Mondee Holdings, Inc.

Good day, and welcome to the Mondi Second Quarter 2023 Earnings Conference Call. Please note, this event is being recorded. I would now like to turn the conference call over to Jeff Houston, Senior Vice President. Jeff, please go ahead.

Thank you, Operator, and good morning, everyone. Welcome to Mondi's Second Quarter 2023 Conference Call. With me today is Founder, Chairman, and CEO Prasad Gundamundala, and Chief Financial Officer Jesus Portillo. who will present our results. Also available for questions and answers is our Vice Chairman, Chief Strategy and Business Development Officer, Aristis Venticulus, and Chief Operating Officer, Jim Dullem. Before we begin, I'd like to remind everyone that this call may contain forward-looking statements, including statements about revenue, growth of our business, our management and government plans, and other non-historical statements as further described in our press release. These forward-looking statements are subject to certain risks, uncertainties, and assumptions, including those related to MONDI's growth, the evolution of our industry, our product development and success, our management performance, and general economic and business conditions. We undertake no obligation to revise any statements to reflect changes that occur after this call. Descriptions of these and other risks that could cause actual results to have a material difference from these forward-looking statements are discussed in our reports filed with the SEC and in our press release that was issued this morning. During the call, we also refer to non-GAAP financial measures. Reconciliations of the most comparable GAAP measures are also available in the press release, which is available at investors.mondi.com. With that, it's my pleasure to turn it over to Prasad.

