Despegar.com (DESP) 14 Nov 242024 Q3 Earnings call transcript

Good day, and welcome to Despegar's Third Quarter 2024 Earnings Conference Call. My name is Jeannie, and I will be the operator for today's call. [Operator Instructions] Please note that this call is being recorded. There will be an opportunity for you to ask questions at the end of today's presentation.

Now I would like to turn the call over to Mr. Relations. Investor Pfeifer, Luca ahead. go Please

afternoon, everyone, us for and thanks joining today. Good

financial results to we with non-GAAP carefully metrics, read reporting measures Investors addition of neutral in foreign to will and exchange including unaudited not understand certain the principles, GAAP In should information accounting financial accordance substitute measures calculations. and financial operating included accepted U.S. discuss these our definitions measures and release press Non-GAAP are as and in measures on. isolation, to metrics financial them. be should provided metrics or supplemental in superior ensure that they a considered generally operating as

forward-looking please certain include, management's on which expectations may acquire. we to, our the the are and factors performance the during uncertainties current the Before subject company's are beliefs of to and constitute differ, materially the remind integration of number risks including These allow are could statements prepared to to that statements, be we made you related businesses a to beyond that remarks, results of and assumptions actual based course begin and but not that may and me cause control. expectations discussion limited

refer please U.S. our our press For of these release. Exchange Commission a description risks, filings the and with to Securities and

key overview on Joining Despegar's update performance our call will third initiatives. CEO, an and are off us an with of today's kick in on Damian Scokin, things who quarter the growth

have a our assistance. through into the financials, results. BXB Amit Partners will you Gonzalo and advancements our CTO, share quarter's of provide deeper Following detailed we then Estebarena, will Mackinnon, Damian, the latest of Sebastian the efforts; Diving made on AI our Chief Singh will the our SOFIA, review Travel walk CFO, travel with recent our

up wrap before we will remarks our please ahead. the go floor your for prepared questions. Damian, Damian open Finally,

welcome and Third Quarter to Luca, you, Thank Despegar's Conference Call.

this the positive robust, results $X.X slightly the through to trends the report year. was strong gross industry-leading of business. billion, bookings due in a our particularly we've trends year-over-year, during third Brazil very the of constant declined Even foreign reflecting an the to continuation headwinds, pleased growth to our are bookings quarter anticipated and of underscoring currency, though fundamental seen In that were Mexico. We gross XX% our demonstrated quarter, exchange

quarter packaged take continued Our to This our rate high during significant gross commercial a sales two to was by increase efforts ] record XX%. the point sales package a driven successful, highly on of as reaching percentage led in basis were XX.X%. [ year-on-year a factors: increase of key leading First, emphasis XXX bookings,

comprehensive for diversifying year's options, in a pay the Argentine transactions Second, ] We revenues achieved in our of we offer further our increased first In to to Argentina, fourth and reaching with where Notably, year-over-year, revenue our the international quarter this sequentially innovation, for by part this million. results. represented allowing $XXX X% for favorable combined line top since ability consolidated bookings trend, line saw a to quarter customers revenues with recovery non-air product with in of of the total XX% increased in in demand XXXX. mix local last line travel success payment like time portfolio [ currency.

the for our highlighting adjusting our underlying increased strength we're by year-over-year, revenues again Importantly, foreign XX% exchange of headwinds, total business.

us cost efficiency in combined of IPO drivers growth includes in margin a efficiency operational enabled deliver related process expenses almost continued in line this with to Our focus of XXXX. and savings XX%, Despegar's strongest our gross top increase. installment Key credit on the card

and savings in year, the and general line with expenses. technology in we Additionally, throughout additional administrative our results achieved

company. improving year-over-year, $XX record reaching XX% efficiency, million, for increased our a of new operational result, EBITDA the a As adjusted

