Gross Bookings up 118% YoY, reaching 69% of
pre-pandemic levels
Adjusted EBITDA of $12.3 million, excluding
Koin, the second consecutive positive quarter
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 March 31, 2022 (“1Q22”). 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.
Financial and Operating Highlights (For definitions, see page
12)
- Gross Bookings of $803.9 million, up 118% YoY and at 69% of
1Q19 levels. Due to the spread of Omicron variant and seasonality
in LatAm, Gross Bookings were slower in January, but recovered by
40% in March, when Omicron cases subsided.
- Transactions increased 59% YoY, reaching 74% of 1Q19
volume.
- Room nights increased 65% YoY to 57% of 1Q19 level.
- Mobile represented 43% of Transactions in 1Q22, down 685 basis
points (“bps”)YoY and up 271 bps compared to 1Q19.
- Revenues increased 117% YoY to $112.4 million, reaching 84% of
1Q19 levels.
- Adjusted EBITDA was $6.8 million, the second consecutive
positive quarter, up from -$20 million a year ago.
- Adjusted EBITDA, excluding Koin, of $12.3 million, only 19%
below 1Q19 and with Gross Bookings at 69% of 1Q19 level.
- Generated $29.2 million in cash from operating activities,
compared with a use of cash of $7.2 million in 1Q21 and $6.0
million in 1Q19.
- Loyalty Program reached 3.2 million members in 1Q22.
- Koin’s TPV (Total Purchase Volume) grew 5x YoY.
- On January 13, 2022, the Company agreed to acquire a 51%
ownership stake in Stays, Brazil’s leading vacation rental channel
manager, for a total price of approximately $3.1 million
Subsequent Events
- On May 5, 2022, Despegar announced an agreement to acquire 100%
ownership of Brazil-based online travel agent Viajanet.
- On May 4, 2022, Koin entered a strategic partnership with
Movii, one of Colombia’s leading fintechs, to expand BNPL solutions
in the country.
1 The Company has chosen to include comparisons against 1Q19, a
pre-pandemic period, in this press release as a means for the
investment community to compare 1Q22 results to a period not
affected by the COVID-19 pandemic.
Message from the CEO
Commenting on the Company’s performance, Damian Scokin, CEO
said:
“We continue to identify opportunities to consolidate Latin
America’s highly fragmented travel market. The recently announced
acquisition of Brazil’s Viajanet, an online travel platform focused
on the country’s air segment, will give us an opportunity to sell
Despegar’s complementary higher-margin non-air products to its
large customer base. Additionally, we intend to drive other
synergies by powering this latest acquisition with Despegar’s
sophisticated technology platform. Acquiring Viajanet adds a new
brand to our portfolio as well as a talented local tech development
team.
We are also advancing the integration of vacation rental channel
manager Stays, which we expect to close by quarter-end. In the
meantime, we continue to add inventory to our vacation rental
offering.
We are expanding Koin’s geographic reach beyond Brazil through a
strategic partnership with Movii, Colombia’s largest digital
wallet. By combining forces, Koin will offer its Buy Now Pay Later
solutions to Movii’s four million customers, which will not only
greatly increase our addressable market, but help Despegar capture
more of the country’s large OTA market.
Looking at our first quarter results, we delivered $12.3 million
of Adjusted EBITDA in our touristic business (excluding Koin),
demonstrating the substantial earnings power we have built into the
Company over the last two years. Moreover, profitability increased
even though travel demand was dampened by the Omicron variant, the
impact of which was mostly limited to January and February. March
Gross Bookings rose over 40% compared to January, when the variant
peaked.
Despegar’s greater operating leverage is reflected in our Gross
Profit Margin, which expanded 697 basis points sequentially to 66%
in the quarter. Margin was slightly higher than that in 1Q19 and
was achieved despite Gross Bookings recovering to only 69% of their
pre-pandemic level.
With Omicron behind us and travel restrictions practically
eliminated, we expect demand to continue recovering, based on the
prevailing trends we have observed in April and early May. We are
even more encouraged by the substantial opportunity that a
resumption in international travel presents, given Despegar’s
regional leadership.”
