Despegar.com, Corp. (NYSE: DESP), (“Despegar” or the “Company”),
a leading online travel company in Latin America, today announced
unaudited results for the three- and nine-month periods ended
September 30, 2018. Financial results are expressed in U.S. dollars
and are presented in accordance with U.S. generally accepted
accounting principles.
Third Quarter 2018 Key Highlights
- Transactions up 13% year-over-year
- Gross bookings down 2% year-over-year
(+27% on an FX neutral basis)
- Revenue declined 9% year-over-year
- Packages, Hotels and Other Travel
Products accounted for 58% of total revenue in 3Q18, up 269 basis
points from third quarter 2017
- Mobile transactions up 36%
year-over-year, accounting for 35% of total transactions in
3Q18
- Over 46 million cumulative mobile
application downloads as of September 30, 2018, up 30%
year-over-year
- Adjusted EBITDA decreased 40%
year-over-year, and was down 31% year-over-year excluding one-time
tax recovery gains in 3Q17 and a one-time severance payment in
3Q18
- Operating cash flow of ($26.7) million
in 3Q18, compared to $10.7 million in 3Q17
- Repurchased 939 thousand shares in 3Q18
for $15.7 million, with a total of $25 million in share repurchases
year-to-date
Message from CEO
Commenting on the Company’s results, Damian Scokin, CEO stated:
“This was a challenging quarter as we faced increasingly
unfavorable macro conditions in Latin America, particularly in
Argentina and Brazil, that impacted the travel industry which saw
gross bookings decline in the low double-digit range. Given the
full quarter impact of macroeconomic conditions, we expect further
industry deterioration in the fourth quarter.
The current market environment, coupled with our strong balance
sheet, has provided us with a unique opportunity to further
strengthen our leading market position. Earlier this year, we
adjusted our go-to-market strategy and customer service processes,
, launching several initiatives that are allowing us to continue to
gain market share across all of our key markets, despite lower
reliance on payment installments. These measures will better
position us to capture future growth as the economies recover.
Importantly, on an FX-neutral basis consolidated gross bookings
increased 27% year-on-year. Our decision to accelerate market share
growth and customer service initiatives together with the
significant currency volatility across our key markets, are
impacting our financial results in the near term.
Reflecting our confidence in the Company’s future growth
opportunities, we opportunistically took advantage of stock market
volatility and repurchased over $25 million of our shares
outstanding year-to-date. We have been operating in the region for
over two decades and have faced similar challenges. Each time, we
have emerged stronger, cementing our position as the leading OTA in
the region.”
Operating and Financial Metrics Highlights (In millions,
except as noted)
Pro Forma
Pro Forma
3Q18 3Q17
Adj.
3Q17 % Chg 9M18
9M17 % Chg Operating metrics Number of
transactions 2.6 2.3 – 2.3 13%
7.7 6.6 16% Gross bookings $1,092.3
$1,116.0 – $1,116.0 (2%) $3,508.1
$3,196.2 10% Mix of mobile transactions 35%
29% – 29% +594 bps 33% 28% +495
bps
Financial metrics
Revenues $121.2 $132.8 $1.3
$131.5 (9%) $398.1 $377.9 5% Air 50.5
58.9 0.3 58.5 (14%) $164.5 175.5
(6%) Packages, Hotels & Other Travel Products
70.8 73.9 1.0 72.9 (4%) $233.5
202.4 15% Net income (1.5) 12.3 1.1
11.2 (112%) 16.1 27.4 (41%) Adjusted
EBITDA 14.5 24.3 1.3 23.0 (40%)
53.8 62.2 (14%) Adjusted EBITDA (Excl. one-time
items) 15.3 22.3 21.0
(31%) 54.6 60.2 (9%) Note: For comparison purposes,
the Company has presented Pro-forma 3Q17 figures which include the
adjustments required under the new revenue recognition standards
adopted since the start of 2018. The YoY % change calculated
against the adjusted figures.
