and technology and product development
expenses. Structural Costs does not include stock-based
compensation, depreciation and amortization, netting of capitalized
IT and impairment charges. The estimates above do not include any
costs that the Company may incur in connection with acquisitions,
nor any extraordinary items related to the Company’s
reorganization.
About Despegar.com
Despegar is the leading online travel company in Latin America.
For over two decades, it has revolutionized the tourism industry
through technology. With its continuous commitment to the
development of the sector, Despegar today is comprised of a
consolidated Group that includes Best Day, Viajes Falabella and
Koin, (the Company’s fintech business) in turn becoming one of the
most relevant companies in the region and able to offer a
tailor-made experience for more than 29 million customers.
Despegar operates in 20 countries in the region, accompanying
Latin Americans from the moment they dream of traveling until they
share their memories. With the purpose of improving people's lives
and transforming the shopping experience, it has developed
alternative payment methods and financing, democratizing access to
consumption and bringing Latin Americans closer to their next
travel experience. Despegar is traded on the New York Stock
Exchange (NYSE: DESP). For more information, please visit
www.despegar.com.
About This Press Release
This press release does not contain sufficient information to
constitute a complete set of interim financial statements in
accordance with U.S. GAAP. The financial information is this
earnings release has not been audited.
Forward-Looking Statements
This press release includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. We base these forward-looking statements 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. Forward-looking statements are not guarantees of future
performance. 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. 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 press release.
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. In
particular, the COVID-19 pandemic, and governments’ extraordinary
measures to limit the spread of the virus, are disrupting the
global economy and the travel industry, and consequently adversely
affecting our business, results of operation and cash flows and, as
conditions are uncertain and changing rapidly, it is difficult to
predict the full extent of the impact that the pandemic will have
or when travel will resume at pre-pandemic levels. Considering
these limitations, you should not make any investment decision in
reliance on forward-looking statements contained in this press
release.
-- Financial Tables Follow --
Unaudited Consolidated Statements of Operations for the
three-month periods ended December 31, 2021 and 2020 (in thousands
U.S. dollars, except as noted)
Profit & Loss Statement
4Q21
4Q20
% Chg Revenue
124,556
53,246
134%
Cost of revenue
50,857
25,832
97%
Gross profit
73,699
27,414
169%
Operating expenses Selling and marketing
34,582
13,160
163%
General and administrative
21,574
29,490
(27%)
Technology and product development
19,507
17,152
14%
Impairment of long-lived assets
-
593
n.m. Total operating expenses
75,663
60,395
25%
Equity Income / (Loss)
343
(2,059)
n.m. Operating (loss) / income
(1,621)
(35,040)
n.m. Net financial income (expense)
(3,835)
(2,095)
n.m. Net (loss) / income before income taxes
(5,456)
(37,135)
n.m. Income tax (benefit) / expense
5,289
(8,298)
n.m. Net (loss) / income
(10,745)
(28,837)
n.m. Net (income) / loss attributable to non controlling interest
526
213
n.m. Net income (loss) attributable to Despegar.com, Corp
(10,219)
(28,624)
n.m. 1. In thousands
Key Financial & Operating Trended Metrics (in thousands
U.S. dollars, except as noted)
1Q20
2Q20
3Q20
4Q20
1Q21
2Q21
3Q21
4Q21
FINANCIAL RESULTS Revenue
$76,082
($9,734)
$11,740
$53,246
$51,850
$63,069
$83,368
$124,556
Revenue Recognition Adjustment Cost of revenue
33,495
13,801
12,390
25,832
29,610
35,838
40,698
50,857
Gross profit
42,587
(23,535)
(650)
27,414
22,240
27,231
42,670
73,699
Operating expenses Selling and marketing
31,985
6,848
5,299