Operating and Financial Metrics Highlights (In millions, except as
noted)
1Q22
1Q21
% Chg
1Q19
% Chg
Operating metrics Number of transactions
1.955
1.228
59%
2.652
(26%)
Gross bookings
$803.9
$369.2
118%
$1,157.5
(31%)
Financial metrics Revenues
$112.4
$51.9
117%
$133.1
(16%)
Net income (loss)
($30.9)
($37.6)
n.m.
$1.9
n.m. Net income (loss) attributable to Despegar.com, Corp
($30.9)
($37.4)
n.m.
$1.9
n.m. Adjusted EBITDA
$6.8
($20.0)
n.m.
$15.2
(55%)
EPS Basic 2
($0.45)
($0.55)
n.m.
$0.03
n.m. EPS Diluted 2
($0.45)
($0.55)
n.m.
$0.03
n.m.
Extraordinary Charges Adjusted
EBITDA
$6.8
($20.0)
n.m.
$15.2
n.m. Extraordinary cancellations due to COVID-19
2.0
(4.255)
n.m.
-
n.m. Extraordinary restructuring and integration charges
(1.8)
(1.617)
n.m.
(2.2)
n.m. Bad Debt due to exposure to Airlines in Chapter 11
(0.2)
-
n.m.
-
n.m.
Adjusted EBITDA (Excl. Extraordinary Charges)
$6.8
($14.2)
n.m.
$17.4
n.m. Average Shares Oustanding - Basic (1)
84,140
81,175
4%
69,294
21%
Average Shares Oustanding - Diluted (1)
84,140
81,175
4%
70,377
20%
EPS Basic (Excl. Extraordinary Charges) (2)
(0.45)
(0.47)
n.m.
0.03
n.m. EPS Diluted (Excl. Extraordinary Charges) (2)
(0.45)
(0.47)
n.m.
0.03
n.m. (1) In thousands (2) Round numbers n.m.: Not Meaningful
Business Update on COVID-19
1Q22 Mobility Requirements
By March and April, an encouraging reduction of travel
restrictions was observed throughout the region. The easing of
restrictions included optional mask use in several geographies and
mass gatherings being permitted, such as Carnival in Brazil.
Unlike prior Covid outbreaks, Omicron’s impact was mostly
limited to January and February. By March, most restrictions
started to diminish:
In Brazil, toward the end of the first quarter, large cities
such as Rio de Janeiro and Sao Paulo made the use of protective
face masks optional.
In Mexico, the governments of Quintana Roo and Estado de Mexico
lifted restrictions in March.
In Argentina, travel restrictions throughout the quarter were
minimal.
Restrictions implemented to contain Omicron in Chile’s
metropolitan areas were lifted in early March.
In February, emergency measures were implemented in Colombia due
to the spread of Omicron, which remained in effect until March.
Overview of First Quarter 2022 Results
Key Operating Metrics (In millions, except as noted)
1Q22
1Q21
% Chg
FX Neutral % Chg
1Q19
% Chg
$
% of total
$
% of total
$
% of total
Gross Bookings
$803.9
$369.2
118%
127%
$1,157.5
(31%)
Average selling price (ASP) (in $)
$411
$301
37%
43%
$436
(6%)
Number of Transactions by Segment & Total
Air
1.0
52%
0.7
53%
55%
1.5
57%
(33%)
Packages, Hotels & Other Travel Products
0.9
48%
0.6
47%
64%
1.1
43%
(17%)
Total Number of Transactions
2.0
100%
1.2
100%
59%
2.7
100%
(26%)
On a year-over-year (“YoY”) basis, transactions rose 59% and
were 26% below 1Q19 levels, mainly reflecting the impact of Omicron
on travel demand and seasonality of travel in the region.
Transactions decreased 16% QoQ to 2.0 million in 1Q22.
Gross Bookings increased 118% on a YoY basis and were 31% lower
than 1Q19 levels.
Domestic Gross Bookings increased 56% YoY and exceeded 1Q19
levels by 7%, and International Gross Bookings increased 257% YoY,
reaching 49% of 1Q19 levels. Despite the recovery of Latin
America’s domestic market, international travel demand was affected
by the global spread of Omicron during the quarter.
ASPs rose 37% YoY to $411, mainly reflecting rising travel
demand, particularly for international trips, as well as higher
fuel prices that increased airfares. However, ASPs declined 6%
compared to 1Q19 levels. On an FX neutral basis, ASPs increased 43%
YoY.