Overview of Third Quarter 2018
Results
Operating Metrics
Transactions rose 13% to 2.6 million in 3Q18 from 2.3 million in
the year-ago period, as Despegar continued to gain share across its
key markets. As a result, gross bookings decreased just 2%,
significantly less than the industry’s, to $1,092.3 million in
3Q18, from $1,116.0 million in the third quarter of 2017.
Importantly, on an FX neutral basis, gross bookings increased 27%
year-over-year, in 3Q18. Across the key markets in which it
operates, particularly Argentina, Despegar faced declining industry
gross bookings and significant currency depreciation. Nevertheless,
in the $100 billion Latin American travel market, the Company
remains focused on leveraging its strong competitive position and
low-cost operating structure, while improving customer satisfaction
levels, to accelerate market share gains.
The Company’s business is organized into two segments: (1) Air,
which consists of the sale of airline tickets, and (2) Packages,
Hotels and Other Travel Products, which consists of travel packages
(the bundling of two or more products together which can include
airline tickets and hotel rooms), as well as stand-alone sales of
accommodations (including hotels and vacation rentals), car
rentals, bus tickets, cruise tickets, travel insurance and
destination services.
The share of higher-margin Packages, Hotels and Other Travel
Products transactions in 3Q18 remained relatively unchanged
year-on-year at 42% of total transactions. Reflecting the macro
environment in the country, Argentina accounted for a lower share
in overall transactions, although still accounting for the highest
share of Packages, Hotels and Other Travel Products.
The average selling price (“ASP”) was $421 per transaction in
3Q18, a 13% year-over-year decline (+12% YoY FX neutral), mainly as
a result of local quarterly average currency devaluation in our two
largest markets, specifically, 46% year-on-year in Argentina and
20% year-on-year in Brazil, and to a lesser extent by a continued
mix-shift from international to domestic travel across key markets.
In particular, the extent of the currency devaluation more than
offset the successful continued mix-shift to higher ASP
packages.
Brazil remains the largest market by transactions for Despegar,
accounting for 40% of total transactions and increasing 11%
year-over-year in 3Q18. Transactions grew 4% year-over-year in
Argentina and 20% year-over-year in Mexico in the third quarter of
2018.
Mobile is an important initiative for Despegar and during the
quarter the number of transactions via mobile rose 36%
year-over-year with 35% of all transactions completed on the mobile
platform, compared with up from 29% in 3Q17.
Key Operating Metrics (In millions, except as noted)
3Q18 3Q17
% Chg
FX Neutral
$ % of total $ % of total
% Chg
Gross Bookings $1,092.3
$1,116.0 (2%)
27% Average selling price (ASP) (in $) $421
$486 (13%) 12%
Number of Transactions by Segment & Total
Air 1.5 58% 1.3
58% 14% Packages, Hotels & Other Travel
Products 1.1 42% 1.0 42%
12%
Total Number of Transactions
2.6 100% 2.3
100% 13%
Revenue
Total revenue in 3Q18 decreased 9% to $121.2 million, from pro
forma $132.8 million in the year-ago quarter, mainly impacted by
the 13% year-on-year decline in ASP resulting from local currency
devaluation in Argentina and Brazil, our two largest markets, and
to a lesser extent by a continued mix-shift from international to
domestic travel across key markets.
Revenue margin experienced a 53 basis points year-on-year
decline, to 11.1% in 3Q18, following the prior quarter
implementation of customer fee reductions and discounts in package
transactions, along with international to domestic mix-shift.
The year-on-year decline in revenue was mainly the result of
lower revenues from Air and to a lesser degree from Packages,
Hotels & Other Travel Products segments.
- Air segment revenue was $50.5
million in 3Q18, declining 14% year-over-year from pro forma $58.9
million in 3Q17. Transactions were up 14% year-on-year resulting in
market share gains despite slower overall market growth. Higher
volumes were more than offset by a 25% decline in average revenue
per transaction resulting from the Company’s strategy of lowering
air customer fees in several markets to drive market share gains
and provide additional cross-selling opportunities, along with a
mix-shift from international to lower-margin domestic travel driven
by local currency depreciation, particularly in Argentina and
Brazil.
