4Q17 Earnings Conference Call. March 8, 2018

Transcription

1 4Q17 Earnings Conference Call March 8, 2018

2 Disclaimer This presentation includes forward-looking statements. We have based these forward-looking statements largely 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 forwardlooking statements, including: political, social and macroeconomic conditions in Latin America; currency exchange rates and inflation; current competition and the emergence of new market participants in our industry; government regulation; our expectations regarding the continued growth of internet usage and e-commerce in Latin America; failure to maintain and enhance our brand recognition; our ability to maintain and expand our supplier relationships; our reliance on technology; the growth in the usage of mobile devices and our ability to successfully monetize this usage; our ability to attract, train and retain executives and other qualified employees; and our ability to successfully implement our growth strategies. We operate in a competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this presentation. The words believe, may, should, aim, estimate, continue, anticipate, intend, will, expect and similar words are intended to identify forward-looking statements. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies, capital expenditures, financing plans, competitive position, industry environment, potential growth opportunities, the effects of future regulation and the effects of competition. 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 after the date of this presentation because of new information, future events or other factors, except as required by law. In light of the risks and uncertainties described above, the future events and circumstances discussed in this presentation might not occur or come into existence and forward-looking statements are thus not guarantees of future performance. Considering these limitations, you should not make any investment decision in reliance on forward-looking statements contained in this presentation. This presentation includes industry, market and competitive position data and forecasts that we have derived from independent consultant reports, publicly available information, industry publications, official government information, other third-party sources and our internal data and estimates. Independent consultant reports, industry publications and other published sources generally indicate that the information contained therein was obtained from sources believed to be reliable. The inclusion of market estimations in this presentation is based upon information obtained from third-party sources and our understanding of industry conditions. Although we believe that this information is reliable, the information has not been independently verified by us. Trademarks and service marks appearing in this presentation are the property of their respective holders. This presentation includes data from Euromonitor. Information sourced to Euromonitor is from independent market research carried out by Euromonitor International Limited as part of its annual Passport research. Euromonitor makes no warranties about the fitness of this intelligence for investment decisions. This presentation is strictly confidential, is for informational purposes only and may not be relied upon in connection with the purchase or sale of any security. You may not disclose any of the information contained herein to any other parties without the company s prior express written permission. This presentation is made pursuant to Section 5(d) of the Securities Act of 1933, as amended, and is intended solely for investors that are either qualified institutional buyers or institutions that are accredited investors (as such terms are defined under Securities and Exchange Commission ( SEC ) rules) solely for the purpose of determining whether such investors might have an interest in a securities offering contemplated by Despegar.com, Corp. Any such offering of securities will only be made by means of a registration statement (including a prospectus) filed with the SEC, after such registration statement is declared effective. No such registration statement has been declared effective as of the date of this presentation. This presentation shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. 2

3 4Q17 Highlights: Delivering on Our Strategy of Balancing Growth and Profitability Number of customers increased 15% YoY Transactions up 19% driven by high repeat customer purchase activity Gross bookings up 26% despite overall slower market conditions in 2H17 Revenue growth of 30% YoY Mobile transactions up 45% YoY Share of Packages, Hotels & OTPs rose to 54% of total revenues from 47% in 4Q16 Adjusted EBITDA up 125% YoY and 29% YoY excluding one-time items Strong operating cash flow generation of $25.2M in 4Q17, compared with $17.6M in 4Q16 3

4 Maintain Strong Business Momentum Driving Higher Margin Packages, Hotels and OTPs Continued to gain market share in Air despite slower overall market growth when compared with 1H17 Strategy implemented in 3Q17 to provide more attractive customer fees to drive traffic and support cross-selling of Packages, Hotels and OTPs transactions up 28% (compared with +13% growth in Air transactions) ASPs increased 6% YoY in 4Q17 Total Transactions by Segment Gross Bookings In millions 5.0 In US$ Bn % ' % +13% Q16 4Q % ' Q16 4Q

5 Mobile Remains the Fastest Growth Vehicle Apple App Store Google Play App Store $1 billion in mobile gross bookings Share of mobile transactions +544 bps YoY to 30% of total transactions +38 M cumulative App downloads at Dec , up 39% YoY Mobile transactions up 45% YoY 5

6 Investing in the Business Expanded payment capabilities with additional purchase alternatives in Argentina and Colombia Investing in sourcing capabilities Only LatAm OTA integrated to WhatsApp Business NPS increases reflecting positive customer response to our ongoing enhancements Leveraging payments and fraud capabilities to enhance competitive advantages in the region

7 Continue to Drive Growth Across Our Markets 125% Transactions by Geography Share of total 34% 34% 26% 25% Robust dynamics in Brazil and Argentina despite increased competition Brand building campaign helps drive market share gains in Mexico and Colombia, despite strong competitive environment. 0% 40% 41% 4Q16 4Q17 Other Argentina Brazil Colombia, still impacted by lower domestic passenger traffic resulting from local pilots strike at leading carrier 7