Despegar [ also the future. Also margin EBITDA million profitable the which for leverage, for reflect XXX% our strongly year-over-year, This net growth us ]. while rose in income, of all-time making high the is operational $XX to for to reaching adjusted positioning quarter. continuing an impressive Our enhance result approved note ability deliver XX%, increase another adjusted

higher-margin we with line particularly consequence, Brazil hotel sales, temporary heading. focused trend, while during per earnings strategy share anticipated centered As ago ] decreasing in [ rose year-on-year, our billion in adjusted BXC experienced ] we [ remain up the this Argentina, a in FX from sector. and the XXXX, quarter X.X% bookings the around reached third $X.XX $X.X to Despite commercial packages for year on no our troubled core quarter. In the $X.X quarter, gross of segment, and

and this focus portfolio the decisions strong BXB solutions, almost America. In steady BXB a travel has level solutions that now online throughout our gross bookings, financial on segment and alongside of to offline total which we year. a year-over-year in and and XX% Our grew been product agencies account gross continue have market-leading Latin integral our in travel technology see remained are purchases growth compelling by for which offering segment, our strategic to and comprehensive trends for market XX% comprehensive include white bookings.

leading the in We continued growth which segment. the brands this positioning BXB, with sustained and reflects platform the successful ramp-up new are technological of our partnerships in us growth strength pleased of with for

focusing the to lodging its between as base America. such new strategy with presence complementary region and further also collaboration opportunities across for milestone greater growth technology customer global commercial with while unlock Expedia both forge supply. pursue lodging alliances set the Despegar leading relationship extensive white to the XXXX. will companies, sourced M&A we opportunities to We're substantial supply, also The enhances combined for but X, BXB as label, reinforces it's initiatives expanding Expedia a partnership to believe and This software-as-a-service us another agreement And vast inventory of launching redefine further beyond. take strengthen outsourcing our quarter, announce only effect companies growth on both we market key parties. our will collaboration not new over our Latin excited significant with January new and our signing agreement on strength, our optimize and partnership this During segments, long-term enhanced Group. achieved and mode on provides next builds our business the the also decade. We outside competitive directly foster flexibility this Expedia's partnership hotel our platform strategic and Despegar in Despegar's positioning This XX-year

$XXX this now our position. perpetual significantly agreement net financial key sheet that ] improving be the recorded XX million another liability of previously on years, contingent [ Despegar's Additionally, asset will balance new over benefits amortized is

capabilities travel booking as reduction customers made our with Throughout resulting of tool. assistant, this leading the directly our easily the partnership the Today, to March, improvement feature debut and phase This it's commitment costly our further conversational heart efficient underscores to SOFIA notable book book evolution well. we've make relationship hotel by same process. and score, travel both testament to [indiscernible]. evolved browse and can cost SOFIA's planning have to through our AI-powered for Furthermore, multiple conversations Expedia travel and the grow their in consensus Assistant of at all thrilled quarter. plan allowing company. Innovation in the in [ Since to not reduces the enhanced are within advances solutions this inquiries delivering now approach allows distinct the customers conversation we the personalized customer more services We by of technology that embark offering recent support improves remains of our within position parallel and the customer-centric air manage this on conversation Customers success scores after also in in travel is a user a year further resolutions. a the introduced the will quarter, satisfaction, experience highest XX.X% This way enables promoting SOFIA. SOFIA, new of travel. capabilities reached Despegar's a in launch NPS, significantly. exemplified of seamlessly net search, and user A has but notable which solidify as and our ] to friction this innovative sales history, only

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Thank and everyone. day, Gonzalo, good you,

again, record and robust. results Our across delivered secular our solid trends helped Once third we revenue profitability, quarter markets. very by were continued growth demand

as business and we increased in revenues For $XXX second which across our foreign Argentina. the the focused solid, strength Brazil This Similar growth, remains growth as our demand exchange underscores our recovery and quarter, captured by region. X.X% results these reaching by markets in Despite million the we demonstrated of FX-neutral what especially profitable demand year-over-year, some revenue quarter, headwinds to as Mexico underlying our in on was impacted observed key XX% such challenges, the fundamentals. the year-over-year.