- Packages, Hotels & Other Travel
Products segment revenue decreased 4% in 3Q18 to $70.8 million,
from pro forma $73.9 million in the year-ago quarter. Transactions
increased by 12% but were more than offset by a 14% decline in
revenue per transaction resulting mainly from the slower macro
environment and price discounts, along with mix-shift from
international to domestic travel given currency depreciation,
particularly in Argentina and Brazil. The Packages, Hotels and
Other Travel Products segment accounted for 58% of total revenue in
the third quarter of 2018, up from 56% in 3Q17.
Revenue Breakdown1
3Q18 Pro
Forma 3Q17
Adj.
3Q17 % Chg2 $ % of total
$ % of total $ $
% of total
Revenue by business segment (in
$Ms)
Air 50.5 42% 58.9 44%
0.3 58.5 45% (14%)
Packages, Hotels & Other Travel Products 70.8 58%
73.9 56% 1.0 72.9
55% (4%)
Total revenue $121.2
100% $132.8 100%
$1.3 $131.5
100% (9%) Revenue per transaction (in
$)
Air 33.4 44.3
0.2 44.1
(25%) Packages, Hotels & Other Travel Products 65.2
76.2 1.0
75.2 (14%)
Total revenue per
transaction $46.7
$57.8 $0.5
$57.2 (19%)
Total
revenue margin 11.1%
11.6%
11.8% (53) bps 1. Net of sales
tax 2. For comparison purposes, the Company has presented Pro-forma
3Q17 figures which include the adjustments required under the new
revenue recognition standards adopted since the start of 2018. The
YoY % change calculated against the adjusted figures.
Cost of Revenue and Gross Profit
Cost of revenue, which mainly consists of credit card
processing fees, bank fees related to customer financing
installment plans offered and fulfillment center expenses, declined
3% to $36.7 million in 3Q18 from $37.9 million in 3Q17. As a
percentage of revenue, cost of revenue increased by 173 basis
points to 30.2% from 28.5% in the comparable period a year ago.
The absolute year-on-year decline cost of revenue was primarily
driven by lower installment plan costs as the Company reduced the
availability and duration of installments in the quarter in
Argentina, following the sharp rise in interest rates in the
country. This was partially offset by incremental costs to operate
the fulfillment center reflecting the Company’s increased focus on
customer service. These customer-oriented initiatives allowed the
Company to deliver a 720 basis points year-on-year increase in
after trip NPS.
As a result, Gross Profit decreased 11% year-on-year to
$84.6 million in 3Q18, reflecting lower revenue margins given the
Company’s initiatives to accelerate market share growth and
investments in support of improving customer satisfaction
levels.
Cost of Revenue and Gross Profit
(In millions, except as noted)
3Q18
Pro Forma 3Q17
Adj.
3Q17
% Chg1 Revenue $121.2
$132.8 $1.3 $131.5 (9%) Cost of Revenue
$36.7 $37.9 $37.9 (3%) % of
revenues 30.2% 28.5% 28.8%
+173 bps
Gross Profit 84.6
94.9 1.3 93.6
(11%) Gross Profit Margin 69.8% 71.5%
71.2% (173) bps 1. For comparison purposes,
the Company has presented Pro-forma 3Q17 figures which include the
adjustments required under the new revenue recognition standards
adopted since the start of 2018. The YoY % change calculated
against the adjusted figures.
Operating Expenses
Total operating expenses in 3Q18 at $75.5 million, were
basically flat when compared to the year-ago quarter despite the
benefit from regional currency depreciation reflecting more
difficult comps from one-time items in both quarters and higher
stock-based compensation in 3Q18. As a percentage of revenues,
total operating expenses increased to 62.3%, from 56.7% in the
comparable period. Excluding one-time expenses, total operating
costs decreased 3% year-on-year and total operating expenses as a
percentage of revenue increased 339 basis points to 61.6% in 3Q18
from 58.2% in the same quarter of the prior year.
- Selling and marketing expenses
rose 1% year-over-year to $41.6 million, from $41.1 million in
3Q17. As a percentage of revenue, selling and marketing expenses in
3Q18 increased to 34.3% from 31.0% in 3Q17, mainly reflecting lower
revenue per transaction which more than offset the benefit from
regional currency depreciation, lower marketing investments and
higher efficiencies.