13,160
15,382
19,188
26,138
34,582
General and administrative
18,023
24,391
22,818
29,490
20,630
25,287
19,416
21,574
Technology and product development
17,154
18,415
14,322
17,152
17,460
18,344
19,432
19,507
Impairment of long-lived assets
-
1,324
-
593
5,106
-
-
-
Total operating expenses
67,162
50,978
42,439
60,395
58,578
62,819
64,986
75,663
Equity Income / (Loss)
(2,059)
376
(348)
(29)
343
Operating income
(24,575)
(74,513)
(43,089)
(35,040)
(35,962)
(35,936)
(22,345)
(1,621)
Net financial income (expense)
10,061
9,428
(4,484)
(2,095)
(1,309)
(1,835)
(3,254)
(3,835)
Net income before income taxes
(14,514)
(65,085)
(47,573)
(37,135)
(37,271)
(37,771)
(25,599)
(5,456)
Adj. Net Income tax expense
709
(8,011)
(5,838)
(8,298)
292
(6,413)
(1,654)
5,289
Income tax expense
709
(8,011)
(5,838)
(8,298)
292
(6,413)
(1,654)
5,289
Adjustment Net income /(loss)
(15,223)
(57,074)
(41,735)
(28,837)
(37,563)
(31,358)
(23,945)
(10,745)
Net (income) / loss attributable to non controlling interest
$69
$213
$180
$258
$273
$526
Net income (loss) attributable to Despegar.com, Corp
(15,223)
(57,074)
(41,666)
(28,624)
(37,383)
(31,100)
(23,672)
(10,219)
Adjusted EBITDA
($13,862)
($57,444)
($31,246)
($19,261)
($20,024)
($22,256)
($10,345)
$9,026
Net income/ (loss)
($15,223)
($57,074)
($41,735)
($28,837)
($37,563)
($31,358)
($23,945)
($10,745)
Add (deduct): Financial expense, net
(10,061)
(9,428)
4,484
2,095
1,309
1,835
3,254
3,835
Income tax expense
709
(8,011)
(5,838)
(8,298)
292
(6,413)
(1,654)
5,289
Depreciation expense
1,851
1,782
2,597
1,751
1,569
1,401
2,451
1,497
Amortization of intangible assets
4,939
5,501
4,370
6,889
7,095
6,827
6,457
6,909
Share-based compensation expense
2,174
113
2,427
2,598
2,149
5,444
3,092
2,241
Impairment of long-lived assets
–
1,324
–
593
5,106
–
–
–
Restructuring charges
1,749
7,249
1,949
2,413
19
8
–
–
Acquisition transaction costs
–
1,100
500
1,535
–
–
–
–
Adjusted EBITDA
($13,862)
($57,444)
($31,246)
($19,261)
($20,024)
($22,256)
($10,345)
$9,026
Unaudited Consolidated Balance Sheets as of December 31, 2021
and September 30, 2021 (in thousands U.S. dollars, except as
noted)
As of December 31, 2021 As of September 30, 2021 ASSETS Current
assets Cash and cash equivalents
246,078
263,204
Restricted cash and cash equivalents
33,145
12,988
Accounts receivable, net of allowances
136,618
91,516
Related party receivable
15,353
11,929
Other current assets and prepaid expenses
55,779
46,207
Total current assets
486,973
425,844
Non-current assets Other Assets
84,102
81,287
Restricted cash and cash equivalents
–
–
Right of use
27,240
28,606
Property and equipment net
14,525
14,335
Intangible assets, net
88,483
89,403
Goodwill
122,426
122,560
Total non-current assets
336,776
336,191
TOTAL ASSETS
823,749
762,035
LIABILITIES AND SHAREHOLDERS’ DEFICIT Current liabilities Accounts
payable and accrued expenses
51,577
39,366
Travel suppliers payable
263,530
230,857
Related party payable
34,772
29,762
Loans and other financial liabilities
15,301
4,286
Deferred Revenue
13,556
12,252
Other liabilities
78,923
71,905
Contingent liabilities
9,156
7,869
Lease liabilities
6,938
6,848
Total current liabilities
473,753
403,145
Non-current liabilities Other liabilities
38,010
38,885
Contingent liabilities
25,281
23,870
Long term debt
11,382
12,241
Lease liabilities
20,937
22,455
Related party liability
125,000
125,000
Total non-current liabilities
220,610
222,451
TOTAL LIABILITIES
694,363
625,596
Series A non-convertible preferred shares
109,565
102,808
Series B convertible preferred shares
46,700
46,700
Redeemable non-controlling interest
2,596
2,525
Mezzanine Equity
158,861
152,033
SHAREHOLDERS’ EQUITY (DEFICIT) Common stock
279,931
276,557
Additional paid-in capital
350,001
358,848
Other reserves
(728)
(728)
Accumulated other comprehensive income
(17,860)
(19,669)
Accumulated losses
(572,552)
(562,335)
Treasury Stock
(68,267)
(68,267)
Total Shareholders' Equity Attributable / (Deficit) to Despegar.com
Corp
(29,475)
(15,594)
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
823,749
762,035
Unaudited Statements of Cash Flows for the three-month
periods ended December 31, 2021 and 2020 (in thousands U.S.