a most take closer performance, at Brazil, important let's our regional and starting with our look market. largest Now

growth demand in domestic $X.X international transactions driven During and stronger reaching rise XX% by transactions by was healthy hotels. the a for third air a quarter, domestic and million. grew year-over-year, This both

decline a selling temporary due anticipated, As primarily average real. prices XX% of depreciation Brazilian to experienced the the year-over-year

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record result representing million, EBITDA a for XX.X%, that adjusted pleased we an of achieved announce margin and year-over-year $XX our EBITDA company. these as another a XX.X% increase are to of We efforts, adjusted record of

more net Turning for was FX analyzing moving Then earlier. we income, financial third million net of $XX.X into U.S. $X.X translation noted funds excludes we GAAP to in improvement reported million primarily in and due I reported Argentina, other representing the which part income, from and adjusted adjusted XXXX. dollars to than impacts an expenses, which of that versus million nonrecurring quarter. expense, the a outside fourfold net large in us moving was $XX quarter as impressive income our This

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our supplier we as around also strategy quarter, strengthen the During relationships. partners working travel core part of million our cash $XX extended in to capital benefits through advances to our

to capital strategy. allocation now our turn Let's

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the first At B. the Instructions] comes floor open this And Khan from questions. Securities. Riley for time, of [Operator we will line your with question Naved your

I XXXX, at but maintain kind level? And is strong. I think of if have then your a renegotiation. is think kind you other on question in only I around a sustainable How not which do rate, just to about question the ability the we is just kind QX, this of take Expedia these have of look maybe levels very should

I prepared benefits do you should the about January but that you take when these renegotiated of kind X, internally contracts? P&L? know happened in that to of So think accrue the the we advantage reset are on when could think

Thank you for the questions.

start take with the the then talk I'll it contract. So to question, about to rate I'll Damian pass and Expedia

as that those us geographies. to right with in P&L long and take in which proportion on we we we focus company, a by, in drive XXXX we place prepared very trending continuing That believe the rate you have drive well. to as all we're level as all packages So XX% something has very past. us the now. is as as that over the continue coming driving term, all the company mean, rates, in take bookings various look a are in providing the not given see profitable that's years helping saw across the and strong of saw, obviously, But remarks, And how strategies as rate, growth. a discussed guiding can forward, you mid, you our on the the strong market, help payment the around solutions as are boosted EBITDA for margin us turn, we ourselves obviously, us in for innovative the have right strong to differentiating increase I that going But to take

But long the it mid, is rate. So short that's term, focus strong in on take the results how very on profitability I strong would think in yielding our about term.

of the per that the least of the the transformational a fifth with ] new at renegotiation agreement would all, first couple agreement of I the and say, with ways. [ Expedia, of As impact

profitability the year. directly to of of as all, of source our P&L portion going that's First start of impact being our on inventory the first and as next bit quarter early to able reflected a larger a

quarter. be regions achievement. from importantly, competitive We of of LatAM our But that start options rely will beyond to in a able the more will more significantly significant And the flexibility the way our BXB on in early because first the we source being that growth business ramp is growth opens that different reflected gradually we up, world. that, and strategy terms of should as as

answer, on your And just then Amit, the follow-up a maybe to margin.

take to and the plus know there. of rate give bring So I what probably us are XX% but just puts down XX%. takes the BXB that thoughts is kind can lower,

Yes.

that's the rates that to levels. down approach take possibly come [ you BXB, have of ] mind, we think also current AR in could I the one take from mentioned So our factors. But also, going an we think forward,

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leading long XX% combine that believe So of right operate at. factors, is mid for what's those that when right we to in now the term, level us that's us all to the

