Despegar.com(DESP) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a record revenue of $165 million for Q2 2023, reflecting a 23% increase year-over-year, achieved during the seasonally weakest quarter [64][72] - Adjusted EBITDA increased by 71% to $20.2 million, marking the highest second quarter EBITDA since the IPO, excluding one-time impacts [69][80] - Gross profit reached $110 million, with a corresponding margin of 18%, the highest since 2018 [68][69] Business Line Data and Key Metrics Changes - Higher-margin travel packages accounted for 33% of gross bookings, a nearly 600 basis points increase from the previous year, contributing to non-air revenue reaching 62% of total revenue [6] - The B2B segment generated 15% of gross bookings, reflecting a 600 basis points increase year-over-year [81] - The Koin business unit is nearing breakeven, with a $600,000 EBITDA loss in the quarter, a nearly $4 million year-on-year improvement [80][107] Market Data and Key Metrics Changes - Brazil and Mexico are key markets, with Brazil accounting for a significant portion of growth, and the company plans to invest heavily in Brazil due to favorable market conditions [17][20] - The online travel market is projected to grow at 13% in Brazil and 15% in Argentina, while the offline segment is expected to grow at a CAGR of 12% [86] Company Strategy and Development Direction - The company is focusing on an omnichannel strategy, leveraging generative AI and deploying an asset-light, tech-enabled offline model in Brazil and Argentina to enhance margins and market penetration [11][65] - The company aims to maintain a disciplined approach to cost management while investing in marketing and technology to drive customer growth and loyalty [25][66] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery in travel demand continuing into the second half of the year, with expectations for revenue and adjusted EBITDA to increase in the mid- to high single digits for Q3 [37][58] - The company reiterated its full-year revenue guidance of $640 million to $700 million and adjusted EBITDA between $80 million and $100 million, with confidence in reaching the upper end of the guidance range [37][58] Other Important Information - The company has nearly 17 million loyalty program members, with points redemptions doubling over the last year to reach 8% [7] - The company is assessing options to address a liability due in September 2025, related to preferred shares [29] Q&A Session All Questions and Answers Question: Can you describe how bookings growth looked during April, May, and June, and how July is trending? - Management noted strong booking trends during Q2, evenly distributed across the months, with July showing sustained trends at similar or slightly higher levels [74] Question: What updates do you have regarding the preferred shares and strategy to address this liability in 2025? - Management is assessing several options to prepare for the transition related to the liability due in September 2025 [29] Question: Why rollout in Argentina versus Chile or Colombia? - The company already operates offline strategies in Chile and Colombia, making Argentina a more attractive market for expansion due to its cash-driven economy [29][54] Question: What should we expect for 2H considering the latest currency softness seen? - Management indicated that the domestic travel market has fully recovered, while the international market still has room for growth [119]