- General and administrative (G&A)
expenses increased 12% year-over-year to $17.1 million, from
$15.3 million in the third quarter of 2017, mainly reflecting more
difficult comps from a $2.0 million one-time tax recovery gain in
the year-ago quarter and a one-time severance expense of $0.8
million in 3Q18. As a percentage of revenues, G&A increased 259
basis points to 14.1% in 3Q18 from 11.5% in the prior year quarter
reflecting higher personnel expenses, including a $0.4 million
increase in stock-based compensation. Excluding the one-time items
described above, comparable G&A declined 6% year-over-year, and
as % of revenues, comparable G&A declined 43 basis points
year-over-year.
- Technology and product development
expenses declined 11% year-over-year to $16.8 million in 3Q18,
compared to $18.9 million in the year-ago quarter reflecting lower
expenses from currency depreciation in Argentina where the majority
of headcount is based, partially offset by higher headcount. As a
percentage of revenue, technology and product expenses decreased by
37 basis points year-over-year to 13.9%.
Operating Expenses (In millions,
except as noted)
3Q18
Pro Forma 3Q17
3Q17
% Chg1 Selling and marketing $41.6
$41.1 $41.1 1% % of revenues 34.3%
31.0% 31.3% +334 bps General and
administrative $17.1 $15.3 $15.3 12% %
of revenues 14.1% 11.5% 11.7% +259 bps
Technology and product development $16.8 $18.9
$18.9 (11%) % of revenues 13.9% 14.2%
14.4% (37) bps
Total operating expenses
$75.5 $75.3 $75.3
0.27% Total operating expenses as a % of revenues
62.3% 56.7% 57.3% +556 bps
Total operating
expenses (Excl. one-time items) $74.7
$77.3 $77.3 (3%) Total operating
expenses (Excl. one time items) as a % of revenues 61.6%
58.2% 58.8% +339 bps 1. For comparison
purposes, the Company has presented Pro-forma 3Q17 figures which
include the adjustments required under the new revenue recognition
standards adopted since the start of 2018. The YoY % change
calculated against the adjusted figures.
Financial Income/Expenses
In 3Q18, the Company reported a net financial expense of $11.0
million compared to $2.9 million in the comparable prior-year
quarter. The increase was primarily due to FX impact of the
currency devaluation in Argentina, Brazil and Chile. This also
includes a $2.6 million FX loss resulting from the adoption of the
U.S. dollar as the functional currency of the Company’s Argentine
subsidiary starting July 1, 2018 following the guidance of ASC 830
as Argentina is recognized as a hyperinflationary economy. FX
losses were partially offset by higher interest income from
invested cash balances.
Income Taxes
The Company reported an income tax gain of $0,5 million in 3Q18,
compared to an expense of $4.4 million in 3Q17. The effective tax
rate in 3Q18 was 25%, compared to 27% in 3Q17. The decrease in
effective tax rate was mainly due to the recovery of deferred tax
allowances in certain subsidiaries.
Adjusted EBITDA & Margin
Adjusted EBITDA declined 40% to $14.5 million in 3Q18 from pro
forma $24.3 million in the comparable year-ago period. Adjusted
EBITDA margin contracted to 12.0% from 18.3% in the prior year
quarter, primarily resulting from the mix shift from international
to domestic travel driven by currency devaluation across the
region, along with lower year-on-year customer fees in air and
price discounts in packages to support top line growth. Higher
fulfillment costs and credit card processing fees also impacted
Adjusted EBITDA margin.
Excluding one-time tax recoveries of $2.0 million in the third
quarter of 2017 and a one-time severance charge of $0.8 million in
3Q18, Adjusted EBITDA would have decreased 31%.
Adjusted EBITDA Reconciliation & Adjusted EBITDA Margin
(In millions, except as noted)
3Q18
Pro Forma 3Q17
Adj.