dollars, except as noted)
3 months ended December 31,
2021
2020
Cash flows from operating activities Net loss
($10,745)
($28,837)
Adjustments to reconcile net income to net cash flow from operating
activities Net loss attributable to redeemable non-controlling
interest
$526
$214
Unrealized foreign currency translation losses
($997)
$4,732
Depreciation expense
$1,498
$1,751
Amortization of intangible assets
$6,909
$6,889
Impairment of long-lived assets
–
$593
Disposals of property and equipment
($1,016)
$1,875
Earnout
($924)
$2,239
Indemnity
$924
($2,239)
Investments in other subsidiaries
($343)
$2,059
Stock based compensation expense
$3,402
$2,598
Amortization of Right of use
$1,318
$847
Interest and penalties
$561
$1,412
Income taxes
($228)
($7,045)
Allowance for doubtful accounts
$2,910
($6,173)
Breakage related to loyalty programs
($673)
Provision for contingencies
$2,655
$8,930
Changes in assets and liabilities, net of non-cash transactions
(Increase) / Decrease in accounts receivable net of allowances
($50,576)
(20,970)
(Increase) / Decrease in related party receivables
($3,408)
(1,497)
(Increase) / Decrease in other assets and prepaid expenses
($14,170)
12,833
Increase / (Decrease) in accounts payable and accrued expenses
$12,779
(3,149)
Increase / (Decrease) in travel suppliers payable
$38,160
(15,201)
Increase / (Decrease) in other liabilities
$6,745
(6,521)
Increase / (Decrease) in contingencies
$159
(2,520)
Increase / (Decrease) in related party liabilities
$4,360
4,519
Increase / (Decrease) in lease liability
($1,345)
(587)
Increase / (Decrease) in deferred revenue
2,062
165
Net cash flows provided by / (used in) operating activities
543
(43,083)
Cash flows from investing activities (Increase)/ Decrease in short
term investments
–
–
Payment for acquired businesses, net of cash acquired
–
8,167
Acquisition of property and equipment
(802)
(1,090)
Increase of intangible assets including internal-use software and
website development
(5,893)
(820)
(Increase) / Decrease in restricted cash and cash equivalents
–
–
Net cash flows used in investing activities
(6,695)
6,257
Cash flows from financing activities Net (decrease) / increase of
short term debt
10,430
(14,288)
Increase in long-term debt
88
(18,875)
Decrease in long-term debt
(582)
33,001
Payment of dividends to stockholders
(505)
(553)
Capital Contributions
201
18
Issuance of cost from private investment
–
(1,676)
Net cash flows provided by financing activities
9,632
(2,373)
Effect of exchange rate changes on cash and cash equivalents
(449)
3,827
Net increase / (decrease) in cash and cash equivalents
3,031
(35,372)
Cash and cash equivalents as of beginning of the period
276,192
385,857
Cash and cash equivalents as of end of the period
279,223
350,485
Use of Non-GAAP Financial Measures
This earnings release includes certain references to Adjusted
EBITDA and non-GAAP financial measures. The Company defines:
Adjusted EBITDA is calculated as
net income/(loss) exclusive of financial income/(expense), income
tax, depreciation and amortization, impairment charges, stock-based
compensation expense, restructuring charges and acquisition
transaction costs.