Thank you, Jeff. This morning, we are excited to welcome everyone to Mondi's second quarter 2023 earnings call to discuss our results and significant developments. We appreciate your interest, whether you are a shareholder, a client, supplier, business partner, employee, prospective shareholders, or unless. I'll begin today's call with our business highlights and strategy, and then I will turn the call over to our CFO, Jesus Portillo, for a more detailed review of our financial results and outlook. We will then conclude the session with time to answer a few questions. Starting on slide four, there are three key points to emphasize in our second quarter results. First, Mondi is once again disrupting the travel market through AI innovation and next-gen technology deployment. We are thrilled that on the first anniversary of our NASDAQ public listing, Mondi released the first fully integrated AI travel marketplace. opening a world of new market opportunities and certifying our status as pioneers in the travel industry. Our journey has naturally led us to this transformational intersection. In the past 12 years, we assembled the components that disrupted a significant segment of the North American travel market and created a highly successful 1.0 marketplace platform. the technology marketplace for travel experts, suppliers, travelers, and organizations. With our newly released Disruptive AI platform and 1D 2.0 marketplace, we are broadening our addressable customer base to include the vibrant ecosystem of travel social influencers, freelancers, and the tech-savvy millennial and Gen Z travelers. Moving to slide five, Key elements of this transformation included a one-of-a-kind modern tech platform, extensive world-class privately negotiated content, deployed through a powerful network of experts and travelers. This positions us to generate increasingly hyper-local content for personalized experiences, as well as establishing Mondi as a technology leader when it comes to AI in travel. Coming to the second point, now that we have all of these assets in place, we are now perfectly positioned to launch a series of robust modern marketing campaigns with the help of our expanded world-class marketing team. This strategic push aims to fully capitalize on our disruptive market position as we approach 2024. EI is not new to us. One, we have been investing in EI technology for the past few years. Because of this, we are uniquely positioned to lead and bring a fully integrated advanced AI platform to the travel industry. Over the past few quarters, a favorable market window opened, allowing us to leverage our established assets to position Mondi as a leader in the AI marketplace. These developments were, first, rapid popularity and proven breakthroughs in the generative AI platforms such as ChatGPT and Google Pod. Secondly, Gen Z and millennial travelers are receptive to and actively seeking AI solutions for creating personalized travel experiences. Thirdly, social media influencers have become more relevant to introduce new travel experiences to their followers. With these developments, coupled with the deployment of our advanced technology, expanded global content, and innovative marketing programs, we are stepping into a new realm, poised to bring travel experiences to a wider audience. As a result, we decided to accelerate our investments in deploying the technology, building the marketing programs, the content scope and curation, as well as the business delivery infrastructure. We believe that the symbiotic relationship between AI advancements and Mondi's leadership in AI travel technology justify our intensified focus on these initiatives. Our incremental investments here will facilitate the process of engaging travelers through social media influencers, close user groups, and organizations more quickly. We fully expect our revolutionary AI travel marketplace to contribute to further market share gains improve the rate of net revenue growth, and enhance profitability in 2024 and thereafter. The third point, we continue to grow at a fast pace and perform well financially. Turning to slide six, we are proud of the performance of our monthly marketplace, which has delivered explosive organic and inorganic growth, as well as positive EBITDA. culminating into yet another stellar financial results in the second quarter, exemplifying our commitment to growth with innovation and excellence. In Q2 of this year, with take rate, which we define as net revenue divided by gross revenue, increasing to 8% from 7.2% in the second quarter of 2022. Net revenue of $57 million was 124% of the second quarter of 22. In the first half of 2023, we exceeded the net revenue guidance communicated to the investment community, and we remain on track to continue performing well. On the profitability front, we delivered an adjusted EBITDA of 4.4 million, which is 118% of adjusted EBITDA in the same period last year. We achieved this result even after investing approximately $1 million of additional marketing and personal expenses in anticipation of the Monty AI Marketplace launch. Jesus will delve deeper into financial results and specific guidance numbers shortly. But first, I would like to underscore the reasons for our enthusiastic growth outlook and additional insights on the potential of our AI travel marketplace. and distribution channels. Turning back to slide five, our AI travel marketplace is transforming the travel marketplace with a range of innovative features that will completely change how trips and personal travel experiences are conceived, planned, and booked. We are enabling travel influencers, local experts, and agents with unprecedented access and complete travel content in our unified marketplace as well as travel-centric cutting-edge technology, such as Abhi, the AI platform with conversational commerce, to conveniently create and deliver personalized travel experiences. It adds the global knowledge of experts to their local expertise to be able to serve any type of customer well. For travelers, we have crafted immersive travel experiences using intuitive self-service exploration tools driven by AI. But that's not all. We have taken it a step further by connecting travelers with on-demand local experts from around the world. Through our AI-driven marketplace, these experts bring local knowledge and tap into global networks to add a unique touch to inspire travel adventures. At the heart of our mission is bringing joy to the traveler's journey, making it personal surprising, and meaningful. We believe in curating localized experiences that matter. With the only fully integrated AI travel platform today, our marketplace empowers travel experts and influencers to provide exactly what their clients desire, saving time while creating their personal travel experiences. Our all-in-one platform offers a wide range of travel content available in about 20 languages, And our customer support has been expanded with our growing always connected expert network to ensure your trip is smooth from start to finish. With assistance available via phone, chat, and email. Experts and travelers are able to discover the world at their fingertips with access to over 500 airlines, 1 million hotels and vacation rentals, 30,000 rental car pickup locations, and now 50 cruise lines. all at negotiated rates that guarantee exceptional value. What truly sets the Monty marketplace apart is our groundbreaking fully integrated AI platform. Innovation is our passion, and we have harnessed the power of generative AI, deep learning, computer vision, and a recommendation engine, along with conversational commerce, to transform the travel booking process. Our FinTech tools provide additional choices and protection for all purchases within our marketplace, ensuring your peace of mind. Moving to slide seven, yesterday we announced the acquisition of SkyPass, a leading travel marketplace, specializing in international corporate and SMB travel, continuing our accretive and disciplined M&A strategy, and adding content and distribution, which is enhancing our new marketplace. This follows our three acquisitions announced earlier this year that strengthened our presence in LATAM, specifically Brazil and Mexico. Going forward, we plan to continue our disciplined inorganic strategy to expand our existing operations while also exploring opportunities in other regions. We intend to leverage our platform and marketplace accretively to support sustainable growth and enhance our position as a leader in the global travel industry. On the operations front, as a part of our continuous improvement, we are introducing all our new technology internally to our support teams, as well as integrating with our new operations team across all geographies to better serve all our organization customers, marketplace influencers, experts, and travelers. The ongoing enhancements of our operation and customer service elevates customer satisfaction and supports rapid growth of our business. For example, our business to enterprise or B2E segment performed very well through the second quarter with 274% increase in transactions as measured in June or January. We continue to experience momentum with joint flight and hotel transactions, providing us with increased confidence as we introduce new travel content and diversify revenue streams to our customers. Moving on to additional networthy accomplishments in the quarters, back to slide six. First is our addition to Russell 2000 Index. As the largest travel tech editions in 2023, it serves as a testament to Mondi's strong fundamentals and business performance, reaffirming our role as a leader in the travel technology industry. This recognition holds significant importance and is expected to support our endeavours in enhancing long-term shareholder value, raising awareness of MONDI among the investment community, bolstering stock volume and liquidity, and diversifying our shareholder base. This development is expected to enhance visibility and trading liquidity while also facilitating the entry of new institutional investors. Next, we completed a successful secondary offering for $52.5 million, welcoming an additional 43 institutional investors to our shareholder base. It was a step forward in diversifying our shareholder base and incentivizes an environment that foster investor participation. Moreover, with management retaining over 40% ownership of shares, our interests remain truly aligned with those of our valued investors. As I mentioned earlier, we have significantly enhanced our leadership and marketing teams in the first half of 2023. Most recently, Miten Mehta, previously a leader at Google, joined Mondi's executive team to oversee AI strategic planning and initiatives. With a professional background of over 25 years, including a wealth of experience in the field of AI, Miten will play a crucial role in our AI marketplace. He brings a growth-focused approach that emphasizes client-centricity, revenue generation, and results-driven leadership. Furthermore, former Accenture executive Geetika Gupta, who led a distributed workforce of 22,000 across geographies, including the United States, India, Singapore, and Malaysia, joined Mondi as Chief People Officer, bringing her HR transformation experience from Accenture Consulting on Fortune 100 projects to aid in scaling Mondi's infrastructure. Under CMO Kimber Lowe's leadership, the marketing team welcomed 14 new members with the focus to drive substantial growth of the company over the coming years. The team now includes online and social media experts from companies such as Google, Amazon, and Microsoft, including Rachel Van Notwik and Christy Berg. The marketing team has launched a set of marketing initiatives around Abhi, Mondi's fully integrated AI genius platform, to promote Mondi's now fully AI-enabled marketplace to customers and prospects, including travel experts, influencers, organizations, and SMEs. In addition, as we round out our infrastructure for rapid scalable growth, We continue to add key executive and subject matter experts in AI strategy and roadmap development, vendor relationship management, financial disciplines such as SOX compliance, as well as operational program management. We are now well along the path of building an all-star team to take Mondi up significant levels of profitable growth. I will now pass the call over to Jesus for a review of our financial performance and outlook. Jesus?

