Group 1 - Despegar.com (DESP) has reached a key level of support and crossed above the 20-day moving average, indicating a short-term bullish trend [1][3] - The 20-day simple moving average (SMA) is a popular trading tool that smooths out short-term price trends and signals trend reversals [2] - Over the past four weeks, DESP has gained 5.7%, with a current price of 12.71 and a 20-day SMA of 12.286 [3] Group 2 - Positive earnings estimate revisions for DESP have occurred, with more revisions higher for the current fiscal year and no lower revisions [4] - The consensus earnings estimate has also moved up, suggesting potential for further gains [4]

Market Overview - The stock market is currently hovering around all-time highs, with investors overcoming concerns regarding a slowing macroeconomy and focusing on potential impacts of rate cuts [1] Investment Strategy - There is an ongoing advocacy for diversifying investments away from highly valued American stocks, suggesting a shift in investment strategy [1] Analyst Background - Gary Alexander has extensive experience in covering technology companies on Wall Street and working in Silicon Valley, providing insights into current industry themes [1] - He has been a contributor on Seeking Alpha since 2017 and has been quoted in various web publications, indicating a strong presence in the investment community [1]

Financial Data and Key Metrics Changes - Gross bookings grew by 4% year-on-year to $1.3 billion, but increased by 37% in constant currency, indicating strong underlying demand despite foreign exchange headwinds [5][39] - Total revenues reached $185 million, a 12% year-on-year increase, with an impressive 46% growth when adjusted for foreign exchange impacts [6][39] - Adjusted EBITDA was $37 million, up 22% year-over-year, and adjusted net income reached $30.2 million, a 397% increase compared to the previous year [7][43] Business Line Data and Key Metrics Changes - B2C bookings totaled $1.1 billion, with strong demand in Brazil and Mexico, particularly in higher-margin packages and hotel sales [7] - B2B gross bookings expanded by 43% year-over-year, while white-label operations grew by 7% [9][20] - Non-air revenues accounted for 64% of total sales, contributing to a take rate of 13.8% [6][43] Market Data and Key Metrics Changes - In Brazil, gross bookings increased by 22% in constant currency, despite floods affecting 5% to 8% of transactions [40] - Mexico's gross bookings rose by 9.4% year-over-year, driven by higher-margin international travel packages [41] - Other Latin American markets saw a 10% decline in gross bookings, but a 67% increase on an FX-neutral basis [42] Company Strategy and Development Direction - The company is focusing on higher-margin package sales and expanding its loyalty program, Pasaporte Despegar, which grew by 65% year-on-year [10][11] - A strategic alliance with World2Meet was formed to streamline operations and focus on core business areas [16] - The company aims to enhance its technology platform and expand its B2B and white-label business segments [20][24] Management's Comments on Operating Environment and Future Outlook - Management acknowledged significant foreign exchange headwinds and temporary impacts from flooding but expressed confidence in the core business's performance [47][56] - The revenue guidance for the year was lowered from at least $820 million to at least $760 million, while adjusted EBITDA guidance was raised to at least $160 million [47][48] - The company remains optimistic about long-term growth potential and plans to continue investing in technology and marketing [49][51] Other Important Information - The company was included in the Russell stock indexes, marking a significant milestone [17] - The loyalty program's growth reflects a commitment to enhancing customer experience and retention [10][11] - The AI travel assistant, SOFIA, has seen increased user engagement and will be integrated into B2B operations [30][35] Q&A Session Summary Question: Guidance clarification regarding top-line and EBITDA changes - Management explained the reduction in top-line guidance was due to FX headwinds, divestiture of the DMC business, and temporary flooding impacts, while the increase in EBITDA guidance reflects strong core business performance and operational efficiencies [54][56] Question: Country-level performance comparison - Management noted that while Brazil's gross bookings increased significantly, Mexico's growth was more modest due to different market dynamics, with underlying demand remaining strong despite FX impacts [63][64] Question: Details on DMC divestment - Management could not disclose exact revenue figures for DMC but indicated it had lower margins compared to the overall company, and the divestment was seen as a positive strategic move [67][68]

Financial Performance - Revenue increased by 12% year-over-year to $185 million[3, 15] - Adjusted EBITDA grew by 22% year-over-year to $37 million, resulting in a 19.8% Adjusted EBITDA margin[4] - Adjusted Net Income reached $30.2 million, a significant increase of 397% year-over-year[4] - The company maintains a solid cash position of $204 million[5, 15] Key Growth Drivers - Take Rate improved to 13.8%, driven by strong package sales[3, 15] - B2B segment experienced robust growth, with new partnerships creating accelerating growth potential[5] - App-based transactions reached an all-time high of 49.1%, a 1258 bps year-over-year increase[9] - Installed base of mobile devices increased by 43% year-over-year to approximately 18 million[8] Strategic Initiatives - The company is focused on improving revenue mix through packages, increasing diversification in Mexico and Brazil, and expanding B2B services[9] - SOFIA, the AI Trip Planner, has been significantly upgraded with new booking features and improved design[5, 11] Market Opportunities and Guidance - The company sees substantial near and long-term market opportunities in Latin America and globally[6, 7] - Full year 2024 financial guidance includes revenues adjusted to at least $760 million, implying at least 8% year-over-year growth, and Adjusted EBITDA raised to at least $160 million, implying at least 39% year-over-year growth[16, 18]