Geographic Breakdown
Geographic Breakdown of Select Operating and Financial Metrics (In
millions, except as noted) 1Q22 vs. 1Q21 - As Reported
Brazil Mexico
Rest of Latam Total % Chg. % Chg. %
Chg. % Chg. Transactions ('000)
41%
10%
120%
59%
Gross Bookings
137%
41%
171%
118%
ASP ($)
68%
28%
23%
37%
Revenues
117%
Gross Profit
234%
1Q22 vs. 1Q21 - FX Neutral Basis
Brazil Mexico Rest of Latam Total %
Chg. % Chg. % Chg. % Chg. Gross Bookings
125%
42%
204%
127%
ASP ($)
60%
29%
38%
43%
Revenues
127%
Gross Profit
253%
Brazil accounted for 32% of total Transactions in 1Q22,
which represented a 34% increase on a YoY basis, but 40% below 1Q19
levels.
Gross Bookings grew 135% YoY and were 48% lower when compared to
1Q19. ASPs increased 75% YoY and were 13% below 1Q19 levels.
Mexico represented 20% of 1Q22 Transactions. Transactions
and Gross Bookings in Mexico increased YoY by 10% and 42%,
respectively. Compared to 1Q19, Transactions increased 5% while
Gross Bookings rose 25%, reflecting the contribution of Best Day,
which was acquired in October 2020. ASPs increased 21% YoY and 19%
when compared to 1Q19.
Across the rest of Latin America, Transactions and Gross
Bookings, on a YoY basis, rose 122% and 173%, respectively, but
were 25% and 30% lower when compared to 1Q19. ASPs increased 23%
YoY, but declined 8% versus 1Q19.
Revenue
Revenue Breakdown
1Q22
1Q21
% Chg
1Q19
% Chg
$
% of total
$
% of total
$
% of total
Revenue by business segment (in $Ms) (Excluding Cancellations)
Air
$43.7
39%
$16.7
32%
162%
$49.7
37%
(12%)
Packages, Hotels & Other Travel Products
$67.7
60%
$35.2
68%
92%
$83.4
63%
(19%)
Unallocated
$1.1
1%
–
n.m n.m
–
n.m. n.m Total Revenue
$112.4
100%
$51.9
100%
117%
$133.1
100%
(16%)
Total revenue margin
14.0%
14.0%
(6) bps
11.5%
+248 bps
Extraordinary Charges
Extraordinary Cancellations due to
COVID-19
$2.0
–
($4.3)
–
n.m.
–
–
n.m. Total Revenue (Excluding Extraordinary Charges)
$110.5
$56.1
97%
$133.1
(17%)
Total revenue margin (Excluding Extraordinary
Charges)
13.7%
15.2%
(146) bps
11.5%
+224 bps
On a YoY basis, Revenues rose 117%
to $112.4 million. Excluding extraordinary cancellations, Revenues
would have increased 97% to $110.5 million.
Revenue Margin remained unchanged on a YoY basis at 14.0% and
decreased 126 bps when excluding extraordinary cancellations.
Compared to 1Q19, Revenues
decreased 16%, due to a 31% decrease in Gross Bookings during the
period, while industry air passenger traffic in the region
contracted 34%. The revenue decline was partially offset by a
higher Revenue Margin. Excluding extraordinary cancellations,
revenues would have reached 83% of 1Q19 levels.
Revenue Margin in 1Q22 increased 248 bps when compared to 1Q19,
reaching 14.0%, driven by higher up-front incentives and customer
fees as a percentage of Gross Bookings. Excluding extraordinary
cancellations, Revenue Margin would have expanded 224 bps to 13.7%,
from 11.5% in 1Q19.
Cost of Revenue and Gross Profit
Cost of Revenue and Gross Profit (In millions, except as noted)
1Q22
1Q21
% Chg
1Q19
% Chg
Revenue
$112.4
$51.9
117%
$133.1
(16%)
Revenue Margin
14.0%
14.0%
(6) bps
11.5%
+248 bps Cost of Revenue
$38.1
$29.6
29%
$45.2
(16%)
Cost of Revenue as a % of GB
4.7%
8.0%
(329) bps
3.9%
+83 bps Gross Profit
$74.4
$22.2
234%
$87.9
(15%)
Gross Profit as a % of GB
9.2%
6.0%
+323 bps
7.6%
+166 bps
Extraordinary
Charges Total Revenue
$112.4
$51.9
$133.1
Extraordinary Cancellations due to COVID-19
$2.0
($4.3)
n.m.