3Q17
% Chg1 Net income/ (loss) ($1.5) $12.3 $1.1
$11.2 (112%)
Add (deduct):
Financial expense, net
11.0 2.9 2.9 283% Income
tax expense (0.5) 4.4 0.2 4.2
(111%) Depreciation expense 1.3 1.3 -
1.3 0% Amortization of intangible assets 2.7
2.5 - 2.5 12% Share-based compensation expense
1.4 1.0 - 1.0 45%
Adjusted
EBITDA $14.5 $24.3 $1.3 $23.0
(40%) Adjusted EBITDA Margin 12.0%
18.3% 17.5%
(635) bps One-time items (0.8) 2.0
2.0 (140%) Adjusted EBITDA (Excl. one-time
items) 15.3 22.3 21.0
(31%) Adjusted EBITDA Mg. (Excl. one-time items)
12.6% 16.8% 16.0%
(419) bps 1. For comparison purposes, the Company has
presented Pro-forma 3Q17 figures which include the adjustments
required under the new revenue recognition standards adopted since
the start of 2018. The YoY % change calculated against the adjusted
figures.
Balance Sheet and Cash Flow
Unrestricted cash and cash equivalents at September 30, 2018 was
$357.4 million, compared to $371.0 million at December 31, 2017,
reflecting lower cash flow generated during the nine-months ended
September 30, 2018. Additionally, during the quarter, the Company
repurchased $15.7 million shares under a previously announced share
buyback program.
Despegar generated negative cash flow from operating activities
of $26.7 million in 3Q18 compared to $10.7 million in the
comparable prior year quarter. This reduction was mainly due to a
decrease in supplier and related party payables resulting from
lower year-over-year sales, as well as higher cash advances to
travel suppliers resulting from new commercial agreements.
During 3Q18, the Company’s capital expenditures were $3.7
million compared to $5.1 million during the same quarter in 2017.
Funds were primarily used for technology hardware and office
expansion.
Argentina Considered Hyperinflationary Market
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.
3Q18 Earnings Conference Call
When: 8:00 a.m. Eastern time, November 8, 2018 Who:
Mr. Damián Scokin, Chief Executive Officer Mr. Alberto
López-Gaffney, Chief Financial Officer Mr. Javier Kelly, Investor
Relations Dial-in: 1-866-270-1533 (U.S. domestic);
1-412-317-0797 (international) Webcast:
CLICK HERE
Use of Non-GAAP Financial Measures
This announcement includes certain references to Adjusted EBITDA
and non-GAAP financial measures. The Company defines:
Adjusted EBITDA is defined as net
income/(loss) exclusive of financial income/(expense), income tax,
depreciation, amortization and share-based compensation
expense.
Free cash flow is defined as cash
flow from operating activities less capital expenditures including
capitalized software.
Adjusted EBITDA and Free cash flow are not measures 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 margin refers to Adjusted EBITDA
as defined above divided by revenue.
Definitions and concepts
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.
Foreign Exchange (“FX”) Neutral Gross Bookings calculated
by using the average monthly exchange rate of each month of 2017
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.
Number of Transactions: The number of transactions for a
period is an operating measure that represents the total number of
customer orders completed on our platform 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.
Revenue: The Company reports its revenue on a net basis,
deducting cancellations and amounts that it collects as sales
taxes. Despegar derives 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. To a lesser extent, Despegar also derives revenue from
the sale of third-party advertisements on its websites and from
certain suppliers when their brands appears in the Company
advertisements in mass media.
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. Bookings for vacation and leisure travel are generally
higher during the fourth quarter, although to date and prior to the
revenue recognition change beginning in the third quarter of 2018,
the Company has recognized more revenue associated with those
bookings in the third quarter of each year. Latin American
travelers, particularly leisure travelers, who are Despegar’s
primary customers, tend to travel most frequently at the end of the
fourth quarter and during the third quarter of each year.
About Despegar.com
Despegar is the leading online travel company in Latin America.
Operating across 20 countries, Despegar provides a broad suite of
travel products, including airline tickets, travel packages, hotel
bookings and other travel products to over 17 million customers.