I then on guess, storms, There And bookings. clarification, the could. quick from a very some if impact the was I

terms that that the on Do any impact I think share call. number we the previous what third you of have in mentioned quarter? to in was

pretty now, as that right that FX had since last we think The impact the from million more quarter. around from much overall those impact, to to is this impact. I quarter incremental was same discussed, It's our storms. revenues XX-ish only we the

any got of other factors last I million is for and incremental FX full weaker impact, having other expectations. quarter, those further around none year revenue incremental since had think our to an us XX-ish impact that but

we highlighted script. our and in -- that So

of from Morgan the line Andrew comes question next Ruben Stanley. with Your

Hoping to in Argentina. bit a more on dig

an but inflection really times, few like a the mentioned seems in quarter. it You was there

the this kind versus So you understand you hoping so Argentina was quarter trying impactful mentioned top-down could a changed in really company understand bottom-up that if company your within of perspective initiatives what what be how just to bridge initiatives FX changed and helpful. break to top-down any from very down arrangement, would

will levels. in our gaining market, offering by FX market explained strategy, pay for The implementing in payment quarter Amit a share, methods evolved market we do were which with effective help and to I customers below payment trend, through are Argentina. less Argentina, their what and particularly that the third the alternatives as trouble has although monetary well On call on still the regulations the that Within we start different XXXX positive with very market. that

value proposition provide that were share. will So customers market able our significant we gain with help to us unique a payment

we As the market continue in gain. underlying to both QX, expect positive that evolution share and our

excited As growing like very market very you is know, a in through going and going -- XXXX. positive look is also what the what's momentum, regarding to Argentina we're

about presentation, think positive there? you overall. take rate. do the spoke rate Argentina take I see one market know was the the as I you called out in that drivers we for a But And of being nuance that Similarly, to the but anything there's you if I consider should rate take Argentina overall just take sustained any consider? talked about drivers, reverting or higher rate understanding company's the to know

our for account that right direction. to rate. But Argentina shares. very market helping gain solutions market also some just of that is longer-term strong that and are XX-ish the I'm to our given is So the Damian's say, cement or and But the that are near drive we all down in potentially into or In of take percent in More now, Damian would able our share talking the we market. taking are is in take as midterm, rate Argentina, rate mid- being to I differentiate the in are rate, coming differentiation point, was but take to other ourselves helping longer-term take that we very position expectation that and take expectation yes, the and we built all into trends rate providing significant take rates that take products materially that expect also take about remain the region. what in all our describing, higher than do strong we leadership strong us long-term expectations us offering and

Your next the Kopelman TD from comes Kevin Cowen. with question of line

Could Mexico -- little talking X% And you QX, give off in In a bit. you by the ex the It about the like about looks you pressure. that seeing some could we divestiture. growth. are quarter-to-date was transaction of us in mentioned trends particular, start QX what

I was quarter? trending of how wondering just kind So was that this

provided. but for transactions, is guide revenue both I is specifically growth for does metrics. of line what strong is generally, travel. both the sort don't the that mean, -- very look, and of of of say EBITDA, about we it can it the guidance the our very Obviously, confident year-over-year to high season have top the when guidance of imply the those comes December year. November trends on feel we also progress unusually margin and region to strongest half the on I quarter we year our important us But is the that our trends second overall guidance solid, -- it extremely side towards full in especially sort and generally continues part despite and The remain in headwinds QX be FX this -- for in solid. of top and to line first

or capacity? into a like then maybe drill some air like the kind start thing once we more And that Is temporary trends, like we X-quarter of there. Mexico QX the pressures anniversary better? on do the to temporary of just of the noted looking you you maybe And see it

included year XQ well impact I capacity we go some happened in headwinds the the move and as I and to But mean well, Yes. and comes that regions that in guidance. the are then have we following should that providing. exceptional XXXX impact will when point, the headwinds this is into as that's of there. well go to mean, beyond, it the are years, your QX FX Mexico could as in other as that and including air happen FX in in

happen type in So at least don't headwinds this these material to we at the years. of expect coming point,

be in terms. sort we looking the following are should comes revenue and growth that positive for the dollar years, at when company So especially as of bookings to it

touched kind of your how give there, versus on about but you could I next you year -- margins growth it then And mean initially? just kind thinking of you're