Thank you, Tassad, and thanks again to our audience for attending. We generated a strong result in the second quarter. As Monday continues to expand geographically, leverage our enhanced technology and capitalize on the international travel market recovery. For your reference, we present the summary of our second quarter results in slide eight of the presentation. Gross revenue of $708 million was 112% of second quarter of 22, while net revenue of $56.8 million was 124% of second quarter 22. Tech rate continued to be in line with our expectations and closed at 8% in the second quarter, a substantial increase from pre-pandemic levels of 4 to 5%. It also represents a substantial increase when compared to 7.2% achieved during the second quarter of 22. This expansion in tech rate is driven mainly by the uptake of hotel content and the diversification of revenue streams like travel ancillaries and FinTech. We expect this very important metric to continue expanding with the addition of cruises and a great mix of hotels, events, and activities. Furthermore, we're helping with the momentum of our business, with over 721,000 transactions in the second quarter of 23, up from 550,000 in the second quarter of 22. Turning to expenses, GAAP sales and marketing as a percentage of gross revenue was 5.7%, which was 5.1% in the same quarter last year, as we enhanced our marketing function and accelerated approximately $1 million of investment that was initially planned for 2024 to capitalize on our AI travel marketplace. G&A as a percentage of net revenue was 9.2%, up from 4.4% a year ago as we incorporated new public company expenses and provide the infrastructure to continue supporting our exceptional growth. Adjusted EBITDA was $4.4 million for the quarter, 118% over $3.8 million in Q2 of 2022, as we continue to deliver profitable growth despite the incremental marketing of one-time expenses. Note that reconciliation of GAAP to non-GAAP are available in today's earnings release. On a GAAP basis, the net loss was $14.6 million, including approximately $14 million of non-cash and or non-recurring items, such as $3.8 million of depreciation and amortization, $4.8 million of stock-based compensation, $2 million of tax provisions, $0.5 million of changes in fair value of earner liabilities, $0.3 million of M&A costs, non-cash financing cost of $1.5 million, and one-time marketing costs associated with our new AI platform launch of approximately $1 million. Comparatively, net loss was $2.1 million in Q2 of 2022. On a non-GAAP basis, adjusted net loss was $5 million versus a loss of $2.9 million last year. Looking at our balance sheet, at the end of second quarter, we had approximately $58 million in cash and $153 million of debt. compared to $67 million and $150 million respectively at the end of first quarter of 2023. The small decrease in cash reserves was mainly due to acquisitions and working capital increase. Turning to our 2023 outlook and guidance, we're increasing our 2023 net revenue guidance by $5 million and expect to continue delivering profitable growth. Our projections include both organic and inorganic growth from Bundy's recent acquisitions. Net revenue for the 2023 fiscal year is expected to range between $245 and $250 million, representing 155% of our 2022 net revenue measured at the midpoint. As Prasad mentioned earlier, we made the decision during the second quarter to ramp up our investment in marketing and accelerate the execution of our AI roadmap. We expect those investments to be around $20 million over the course of the year. We believe this will facilitate capturing new market share, accelerating revenue growth in 2024, and disrupting the travel industry with our next-gen AI platform. With all of this in mind, we're updating our 2023 adjusted EBITDA guidance to be in the range of 25 to 30 million, which could represent a 250% of our 2022 adjusted EBITDA, measured at the midpoint. Finally, and before turning the call over to Prasad, we would like to formally welcome Deloitte as our new auditor effective July 6th of 2023. We're very excited about this partnership and the capabilities and experience that Deloitte will contribute to Mondi. Thank you, and over to you now, Prasad.