With a mission “to make travel possible”, the Company’s one-stop
marketplace enables millions of users to find, compare, plan and
easily purchase travel services and products. Through Despegar’s
websites and leading mobile apps, it offers products from over 300
airlines, more than 520,000 accommodation options, as well as
approximately 1,100 car rental agencies and approximately 240
destination services suppliers with more than 8,700 activities
throughout Latin America. The Company owns and operates two
well-recognized brands, Despegar, its global brand, and Decolar,
its Brazilian brand. Despegar is traded on the New York Stock
Exchange (NYSE: DESP). For more information, please
visit www.despegar.com.
Forward-Looking Statements
This press release includes forward-looking statements. 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.
-- Financial Tables Follow --
Unaudited Consolidated Statements of
Operations for the three and nine-month periods ended September 30,
2018 (in thousands U.S. dollars, except as noted)
3Q18
Pro Forma 3Q17
Adj. 3Q17 % Chg2
9M18
Pro Forma 9M17
% Chg Revenue $121,247
$132,778 $1,310 $131,468
(9%) $398,099 $377,860 5%
Cost of revenue 36,673 37,869
37,869 (3%) 122,407 104,096 18%
Gross
profit 84,574 94,909
1,310 93,599 (11%)
275,692 273,764 1% Operating
expenses Selling and marketing 41,572 41,097
41,097 1% 131,432 119,932
10% General and administrative 17,130 15,318
15,318 12% 50,004 52,805 (5%)
Technology and product development 16,821 18,907
18,907 (11%) 54,778 51,959
5%
Total operating expenses 75,523
75,322 75,322 0% 236,214 224,696
5%
Operating income 9,051 19,587
1,310 18,277 (54%)
39,478
49,068 (20%) Net financial income
(expense) (11,026) (2,880)
(2,880) 283% (19,149) (10,647) 80%
Net income before
income taxes (1,975) 16,707
1,310 15,397 (112%)
20,329
38,421 (47%) Income tax expense (501)
4,373 183 4,190 (111%) 4,205
11,045 (62%)
Net income (1,474)
12,334 1,127 11,207
(112%) 16,124 27,376
(41%) Basic EPS (in $) (0.02) 0.21
0.19 (110%) 0.23 0.46
(50%) Diluted EPS (in $) (0.02) 0.21
0.19 (110%) 0.23 0.46 (50%)
Basic shares weighted average1 69,193 59,694
59,694 69,165 58,910
Diluted shares weighted average1 69,193 59,785
59,785 69,165 59,001
As a % of Revenues
Cost of revenue 30.2% 28.5%
28.8% +173 bps 30.7% 27.5% +320
bps Gross profit 69.8% 71.5%
71.2% (173) bps 69.3% 72.5% (320) bps
Operating expenses
Selling and
marketing 34.3% 31.0% 31.3%
+334 bps 33.0% 31.7% +128 bps General and
administrative 14.1% 11.5% 11.7%
+259 bps 12.6% 14.0% (141) bps Technology and
product development 13.9% 14.2%
14.4% (37) bps 13.8% 13.8% +1 bps Total
operating expenses 62.3% 56.7%
57.3% +556 bps 59.3% 59.5% (13) bps Operating
income 7.5% 14.8% 13.9%
(729) bps 9.9% 13.0% (307) bps Net income before
income taxes -1.6% 12.6% 11.7%
(1,421) bps 5.1% 10.2% (506) bps Net income
-1.2% 9.3% 8.5% (1,051)
bps 4.1% 7.2% (319) bps 1. In thousands 2. For
comparison purposes, the Company has presented Pro-forma 3Q17
figures which include the adjustments required under the new
revenue recognition standards adopted since the start of 2018. The
YoY % change calculated against the adjusted figures.