-
n.m.
Total Revenue (Excl. Extraordinary Charges)
$110.5
$56.1
97%
$133.1
(17%)
Revenue (Excl. Extraordinary Charges) as a % of GB
13.7%
15.2%
(146) bps
11.5%
+224 bps
Total Cost of Revenue
$38.1
$29.6
$45.2
Extraordinary restructuring and integration charges
($0.6)
(0.1)
n.m.
-
n.m.
Total Cost of Revenue (Excl. Extraordinary
Charges)
$37.4
$29.5
27%
$45.2
(17%)
Cost of Revenue (Excl. Extraordinary Charges) as a % of GB
4.7%
8.0%
(334) bps
3.9%
+75 bps Gross Profit / (Loss) (Excl. Extraordinary Charges)
$73.0
$26.6
175%
$87.9
(17%)
Gross Profit / (Loss) (Excl. Extraordinary Charges) as a % of
GB
9.1%
7.2%
+188 bps
7.6%
+149 bps
Cost of Revenue is mainly comprised of credit card processing
fees, bank fees related to customer financing installment plans,
and fulfillment center expenses.
On a YoY basis, Cost of Revenue
increased 29% due to higher volumes, but decreased 329 bps as a
percentage of Gross Bookings, reflecting mostly the operating
leverage of the business and customer care demand returning to
lower pre-pandemic levels.
Gross Profit increased 234% to $74.4 million, from $22.2 million
in 1Q21. Excluding Extraordinary Charges, Gross Profit would have
increased 172% to $72.4 million from $26.6 million in 1Q21.
Compared to 1Q19, Cost of Revenue
declined 16%, due to lower Transaction volume and cost of
installments as a percentage of Gross Bookings. These favorable
trends were partially offset by increased fulfillment center costs.
Cost of Revenue as a percentage of Gross Bookings was still above
2019 levels, mainly reflecting a higher cost to serve customers,
due to abnormal levels of cancellations, which are expected to
normalize during the remainder of the year. As reported, Gross
Profit declined 15% during this period and 18% when excluding
Extraordinary Charges.
Operating Expenses
Operating Expenses (In millions, except as noted)
1Q22
1Q21
% Chg
1Q19
% Chg
Selling and marketing
$30.5
$15.4
98%
$40.9
(25%)
S&M as a % of GB
3.8%
4.2%
(37) bps
3.5%
+26 bps General and administrative
$28.0
$20.6
36%
$20.6
36%
G&A as a % of GB
3.5%
5.6%
(210) bps
1.8%
+170 bps Technology and product development
$20.7
$17.5
19%
$18.7
11%
T&C as a % of GB
2.6%
4.7%
(215) bps
1.6%
+96 bps Impairment of long-lived assets
–
$5.1
n.m.
–
n.m. Total operating expenses
$79.3
$58.6
35%
$80.3
(1%)
Operating Expenses as a % of GB
9.9%
15.9%
(601) bps
6.9%
+292 bps
Extraordinary Charges
Total
Operating Expenses
$79.3
$58.6
35%
$80.3
(1%)
Extraordinary restructuring and integration charges
(1.2)
(1.6)
n.m.
-
n.m. Bad Debt due to exposure to Airlines in Chapter 11
(0.2)
-
n.m.
-
n.m.
Total operating expenses (Excl. Extraordinary
Charges)
$77.9
$57.0
37%
$80.3
(3%)
Operating expenses (Excl. Extraordinary Charges) as a % of GB
9.7%
15.4%
(573) bps
6.9%
+276 bps
2019 Figures do not include the
contribution from Viajes Falabella, Best Day and Koin
On a YoY basis, Operating Expenses
rose 35% to $79.3 million, mainly due to a 98% increase in Selling
and Marketing (S&M) spend in response to higher travel demand
during the period. Excluding Extraordinary Charges in both
quarters, Operating Expenses would have increased 37%.