8 Solid Revenue Growth while Further Diversifying Mix Revenue growth accelerated to 30% YoY in 4Q17, with revenue margin up 31 bps to 11.4% as shift to higher-margin Packages, Hotels and OTPs more than offset the Air fee reduction implemented in 3Q17 Total Revenue* In US$ millions Revenue Mix % of total revenue Revenue per Transaction In US$ % 54% 50% 54% Q16 4Q ' Q16 4Q % 46% 50% 46% 4Q16 4Q Air Packages, Hotels & OTPs 4Q16 4Q

9 Strategic Options in Toolbox to Support Growth Selectively reduced customer air fees in 3Q17 to drive traffic & increase cross selling of Packages, Hotels & OTPs Cost of revenue down 328 bps YoY to 26.7% in 4Q17 as lower fraud and efficiency gains offset enhanced financing Step-up in selling and marketing spend as we invest building brand awareness Gross Profit & Margin In US$ millions and % of revenues Selling & Marketing Expenses In US$ millions and % of revenues Gross Margin 70.1% 73.3% 69.2% 72.8% % of Revenues 29.1% 32.2% 29.5% 31.7% Q16 4Q Q16 4Q

10 Adjusted EBITDA Up 125% and 29% Excluding Non- Recurring Items Adjusted EBITDA growth in 4Q17 impacted by non-recurring $0.8 million tax recovery gain in 4Q17 and $7.7 million severance costs in 4Q16, both reported in G&A, as well as higher marketing costs EXCLUDING ONE-TIME GAINS Adjusted EBITDA and Adjusted EBITDA margin (%) In US$ millions and % of revenues Adjusted EBITDA and Adjusted EBITDA margin (%) In US$ millions and % of revenues Adjusted EBITDA Mg. 17.0% 16.9% 12.6% 16.5% Adjusted EBITDA Mg. 10.1% 17.4% 11.8% 17.1% Q16 4Q Q16 4Q17 FY16 FY17 10

11 Looking Ahead Into 2018 Anticipate continued industry growth, supported by positive overall macroeconomic conditions Ongoing migration from offline to online channel, providing attractive growth opportunities across markets Focused on further expanding market share Leveraging Despegar s attractive value proposition and critical mass Continued mix shift to higher-margin Hotels, Packages and OTPs Further drive mobile transactions 11

12 Questions & Answers 12

13 Appendix

14 Unaudited Consolidated Statements of Operations (in thousands U.S. dollars, unless otherwise stated) 4Q17 4Q16 % Chg % Chg Revenue $144,011 $111,162 30% $523,940 $411,162 27% Cost of revenue 38,383 33,279 15% 142, ,675 12% Gross profit 105,628 77,883 36% 381, ,487 34% Operating expenses Selling and marketing 46,356 32,382 43% 166, ,466 37% General and administrative 19,821 21,961 (10%) 72,626 64,683 12% Technology and product development 19,349 16,030 21% 71,308 63,251 13% Total operating expenses 85,526 70,373 22% 310, ,400 24% Operating income 20,102 7, % 71,239 35, % Net financial income (expense) (6,232) (1,863) 235% (16,879) (6,752) 150% Net income before income taxes 13,870 5, % 54,360 28,335 92% Income tax expense 1,512 1,647 (8%) 11,994 10,538 14% Net income 12,358 4, % 42,366 17, % 4Q17 4Q16 % Chg % Chg Basic EPS (in $) % % Diluted EPS (in $) % % Basic shares weighted average 1 69,098 58,518 61,457 58,518 Diluted shares weighted average 1 69,189 58,609 61,548 58,609 As a % of Revenues Cost of revenue 26.7% 29.9% (328) bps 27.2% 30.8% (362) bps Gross profit 73.3% 70.1% +328 bps 72.8% 69.2% +362 bps Operating expenses Selling and marketing 32.2% 29.1% +306 bps 31.7% 29.5% +220 bps General and administrative 13.8% 19.8% (599) bps 13.9% 15.7% (187) bps Technology and product development 13.4% 14.4% (98) bps 13.6% 15.4% (177) bps Total operating expenses 59.4% 63.3% (392) bps 59.2% 60.7% (145) bps Operating income 14.0% 6.8% +720 bps 13.6% 8.5% +506 bps Net income before income taxes 9.6% 5.1% +455 bps 10.4% 6.9% +348 bps Net income 8.6% 3.6% +498 bps 8.1% 4.3% +376 bps 1. In thousands 14