Financial Performance - Gross Bookings increased 4% YoY to $1.3 billion, with a 37% YoY increase on an FX neutral basis[4] - Adjusted EBITDA rose 22% YoY to $36.7 million, with an Adjusted EBITDA margin increase of 173 bps YoY to 19.8%[5] - Revenues increased 12% YoY to $185 million, driven by a Take Rate of 13.8%, which is up 96 bps YoY[11] - Adjusted Net Income surged 397% YoY to $30.2 million, compared to $6.1 million in 2Q23[20] - The company expects Adjusted EBITDA for FY24 to be at least $160 million, representing at least 39% YoY growth[12] - Revenue guidance for FY24 has been updated to at least $760 million, reflecting at least 8% YoY growth[25] - Total adjusted EBITDA increased to $36,687 million in Q2 2024, up 22% from $29,957 million in Q2 2023[36] - Total adjusted net income increased by 397% to $30,223 million from $6,079 million year-over-year[38] - Revenue for Q2 2024 was $185,047 million, representing a 12% increase from $165,524 million in Q2 2023[59] - Gross profit rose by 26% to $133,095 million in Q2 2024, up from $105,524 million in the same quarter last year[59] - Operating income for Q2 2024 was $26,142 million, a 40% increase compared to $18,700 million in Q2 2023[59] Transaction and Booking Metrics - B2B Gross Bookings increased 43% YoY, contributing to 18% of total Gross Bookings[6] - App transactions accounted for a record 49.1% of total transactions, up 1,258 bps from 36.5% in 2Q23[22] - Total transactions increased by 10% year-over-year to 2,431,000 in Q2 2024, with Brazil showing a 26% increase and Mexico a 6% increase[67] - Gross bookings rose by 37% year-over-year to $1.758 billion, with significant growth in the Rest of Latin America at 67%[67] - Total payment volume (TPV) for financial services was $18 million in Q2 2024, an 8% increase from $17 million in Q2 2023[41] - The number of transactions increased by 10% to 2,431,000 in Q2 2024 from 2,204,000 in Q2 2023[41] Cost and Expense Management - Selling and marketing expenses increased by 22% to $62,933 million in Q2 2024, up from $51,695 million in Q2 2023[59] - General and administrative expenses doubled to $16,802 million from $8,396 million year-over-year, reflecting a 100% increase[59] - Operating expenses for Q2 2024 were $106.873 million, reflecting a strategic focus on cost management despite increased revenue[69] - The company experienced a significant increase in share-based compensation expense, which rose to $1,457 million in Q2 2024, a 60% increase from $910 million in Q2 2023[36] Asset and Liability Overview - Total assets decreased to $862,981 million as of June 30, 2024, from $886,062 million as of March 31, 2024, representing a decline of approximately 2%[32] - Total current liabilities decreased to $635,100 million as of June 30, 2024, from $657,754 million as of March 31, 2024, a reduction of approximately 3.4%[32] - Total non-current liabilities decreased to $167,865 million as of June 30, 2024, from $174,275 million as of March 31, 2024, a decline of about 3.7%[32] - Cash and cash equivalents and restricted cash decreased to $204,484 million at the end of the period from $243,934 million at the end of the previous period[34] - Net cash flows provided by operating activities were $12,746 million for the three months ended June 30, 2024, down from $28,873 million in the same period last year[34] - The company reported a net decrease in cash flows used in investing activities of $11,498 million for the three months ended June 30, 2024, compared to $16,660 million in the same period last year[34] Strategic Initiatives and Future Outlook - A strategic alliance was formed with World2Meet, resulting in the sale of Despegar's Destination Management Company, BDexperience[8] - The company plans to continue expanding its market presence in Latin America, leveraging the growth in gross bookings and transactions[67] - Future outlook remains positive with expectations of continued revenue growth driven by new product launches and market expansion strategies[67] - The company updated its 2024 annual guidance, indicating a positive outlook for future performance[54] Revenue Generation and Business Model - Despegar's Gross Bookings is a key operating measure representing the total purchase price of travel products booked through its platform, net of withholding taxes on international trips in Argentina since 2020[75] - The Company generates most of its revenue from commissions and service fees, making Gross Bookings an important revenue indicator[75] - Despegar's revenue is primarily derived from commissions and service fees, with additional income from advertising and financial services[90] - The Financial Services segment includes loan origination and processing services, contributing to the overall business model[92] - The Company emphasizes the importance of the number of transactions as a metric for customer engagement and business scale, independent of average transaction prices[78] Financial Metrics and Definitions - Total Adjusted EBITDA is calculated by excluding financial results, income tax, depreciation, amortization, and other specific charges, providing a clearer view of operational performance[76] - The Total Revenue Margin, or Take Rate, is defined as revenue divided by the sum of Gross Bookings and Total Payment Volume, indicating the efficiency of revenue generation[77] - The Company utilizes FX neutral measures to provide a clearer understanding of financial performance by excluding foreign currency exchange impacts[98] - Despegar has become one of the largest travel companies in Latin America, consolidating various brands under its umbrella to enhance its market position[94]