Structural Costs, which consider Best Day expenses in both 1Q22
and 1Q21 increased 25% to $50.6 million, mainly due to inflation in
Argentina which accelerated in relation to FX depreciation in this
country. This effect was partially offset by a reduction in
headcount.
1
See definition on page 13
Selling and Marketing (“S&M”) expenses rose 98% YoY
to $30.5 million on an absolute basis and decreased 37 bps as a
percentage of Gross Bookings. The increase in absolute terms mainly
reflects investments in direct marketing, which are consistent with
market growth, particularly in regions with higher recovery
levels.
General and Administrative (“G&A”) expenses
increased 21% YoY to $22.8 million when adjusting for Extraordinary
Charges in both 1Q22 and 1Q21 and for $3.1 million in Koin related
expenses. This increase was mainly due to dollar inflation,
particularly in relation to wages, provisions in connection with
contingencies and bad debt, and outsourced services related to
strategic initiatives.
Technology and Product Development expenses totaled $20.7
million, increasing 19% YoY. Excluding Extraordinary Charges and
the impact of Koin, Technology and Product Development costs would
have increased 15% YoY in connection with salary increases.
Financial Income/Expense
For 1Q22, Despegar reported a net financial loss of $7.0
million, compared to a net financial loss of $1.3 million in 1Q21.
The higher loss was mainly due to costs associated with the
factoring of receivables in Brazil and to FX losses. The FX losses
were partially offset by hedging activities conducted by the
Company and by interest gains.
Income Taxes
The Company reported an income tax expense of $20.4 million in
1Q22, compared to $0.3 million in 1Q21. The effective tax rate in
1Q22 was 196%, compared to 1% in 1Q21.
The variation in the effective tax rate was mainly due to: i) a
change in Valuation Allowances in Brazil, Argentina, Mexico and US
related to updated recoverability analyses for future years: ii)
provisions due to uncertain tax positions and contingencies; and
iii) a change in deferred taxes in Brazil due to an income tax rate
reduction.
Adjusted EBITDA
Adjusted EBITDA Reconciliation
(In millions, except as noted)
1Q22
1Q21
% Chg
1Q19
% Chg Net income/ (loss)
($30.9)
($37.6)
(18%)
$1.9
n.m. Add (deduct): Financial
expense, net
$7.0
$1.3
437%
$5.2
35%
Income tax expense
$19.1
$0.3
6439%
$0.5
3886%
Depreciation expense
$1.7
$1.6
7%
$1.4
20%
Amortization of intangible assets
$6.6
$7.1
(7%)
$3.2
106%
Share-based compensation expense
$3.3
$2.1
55%
$3.0
11%
Impairment of long-lived assets
–
$5.1
n.m.
–
n.m. Restructuring charges
–
$0.0
n.m.
–
n.m. Acquisition transaction costs
–
–
n.m.
–
n.m. Adjusted EBITDA
$6.8
($20.0)
n.m.
$15.2
n.m.
Extraordinary Charges
Adjusted EBITDA
$6.8
($20.0)
$15.2
Extraordinary cancellations due to COVID-19
2.0
(4.3)
n.m.
-
n.m. Extraordinary restructuring and integration charges
(1.8)
(1.6)
n.m.
(2.2)
n.m. Bad Debt due to exposure to Airlines in Chapter 11
(0.2)
-
n.m.
-
n.m.
Adjusted EBITDA (Excl. Extraordinary Charges)
$6.8
($14.2)
n.m.
$17.4
n.m.
As reported Adjusted EBITDA was $6.8 million and compares with a
loss of $20.0 million in 1Q21. Adjusted EBITDA, excluding Koin,
totaled $12.3 million in 1Q22, despite Gross Bookings reaching only
69% of 1Q19, when comparable Adjusted EBITDA was $15.2 million.
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.
In 1Q22, Despegar generated $29.2 million in cash from operating
activities compared with cash generation of $0.5 million in 4Q21
and use of cash of $7.2 million in 1Q21 and $6.0 million in
1Q19.
Cash generated from operating activities this quarter amounted
to $29.2, which comprised Adjusted EBITDA of $6.8 million and $22
million of negative working capital.