Key Financial & Operating Trended
Metrics (in thousands U.S. dollars, except as noted)
Pro Forma
1Q17 2Q17 3Q17
4Q17 1Q18 2Q18
3Q18 FINANCIAL RESULTS
Revenue $124,999 $123,462
$131,468 $144,011 $148,593
$128,259 $121,247 Revenue Recognition
Adjustment ($3,321) ($59) $1,310 $7,578
Cost of revenue 31,140
35,087 37,869 38,383 43,646 42,088
36,673
Gross profit 90,538
88,316 94,909 113,206
104,947 86,171 84,574 Operating
expenses Selling and marketing 35,546 43,289
41,097 46,356 46,410 43,450 41,572
General and administrative 18,869 18,618
15,318 19,821 15,888 16,986 17,130 Technology
and product development 15,408 17,644 18,907
19,349 19,225 18,732 16,821
Total operating
expenses 69,823 79,551
75,322 85,526 81,523
79,168 75,523
Operating income 20,715
8,765 19,587 27,680
23,424 7,003 9,051 Net financial
income (expense) (6,156) (1,611) (2,880)
(6,232) (2,831) (5,292) (11,026)
Net income
before income taxes 14,559 7,154
16,707 21,448 20,593
1,711 (1,975) Adj. Net Income tax expense
2,418 4,254 4,373 2,617 4,235
471 (501) Income tax expense 2,486 3,806
4,190 1,512 4,235 471 (501) Adjustment
$68 ($448) ($183) ($1,105)
Net income /(loss)
12,141 2,900 12,334
18,831 16,358 1,240
(1,474)
KEY
METRICS
Operational
Gross bookings $1,019,102
$1,061,026 $1,116,022 $1,258,398
$1,231,497 $1,184,355 $1,092,287
- YoY growth 54% 40% 32% 26% 21%
12% (2%)
Number of transactions 2,129
2,210 2,298 2,419
2,514 2,607 2,596 - YoY growth
30% 30% 25% 19% 18% 18%
13% Air 1,246 1,324 1,328 1,386 1,362
1,513 1,512 - YoY growth 34% 31%
22% 13% 9% 14% 14% Packages, Hotels &
Other Travel Products 883 886 970 1,033
1,152 1,094 1,085 - YoY growth 25% 27%
29% 28% 30% 23% 12%
Revenue per
transaction $57.2 $55.8
$57.8 $62.7 $59.1 $49.2
$46.7 - YoY growth
3% (12%) (18%) Air $45.6
$45.2 $44.3 $47.7 $44.7 $35.1
$33.4 - YoY growth
(2%) (22%) (25%) Packages, Hotels & Other
Travel Products $73.5 $71.7 $76.2 $82.7
$76.2 $68.6 $65.2 - YoY growth
4% (4%) (14%)
ASPs $479 $480
$486 $520 $490 $454
$421 - YoY growth 18% 8% 6%
6% 2% (5%) (13%)
Net income/ (loss) $12,141 $2,900
$12,334 $18,831 $16,358 $1,240 ($1,474)
Add (deduct):
Financial expense,
net 6,156 1,611 2,880 6,232 2,831
5,292 11,026 Income tax expense 2,418
4,254 4,373 2,617 4,235 471 (501)
Depreciation expense 1,343 1,362 1,337
1,033 859 1,475 1,338 Amortization of intangible
assets 1,517 2,039 2,454 2,741 2,018
2,228 2,738 Share-based compensation expense
1,176 930 959 1,224 983 1,266
1,393
Adjusted EBITDA $24,751
$13,096 $24,337 $32,678
$27,284 $11,972 $14,520
Unaudited Consolidated Balance Sheets
as of September 30, 2018
(in thousands U.S. dollars, except as
noted)
As of September 30, 2018 As of December 31,
2017 ASSETS
Current assets
Cash and cash equivalents $357,399 $371,013
Restricted cash and cash equivalents
$9,295 $29,764 Accounts receivable, net of allowances $187,467
$198,273 Related party receivable 6,513 5,253 Other current assets
and prepaid expenses 53,485 29,405 Total current assets 614,159
633,708
Non-current assets Other Assets 11,691
4,658 Restricted cash and cash equivalents 10,000 10,000 Property
and equipment net 17,838 16,171 Intangible assets, net 36,943
35,424 Goodwill 35,738 38,733 Total non-current assets 112,210
104,986
TOTAL ASSETS 726,369 738,694
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current
liabilities Accounts payable and accrued expenses
46,405 45,609 Travel suppliers payable 146,536 174,817 Related
party payable 83,152 84,364 Loans and other financial liabilities
31,258 8,220 Deferred Revenue 249 30,113 Other liabilities 36,282
39,751 Contingent liabilities 4,026 4,732 Total current liabilities
347,908 387,606
