Despegar.com(DESP) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Gross bookings for Q3 2024 slightly declined to $1.3 billion, anticipated due to foreign exchange headwinds, particularly in Brazil and Mexico, but showed a 35% year-over-year growth in constant currency [7][9] - Total revenues increased by 9% year-over-year to$ 194 million, with a 53% increase when adjusted for foreign exchange [8][9] - Adjusted EBITDA reached a record $48 million, a 94% year-over-year increase, with an adjusted EBITDA margin of 24.8% [10][55] - Adjusted net income rose 309% year-over-year to$ 36 million, leading to adjusted earnings per share of $0.34, up from$ 0.10 in the same quarter last year [10][56] Business Line Data and Key Metrics Changes - In the B2C segment, gross bookings reached $1.1 billion, down 8.4% year-over-year, attributed to foreign exchange impacts [11] - The B2B segment saw gross bookings grow by 23% year-over-year, now accounting for almost 19% of total gross bookings [12] Market Data and Key Metrics Changes - In Brazil, transactions grew by 14% year-over-year, reaching 1.2 million, driven by domestic air transactions and hotel demand [50] - In Mexico, transactions declined by 22% year-over-year, influenced by the divestiture of the Destination Management Company and reduced domestic air capacity [51] - Argentina showed a positive trend with significant market share gains due to tailored payment solutions and a strong product portfolio [52] Company Strategy and Development Direction - The company signed a new 10-year lodging outsourcing agreement with Expedia, effective January 1, 2025, aimed at optimizing lodging supply and expanding market presence [13][14] - The launch of the AI-powered travel assistant, SOFIA, is a key innovation, enhancing customer experience and offering a software-as-a-service solution to partners [16][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the commercial strategy for Q4, despite ongoing foreign exchange challenges, maintaining full-year revenue guidance of at least$ 760 million [61] - The company anticipates continued growth in Argentina and is optimistic about regaining revenue momentum in Mexico [90] Other Important Information - The loyalty program, Pasaporte Despegar, grew by over 50% year-over-year, reaching 30 million members, with 12% of transactions completed using loyalty points [20][21] - Mobile app downloads increased by 47% year-over-year, accounting for almost 51% of total bookings [22] Q&A Session Summary Question: Sustainability of the strong take rate - Management indicated that while the current take rate is strong, they expect it to stabilize around 13% in the mid to long term due to various strategic initiatives [67][68] Question: Impact of the Expedia renegotiation - The profitability impact from the new agreement with Expedia is expected to start reflecting in the P&L as early as Q1 2025, with significant flexibility for growth strategies [69][70] Question: Trends in Argentina - Management noted a positive market evolution in Argentina, driven by unique payment solutions and market share gains, with expectations for continued growth [76][77] Question: Q4 transaction growth trends - While specific transaction guidance was not provided, management expressed confidence in solid top-line trends despite FX headwinds [82] Question: Impact of air capacity in Mexico - Management acknowledged that air capacity issues may persist into Q4 but expects recovery in the following years as FX headwinds stabilize [83][90]