Cash and cash equivalents, including restricted cash, increased
$6.5 million QoQ to $285.8 million, as of March 31, 2022. Aggregate
Net Operational Short-term Obligations were $220.4 million,
increasing 11% on a QoQ basis.
Subsequent Events
On May 6, 2022, the Company agreed to acquire TVLX Viagens e
Turismo S.A (“Viajanet”), an online travel agency in Brazil, for a
total consideration of approximately US$15 million and subject to
customary closing conditions. 60% of the purchase price is payable
at closing, 20% within the next 24 months, and the remaining 20%
within the next 36 months.
During 2019, Viajanet recorded audited revenues and EBITDA of
approximately US$30 million and US$0.6 million, respectively.
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.
1Q22 Earnings Conference Call
When:
10:00 a.m. Eastern time, May 19,
2021
Who:
Mr. Damián Scokin, Chief
Executive Officer
Mr. Alberto López-Gaffney, Chief
Financial Officer
Ms. Natalia Nirenberg, Investor
Relations
Dial-in:
1-646-904-5544 (U.S. domestic);
1-929-526-1599 (International)
Access Code: 486708
Pre-Register: You may pre-register at any time: click
here. 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 1Q22
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, 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. As of
1Q22, Extraordinary Charges also include costs generated from the
operation of Best Day.
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 March 31, 2022 and 2021 (in thousands
U.S. dollars, except as noted)
Profit & Loss Statement
1Q22
1Q21
% Chg
Revenue
112,414
51,850
117%
Cost of revenue
38,059
29,610
29%
Gross profit
74,355
22,240
234%
Operating expenses Selling and marketing
30,517
15,382
98%
General and administrative
28,010
20,630
36%
Technology and product development
20,735
17,460
19%
Impairment of long-lived assets
-
5,106
n.m. Total operating expenses
79,262
58,578
35%
Equity Income / (Loss)
117
376
n.m. Operating (loss) / income
(4,790)
(35,962)
n.m. Net financial income (expense)
(7,035)
(1,309)
n.m. Net (loss) / income before income taxes
(11,825)
(37,271)
n.m. Income tax (benefit) / expense
19,093
292
n.m. Net (loss) / income
(30,918)
(37,563)
n.m. Net (income) / loss attributable to non controlling
interest
-
180
n.m. Net income (loss) attributable to Despegar.com, Corp
(30,918)
(37,383)
n.m. 1. In thousands
Key Financial & Operating Trended Metrics (in thousands
U.S. dollars, except as noted)
2Q20
3Q20
4Q20
1Q21
2Q21
3Q21
4Q21
1Q22
FINANCIAL RESULTS
Revenue
($9,734)
$11,740
$53,246
$51,850
$63,069
$83,368
$124,556
$112,414
Revenue Recognition Adjustment
Cost of revenue
13,801
12,390
25,832
29,610
35,838
40,698
50,857
38,059
Gross profit
(23,535)
(650)
27,414
22,240
27,231
42,670
73,699
74,355
Operating expenses Selling and marketing
6,848
5,299
13,160
15,382
19,188
26,138
34,582
30,517
General and administrative
24,391
22,818
29,490
20,630
25,287
19,416
21,597
28,010
Technology and product development
18,415
14,322
17,152
17,460
18,344
19,432
19,508
20,735
Impairment of long-lived assets
1,324
-
593
5,106
-
-
-
-
Total operating expenses
50,978
42,439
60,395
58,578
62,819
64,986
75,687
79,262
Equity Income / (Loss)
(2,059)
376
(348)
(29)
343
117
Operating income
(74,513)
(43,089)
(35,040)
(35,962)
(35,936)
(22,345)
(1,645)
(4,790)
Net financial income (expense)
9,428
(4,484)
(2,095)
(1,309)
(1,835)
(3,254)
(3,809)
(7,035)
Net income before income taxes
(65,085)
(47,573)
(37,135)
(37,271)
(37,771)
(25,599)
(5,454)
(11,825)
Adj. Net Income tax expense
(8,011)
(5,838)
(8,298)
292
(6,413)
(1,654)
7,545
19,093
Income tax expense
(8,011)
(5,838)
(8,298)
292
(6,413)
(1,654)
7,545