Non-current liabilities Other
liabilities 314 1,015 Contingent liabilities 2,128 7,115 Related
party liability 125,000 125,000 Total non-current liabilities
127,442 133,130
TOTAL LIABILITIES 475,350
520,736 SHAREHOLDERS’ EQUITY (DEFICIT)
Common stock 253,705 253,535 Additional paid-in capital
320,052 316,444 Other reserves (728) (728) Accumulated other
comprehensive income 2,641 16,323 Accumulated losses (308,855)
(367,616) Treasury Stock (15,796) – Total Shareholders' Equity
Attributable / (Deficit) to Despegar.com Corp 251,019 217,958
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 726,369
738,694
Unaudited Statements of Cash Flows for
the three and nine-month period ended September 30, 2018 and
2017
(in thousands U.S. dollars, except as
noted)
3 months ended September 30, 9
months ended September 30, 2018
2017 2018 2017 Cash flows
from operating activities
Net income ($1,474)
$11,207 $16,124
$30,008 Adjustments to reconcile net income to net cash flow
from operating activities
Unrealized foreign currency translation losses
249 (229) 1,477 457 Depreciation
expense 1,338 1,337 3,672 4,042
Amortization of intangible assets 2,738 2,454
6,984 6,010 Stock based compensation expense
1,393 959 3,642 3,065 Interest and
penalties 597 156 597 610 Income
taxes (1,720) 3,081 1,287 5,876
Allowance for doubtful accounts – (55)
313 688 Provision / (recovery) for contingencies
(182) (1,285) 942 (506) Changes in
assets and liabilities, net of non-cash transactions
(Increase) /
Decrease in accounts receivable, net of allowances 3,116
944 (14,472) (39,600) (Increase) /
Decrease in related party receivables (512) (956)
(1,269) (2,342) (Increase) / Decrease in other
assets and prepaid expenses (18,197) (6,921)
(45,388) (6,491) Increase / (Decrease) in accounts
payable and accrued expenses 712 864
8,339 14,485 Increase / (Decrease) in travel suppliers
payable (8,925) 14,579 536
28,830 Increase / (Decrease) in other liabilities 5,585
(5,765) 8,092 (3,237) Increase /
(Decrease) in contingencies (1,003) (9,484)
(5,386) (10,121) Increase / (Decrease) in related
party liabilities (9,497) (865) 4,733
9,343 Increase / (Decrease) in deferred revenue (928)
692 (2,408) (5,123)
Net cash flows
provided by / (used in) operating activities
(26,710) 10,713 (12,185)
35,994 Cash flows from investing activities
Payments
for short-term investments – 238 –
– Acquisition of property and equipment (1,129)
(2,232) (8,393) (6,354) Increase of
intangible assets including internal-use software and website
development (2,615) (2,830) (9,247)
(8,987) (Increase) / Decrease in restricted cash and cash
equivalents – – – –
Net cash
(used in) /provided by investing activities
(3,744) (4,824) (17,640)
(15,341) Cash flows from financing activities
Increase /
(Decrease) in loans and other financial liabilities 7,640
(5,717) 24,016 959 Capital
contributions 136 (6,247) 136
254,305 Treasury Stock (15,796)
Net cash (used in) / provided by financing
activities (8,020) 248,588
8,356 255,264 Effect of exchange rate
changes on cash, cash equivalents and restricted cash 1,662
267 (12,614) 956
Net increase /
(decrease) in cash, cash equivalents and restricted cash
(36,812) 254,744 (34,083)
276,873 Cash, cash equivalents and restricted cash as
of beginning of the period 413,506 141,294
410,777 119,165 Cash, cash equivalents and restricted
cash as of end of the period 376,694 396,038
376,694 396,038
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Investor Relations:Despegar.com, Corp.Javier
KellyInvestor Relations(+5411) 5173
3501investorelations@despegar.com
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