Adjusted EBITDA is not a measure recognized under U.S. GAAP.
Accordingly, readers are cautioned not to place undue reliance on
this information and should note that these measures as calculated
by the Company, differ materially from similarly titled measures
reported by other companies, including its competitors.
Adjusted EBITDA excluding Extraordinary
Charges: is Adjusted EBITDA as defined before excluding the
impact of Extraordinary Charges
Earnings per share (EPS) excluding
Extraordinary Charges is calculated dividing Net Income/Loss
excluding the impact of Extraordinary Charges by weighted average
shares outstanding (WASO).
To supplement its consolidated financial statements presented in
accordance with U.S. GAAP, the Company presents foreign exchange
(“FX”) neutral measures.
This non-GAAP measure should not be considered in isolation or
as a substitute for measures of performance prepared in accordance
with U.S. GAAP and may be different from non-GAAP measures used by
other companies. In addition, this non-GAAP measure is not based on
any comprehensive set of accounting rules or principles. Non-GAAP
measures have limitations in that they do not reflect all of the
amounts associated with our results of operations as determined in
accordance with U.S. GAAP. This non-GAAP financial measure should
only be used to evaluate our results of operations in conjunction
with the most comparable U.S. GAAP financial measures.
Reconciliation of this non-GAAP financial measure to the most
comparable U.S. GAAP financial measures can be found in the tables
included in this quarterly earnings release.
The Company believes that reconciliation of FX neutral measures
to the most directly comparable GAAP measure provides investors an
overall understanding of our current financial performance and its
prospects for the future. Specifically, we believe this non-GAAP
measure provide useful information to both management and investors
by excluding the foreign currency exchange rate impact that may not
be indicative of our core operating results and business
outlook.
The FX neutral measures were calculated by using the average
monthly exchange rates for each month during 2020 and applying them
to the corresponding months in 2021, so as to calculate what
results would have been had exchange rates remained stable from one
year to the next. The table below excludes intercompany allocation
FX effects. Finally, this measure does not include any other
macroeconomic effect such as local currency inflation effects, the
impact on impairment calculations or any price adjustment to
compensate local currency inflation or devaluations.
The following table sets forth the FX neutral measures related
to our reported results of the operations for the three-month
periods ended December 31, 2021 and 2020
Geographical Breakdown of Select Operating and Financial Metrics
(In millions, except as noted) 4Q21 vs. 4Q20 - As Reported
Brazil Mexico Rest of Latin America
Total
4Q21
4Q20
% Chg.
4Q21
4Q20
% Chg.
4Q21
4Q20
% Chg.
4Q21
4Q20
% Chg. Transactions ('000)
778
579
34%
508
337
51%
1,053
341
209%
2,338.7
1,257
86%
Gross Bookings
277
153
81%
188
116
62%
494
132
274%
959
401
139%
ASP ($)
356
264
35%
371
345
7%
469
387
21%
410
319
28%
Revenues
125
53
134%
Gross Profit
74
27
169%
4Q21 vs. 4Q20 - FX Neutral Basis
Brazil Mexico
Rest of Latin America Total
4Q21
4Q20
% Chg.
4Q21
4Q20
% Chg.
4Q21
4Q20
% Chg.
4Q21
4Q20
% Chg. Transactions ('000)
778
579
34%
508
337
51%
1,053
341
209%
2,338.7
1,257
86%
Gross Bookings
285
153
86%
190
116
63%
561
132
325%
1,036
401
158%
ASP ($)
366
264
39%
374
345
8%
532
387
38%
443
319
39%
Revenues
135
53
153%
Gross Profit
79
27
186%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220310005366/en/
IR Natalia Nirenberg Investor Relations Phone: (+54911) 26684490
E-mail: natalia.nirenberg@despegar.com
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