19,093
Adjustment Net income /(loss)
(57,074)
(41,735)
(28,837)
(37,563)
(31,358)
(23,945)
(12,999)
(30,918)
Net (income) / loss attributable to non controlling interest
$69
$213
$180
$258
$273
$526
–
Net income (loss) attributable to Despegar.com, Corp
(57,074)
(41,666)
(28,624)
(37,383)
(31,100)
(23,672)
(12,473)
(30,918)
Adjusted EBITDA
($57,444)
($31,246)
($19,261)
($20,024)
($22,256)
($10,345)
$9,002
$6,799
Net income/ (loss)
($57,074)
($41,735)
($28,837)
($37,563)
($31,358)
($23,945)
($12,999)
($30,918)
Add (deduct):
Financial expense, net
(9,428)
4,484
2,095
1,309
1,835
3,254
3,809
7,035
Income tax expense
(8,011)
(5,838)
(8,298)
292
(6,413)
(1,654)
7,545
19,093
Depreciation expense
1,782
2,597
1,751
1,569
1,401
2,451
1,497
1,672
Amortization of intangible assets
5,501
4,370
6,889
7,095
6,827
6,457
6,909
6,584
Share-based compensation expense
113
2,427
2,598
2,149
5,444
3,092
2,241
3,333
Impairment of long-lived assets
1,324
–
593
5,106
–
–
–
–
Restructuring charges
7,249
1,949
2,413
19
8
–
–
–
Acquisition transaction costs
1,100
500
1,535
–
–
–
–
–
Adjusted EBITDA
($57,444)
($31,246)
($19,261)
($20,024)
($22,256)
($10,345)
$9,002
$6,799
Unaudited Consolidated Balance Sheet as of March 31, 2022 and
December 31, 2021 (in thousands U.S. dollars, except as
noted)
As of March 31, 2022 As of December 31, 2021 ASSETS
Current assets Cash and cash
equivalents
235,175
246,078
Restricted cash and cash equivalents
50,589
33,145
Short Term Investments
–
–
Accounts receivable, net of allowances
127,120
136,843
Related party receivable
15,857
20,172
Other current assets and prepaid expenses
33,614
50,803
Total current assets
462,355
487,041
Non-current assets Other Assets
63,426
82,406
Restricted cash and cash equivalents
–
–
Right of use
26,649
27,240
Property and equipment net
17,234
17,285
Intangible assets, net
85,873
85,723
Goodwill
128,094
122,426
Total non-current assets
321,276
335,080
TOTAL ASSETS
783,631
822,121
LIABILITIES AND SHAREHOLDERS’ DEFICIT Current
liabilities Accounts payable and accrued expenses
49,938
51,577
Travel suppliers payable
278,678
263,530
Related party payable
35,115
34,772
Loans and other financial liabilities
11,206
16,283
Deferred Revenue
16,924
13,556
Other liabilities
69,443
79,014
Contingent liabilities
11,746
9,156
Lease liabilities
6,860
6,938
Total current liabilities
479,910
474,826
Non-current liabilities Other liabilities
35,661
38,545
Contingent liabilities
25,128
25,281
Long term debt
11,508
10,400
Lease liabilities
20,294
20,937
Related party liability
125,000
125,000
Total non-current liabilities
217,591
220,163
TOTAL LIABILITIES
697,501
694,989
Series A non-convertible preferred shares
100,879
109,565
Series B convertible preferred shares
46,700
46,700
Redeemable non-controlling interest
–
2,596
Mezzanine Equity
147,579
158,861
SHAREHOLDERS’ EQUITY (DEFICIT) Common stock
280,298
279,932
Additional paid-in capital
349,334
350,200
Other reserves
(728)
(728)
Accumulated other comprehensive income
(16,368)
(18,065)
Accumulated losses
(605,718)
(574,801)
Treasury Stock
(68,267)
(68,267)
Total Shareholders' Equity Attributable / (Deficit) to Despegar.com
Corp
(61,449)
(31,729)
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
783,631
822,121
Unaudited Statements of Cash Flows for the three-month
periods ended March 31, 2022 and 2021 (in thousands U.S. dollars,
except as noted)
3 months ended March
31,
2022
2021
Cash flows from operating activities Net income /
(loss)
($30,918)
($37,563)
Adjustments to reconcile net income to net cash flow from operating
activities Net loss attributable to redeemable
non-controlling interest
–
$180