Yes.

open. So to very I be mean,

obviously, are of in And guide we at We next this budgeting currently our process. year. point, don't middle the to

for about, we've discussed talk initiatives As of then started past area. the growth the -- solutions. [ us, our clients ] already is was Gonzalo our talked In a strategic starting did quarters, we mentioned, [ example, Sebastian we have we've that in for in, in investing as goal now SaaS and And as mentioning, drive for company. ] winning lot our past, in about

talked about and have investments solutions. through technology We in that SaaS

Now technology. actually are we licensing our

required we -- a process, budgeting the initiatives, lot initiatives. near as should those in we us drive So with of help And be of going will we'll evaluate we are which that, of of what a along foreseeable have through the future. our we have believe growth investments for for lot growth type industry-leading type midterm

to in what type fee drive geographies. strategy also We need to various need of we evaluate

how will you company but as usual be look the industry-leading help usual all, to and sort not determine it into for any But trend tell what do goal just initiatives how margins growth sustained do as we as the for should mid, growth like year, over But how position should without positive. a year. company for the our is is of I next can we this this remains long company, we next for business term. any position us all that going all if operate business and So the

very based on that investment creation standpoint. mid be decisions will long-term growth our industry-leading much So

shift accelerating, on that over year as mix then to on with BXB we take is next -- margin there going call the out anything forward? rate about or And EBITDA just side the think

Yes. level, EBITDA wouldn't largely -- I mean, on I I mean similar-ish.

EBITDA into that offline which of XX% scale achieving going, to are and have are not hopefully, and type BXB you we more everyone say, announce add similarly depending is the But margin excited we tapping white clients, can the the have and Latin of hopefully, also BXC what labels for to an through white agencies restrictions strong some of American would other broadly, can very always about how on at is side, we I doing give ] almost there's in and look just are versus we growth, BXB business in market, in on [ market profile. the we profile EBITDA margin BXB side. idea different I as the But XX% the quarters more but the the you Some can would and with there. of our more we're maybe solutions, more Sebastian adjusted profile, more say, well. margin is where about -- winning the But it, would label side and solutions. which coming we can announce much announce if

to So add you years. about us say the very anything excited over there, I want want coming in to BXB if but don't for go where will

Yes. Totally agree.

building a strong We are momentum we -- are our sure I'm in segment. BXB

by We are I'm setting the us. main [indiscernible] a motivated very stage three initiatives. significant for with

we have one incorporated than first The off-line more X,XXX and online agencies.

totalizing are agencies. nowadays we So XX,XXX

new than ]. call [ Secondly, onboarded XX more we [ labels ] have and partners

XX So now are we partners. with booking than are operating And more finally, engine. we to about flight our launch

fueling now, bookings. So hotel our growth we were up only to

also. a and globally are BXB So I'm will now lot. that [indiscernible] sure our expanding help flight we Well, coming is

very the we of on I'm building So strong the confident segments. BXB momentum are

expect the cost via you Only in due the higher to travelers real the mainly What AST and transactions of are of webcast abroad, in too. Chiarvesio this traveling retracting is Mexico short numbers question affecting is to final of or improve term? Brazil? of impact Santander. from consumption FX Do Walter Our

there's challenge we see FX Mexican is of reduced decline compounded more in both see decline. at becoming on transactions, capacity. of also travel and coupled What level we Yes, is with obviously market, the a expensive, the air the the market the foreign

be and and capacity, a temporary, next the for to able regain expect about of few we question to the said optimistic FX momentum very being revenue of are recover. Mexico remains particularly is for growth more very the mark. Having We large market there, to striving factors we're these a and us, -- months although market that, air some to

Mr. Scokin further questions time. at no I closing remarks. are for over call the now There turn will this to any

your we thank share quarter care. and fourth results. I you in you participation, to Despegar, take wanted all just our look in will our and to we seeing forward with next call again you for all, your you Thank which in interest

today's conference concludes call. This

disconnect. now may You