Group 1: Brinker International - Brinker International has a PEG ratio of 0.64 compared to the industry average of 1.78, indicating strong growth potential [1] - The company has a Growth Score of A, reflecting its favorable growth characteristics [1] - The Zacks Consensus Estimate for Brinker International's current year earnings has increased by 5.3% over the last 60 days [3] Group 2: Vertiv Holdings Co - Vertiv Holdings has a PEG ratio of 1.01, which is lower than the industry average of 2.51, suggesting competitive growth prospects [2] - The company holds a Zacks Rank 1, indicating strong performance expectations [2] - The Zacks Consensus Estimate for Vertiv's current year earnings has risen by 6.6% over the last 60 days [2] Group 3: Despegar.com, Corp. - Despegar.com has a PEG ratio of 0.53 compared to the industry average of 1.93, highlighting its growth potential [4] - The company also carries a Zacks Rank 1, signifying strong market performance [2] - The Zacks Consensus Estimate for Despegar's current year earnings has increased by 10.5% over the last 60 days [2]

Company Performance - Despegar.com (DESP) has gained approximately 29.1% year-to-date, outperforming the average loss of 4.9% in the Transportation sector [4] - The Zacks Consensus Estimate for DESP's full-year earnings has increased by 12.1% over the past three months, indicating improved analyst sentiment and a more positive earnings outlook [3] Industry Context - Despegar.com is part of the Transportation - Services industry, which consists of 27 companies and currently ranks 172 in the Zacks Industry Rank. This industry has experienced an average loss of 9.4% year-to-date, further highlighting DESP's strong performance [5] - In comparison, SkyWest (SKYW), another Transportation stock, has returned 59.3% year-to-date and belongs to the Transportation - Airline industry, which is ranked 230 and has moved up by 8.3% year-to-date [4][6] Zacks Rank - Despegar.com holds a Zacks Rank of 1 (Strong Buy), suggesting it has favorable characteristics to outperform the market in the near term [3] - The Zacks Rank system emphasizes earnings estimates and revisions, which is currently showing a positive trend for Despegar.com [3]

Group 1: Stock Highlights - Silicon Motion Technology Corporation (SIMO) has a Zacks Rank 1, with a 0.9% increase in the Zacks Consensus Estimate for current year earnings over the last 60 days, and a PEG ratio of 0.56 compared to 4.94 for the industry, possessing a Growth Score of A [1] - Despegar.com, Corp. (DESP) also holds a Zacks Rank 1, with a 10.5% increase in the Zacks Consensus Estimate for current year earnings over the last 60 days, and a PEG ratio of 0.59 compared to 1.90 for the industry, possessing a Growth Score of B [2] - The Progressive Corporation (PGR) carries a Zacks Rank 1, with a 4.4% increase in the Zacks Consensus Estimate for current year earnings over the last 60 days, and a PEG ratio of 0.75 compared to 1.42 for the industry, possessing a Growth Score of A [3]

Group 1: Company Overview - Silicon Motion Technology Corporation (SIMO) is a manufacturer of NAND flash controllers for solid-state storage devices and holds a Zacks Rank 1 [1] - Despegar.com, Corp. (DESP) is an online travel company that also carries a Zacks Rank 1 [2] - KB Home (KBH) is a homebuilding company with a Zacks Rank 1 [4] Group 2: Earnings Estimates - Silicon Motion Technology has seen the Zacks Consensus Estimate for its current year earnings increase by 1.1% over the last 60 days [1] - Despegar.com has experienced a 10.5% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2] - KB Home's current year earnings estimate has risen by 4.6% in the last 60 days [4] Group 3: Growth Metrics - Silicon Motion Technology has a PEG ratio of 0.55, significantly lower than the industry average of 5.76, and possesses a Growth Score of B [3] - Despegar.com has a PEG ratio of 0.57 compared to the industry average of 2.12, with a Growth Score of A [4] - KB Home has a PEG ratio of 0.81, which is lower than the industry average of 0.97, and also has a Growth Score of B [4]

Core Viewpoint - Value investing remains a popular strategy that has shown success across various market conditions, focusing on identifying undervalued companies through fundamental analysis [1] Company Summary - Despegar.com (DESP) is currently rated as a Strong Buy with a Zacks Rank of 1 and holds a Value grade of A [2] - The Forward P/E ratio for DESP is 13.06, significantly lower than the industry average of 17.68, indicating potential undervaluation [2] - Over the past year, DESP's Forward P/E has fluctuated between a high of 40.04 and a low of 10.45, with a median of 15.86 [2] - The company is highlighted as one of the strongest value stocks in the market due to its favorable earnings outlook [3] Investment Metrics - DESP has a PEG ratio of 0.50, which is lower than the industry average PEG of 1.39, suggesting it may be undervalued relative to its expected earnings growth [6] - The PEG ratio for DESP has ranged from a high of 0.65 to a low of 0.47 over the past 52 weeks, with a median of 0.55 [6]