Unrealized foreign currency translation losses
$6,723
$3,914
Depreciation expense
$1,672
$1,569
Amortization of intangible assets
$6,584
$7,095
Impairment of long-lived assets
–
$5,106
Disposals of property and equipment
–
$12
Earnout
$175
$329
Indemnity
($175)
($329)
Investments in other subsidiaries
($117)
($752)
Stock based compensation expense
$3,333
$2,149
Amortization of Right of use
$1,886
$1,026
Interest and penalties
$565
($384)
Income taxes
$16,684
($1,309)
Allowance for doubtful accounts
$4,487
$482
Breakage related to loyalty programs
–
–
Provision for contingencies
$6,376
$4,353
Changes in assets and liabilities, net of non-cash
transactions (Increase) / Decrease in accounts
receivable net of allowances
$17,047
$22,339
(Increase) / Decrease in related party receivables
$4,389
$5
(Increase) / Decrease in other assets and prepaid expenses
$38,187
($4,152)
Increase / (Decrease) in accounts payable and accrued expenses
($4,257)
$5,281
Increase / (Decrease) in travel suppliers payable
($2,786)
($21,519)
Increase / (Decrease) in other liabilities
($33,564)
$7,786
Increase / (Decrease) in contingencies
($6,204)
($1,515)
Increase / (Decrease) in related party liabilities
($1,277)
($488)
Increase / (Decrease) in lease liability
($2,071)
($1,070)
Increase / (Decrease) in deferred revenue
2,478
265
Net cash flows provided by / (used in) operating activities
29,217
(7,190)
Cash flows from investing activities (Increase)/
Decrease in short term investments
–
1
Payment for acquired businesses, net of cash acquired
(1,200)
–
Acquisition of property and equipment
(1,057)
(579)
Increase of intangible assets including internal-use software and
website development
(7,098)
(4,064)
(Increase) / Decrease in restricted cash and cash equivalents
–
–
Net cash flows used in investing activities
(9,355)
(4,642)
Cash flows from financing activities Net (decrease) /
increase of short term debt
(6,048)
(1,758)
Increase in long-term debt
1,464
88
Decrease in long-term debt
(1,949)
(459)
Payment of dividends to stockholders
(15,838)
(8,466)
Capital Contributions
86
640
Issuance of cost from private investment
–
(170)
Collect on debenture issuance by securitization program
605
–
Net cash flows provided by financing activities
(21,680)
(10,125)
Effect of exchange rate changes on cash and cash equivalents
8,359
(2,788)
Net increase / (decrease) in cash and cash equivalents
6,541
(24,745)
Cash and cash equivalents as of beginning of the period
279,223
350,485
Cash and cash equivalents as of end of the period
285,764
325,740
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 Despegar’s 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) 1Q22 vs. 1Q21 -
As Reported
Brazil Mexico Rest of Latin America
Total
1Q22
1Q21
% Chg.
1Q22
1Q21
% Chg.
1Q22
1Q21
% Chg.
1Q22
1Q21
% Chg. Transactions ('000)
664
472
41%
377
342
10%
914
415
120%
1,955.1
1,228
59%
Gross Bookings
247
104
137%
177
125
41%
380
140
171%
804
369
118%
ASP ($)
372
221
68%
469
366
28%
416
338
23%
411
301
37%
Revenues
112
52
117%
Gross Profit
74
22
234%
1Q22 vs. 1Q21 - FX Neutral Basis
Brazil Mexico Rest of Latin
America Total
1Q22
1Q21
% Chg.
1Q22
1Q21
% Chg.
1Q22
1Q21
% Chg.
1Q22
1Q21
% Chg. Transactions ('000)
664
472
41%
377
342
10%
914
415
120%
1,955.1
1,228
59%
Gross Bookings
235
104
125%
178
125
42%
425
140
204%
838
369
127%
ASP ($)
353
221
60%
472
366
29%
465
338
38%
428
301
43%
Revenues
118
52
127%
Gross Profit
78
22
253%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220519005199/en/
IR Natalia Nirenberg Investor Relations Phone: (+54911)
26684490 E-mail: natalia.nirenberg@despegar.com
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