15 Key Financial & Operating Trended Metrics (in thousands U.S. dollars, unless otherwise stated) 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 FINANCIAL RESULTS Revenue $95,115 $98,797 $106,088 $111,162 $124,999 $123,462 $131,468 $144,011 Cost of revenue 33,494 33,752 26,150 33,279 31,140 35,087 37,869 38,383 Gross profit 61,621 65,045 79,938 77,883 93,859 88,375 93, ,628 Operating expenses Selling and marketing 28,577 29,133 31,374 32,382 35,546 43,289 41,097 46,356 General and administrative 15,186 13,960 13,576 21,961 18,869 18,618 15,318 19,821 Technology and product development 15,561 15,942 15,718 16,030 15,408 17,644 18,907 19,349 Total operating expenses 59,324 59,035 60,668 70,373 69,823 79,551 75,322 85,526 Operating income 2,297 6,010 19,270 7,510 24,036 8,824 18,277 20,102 Net financial income (expense) (386) (3,653) (850) (1,863) (6,156) (1,611) (2,880) (6,232) Net income before income taxes 1,911 2,357 18,420 5,647 17,880 7,213 15,397 13,870 Income tax expense 2,646 2,178 4,067 1,647 2,486 3,806 4,190 1,512 Net income /(loss) (735) ,353 4,000 15,394 3,407 11,207 12,358 Net income/ (loss) ($735) $179 $14,353 $4,000 $15,394 $3,407 $11,207 $12,358 Add (deduct): Financial expense, net 386 3, ,863 6,156 1,611 2,880 6,232 Income tax expense 2,646 2,178 4,067 1,647 2,486 3,806 4,190 1,512 Depreciation expense 1,265 1,263 1,450 1,111 1,343 1,362 1,337 1,033 Amortization of intangible assets 1,728 1,918 2,060 2,129 1,517 2,039 2,454 2,741 Share-based compensation expense , ,224 Adjusted EBITDA $5,340 $9,241 $22,830 $11,174 $28,072 $13,155 $23,027 $25,100 15

16 Key Financial & Operating Trended Metrics (cont.) (in thousands U.S. dollars, unless otherwise stated) KEY METRICS Operational 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Gross bookings $661,577 $755,413 $844,782 $998,462 $1,019,102 $1,061,026 $1,116,022 $1,258,398 - YoY growth (19%) (13%) (10%) 3% 54% 40% 32% 26% Number of transactions 1,632 1,706 1,839 2,035 2,129 2,210 2,298 2,419 - YoY growth (6%) (8%) (9%) (3%) 30% 30% 25% 19% Air 928 1,008 1,089 1,225 1,246 1,324 1,328 1,386 - YoY growth (0%) (4%) (4%) (3%) 34% 31% 22% 13% Packages, Hotels & Other Travel Products ,033 - YoY growth (13%) (12%) (16%) (2%) 25% 27% 29% 28% Revenue per transaction $58.3 $57.9 $57.7 $54.6 $58.7 $55.9 $57.2 $ YoY growth 5% 4% 8% 0% 1% (4%) (1%) 9% Air $44.8 $50.2 $50.1 $48.1 $44.7 $46.0 $44.1 $ YoY growth (11%) (4%) 4% (4%) (0%) (8%) (12%) (1%) Packages, Hotels & Other Travel Products $76.1 $69.1 $68.6 $64.4 $78.4 $70.6 $75.2 $ YoY growth 23% 16% 13% 5% 3% 2% 10% 17% ASPs $405 $443 $459 $491 $479 $480 $486 $520 - YoY growth (13%) (6%) (1%) 6% 18% 8% 6% 6% 16

17 Unaudited Consolidated Balance Sheets (in thousands U.S. dollars) As of December 31, 2017 As of December 31, 2016 ASSETS Current assets Cash and cash equivalents $371,013 $75,968 Restricted cash and cash equivalents $29,764 $22,738 Short Term Investments Accounts receivable, net of allowances $198,273 $121,098 Related party receivable 5,253 2,240 Other current assets and prepaid expenses 34,063 27,184 Total current assets 638, ,228 Non-current assets Restricted cash and cash equivalents 10,000 20,459 Property and equipment net 16,171 13,717 Intangible assets, net 35,424 31,412 Goodwill 38,733 38,894 Total non-current assets 100, ,482 TOTAL ASSETS 738, ,710 As of December 31, 2017 As of December 31, 2016 LIABILITIES AND SHAREHOLDERS DEFICIT Current liabilities Accounts payable and accrued expenses 45,609 25,335 Travel suppliers payable 174, ,237 Related party payable 84,364 71,006 Loans and other financial liabilities 8,220 7,179 Deferred Revenue 30,113 29,095 Other liabilities 39,751 49,686 Contingent liabilities 4,732 3,613 Total current liabilities 387, ,151 Non-current liabilities Other liabilities 1, Contingent liabilities 7,115 22,413 Related party liability 125, ,000 Total non-current liabilities 133, ,822 TOTAL LIABILITIES 520, ,973 SHAREHOLDERS EQUITY (DEFICIT) Common stock 1 253,535 6 Additional paid-in capital 316, ,155 Other reserves (728) (728) Accumulated other comprehensive income 16,323 16,286 Accumulated losses (367,616) (409,982) Total Shareholders' Equity Attributable / (Deficit) to Despegar.com Corp 217,958 (82,263) TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 738, , Represents 58,518 (at $0.0001) and 10,578 (issued at $26 per share) issued and outstanding at September 30, 2017 and 58,518 shares issued and outstanding at December 31, (in thousands of shares) 17

18 Investor Relations Contact Ines Lanusse IR Manager Phone: (+5411)