Thank you, Jesus. We are excited with the initial results of the investments we are making in AI technology, marketing, and infrastructure to position Mondi as a driving force and the rapidly emerging world-class social commerce travel. I'm especially proud of our entire team for making this happen while continuing to deliver a very strong second quarter, and more importantly, putting us on track for an even more exciting rest of 2023 and beyond. Mondi is truly transforming the travel industry with its modern tech platform, connecting airlines, hotels, and vacation rentals with millions of travelers, through an expanding network of travel experts, freelancers, and social media influencers, Bondi is now best poised to capitalize on our investments and penetrate all market segments rapidly with our next generation AI marketplace led by the increasing travel demand for socially based collaboration and personalization of their travel experiences. With our rapidly expanding and segmented distribution network and AI-enabled trip creation, our comprehensive solution also provides suppliers with a one-stop shop to best place excess capacity, unlike the online broadcast distribution channels. This is further enhanced by our ability to offer not only unique privately negotiated value content, but also full fintech solutions and anthologies, many of which also benefit our supply partners. We are thrilled by the progress we expect to make over the next several quarters and the vast opportunity now before us with our next-gen AI-enabled tech platform expanding and deepening content and substantially enhance and expanding distribution. We are uniquely positioned once again to continue disrupting and serving the travel market, which is approximately 2 trillion in size. Thanks for attending our first core learnings call, and we look forward to your ongoing support.

Operator, we're ready for questions now.

Thank you. If you would like to ask a question, you may do so by pressing star followed by one on your telephone keypad. To revoke your question, please press star followed by two. And when preparing for your question, please ensure your phone is unmuted locally. Our first question. That's from Darren Asahi from Roth MKM. Darren, your line is now open. Please go ahead.

Yeah, good morning. Thanks for taking my questions. First one, just some clarification on the commentary about the $20 million investment in the AI marketplace. Like, I guess you guys kind of called out a million dollars in the second quarter, so does it assume the bulk of that investment is going to be made in the second half And then I'm kind of curious, in the context of that number, where is that money going to besides marketing, and what is the rationale that's sort of one time in nature?

Yes, thank you, Darren. I'll add some thoughts on... Oh, Jim, go ahead and add that.

Yeah, I'll... RST is how it starts, and then you go... Yeah, Darren, I was just going to say that, look, you know, we're as we go to the market now with this just, you know, this really industry-leading AI platform, you know, we're going to be rebranding. So there is a one-time investment in branding. There are a number of very significant marketing programs that we will launch that will bring in you know, substantial numbers of travel influencers. And obviously behind travel influencers are all of their followers. And then obviously going through our travel experts, our agents, providing them with not just these tools to do the job better, but the marketing incentives to really get this going quickly. I mean, this is a market window that is substantial. We are the only ones that we believe properly positioned to take advantage of it. Given our, given our, our excellent tech platform. And so this is the time for us to go ahead and, you know, accelerate our investments to, to, to go in and really get significant penetration. So those are the characters of the types of things we're going to be doing. And we've put together a full budget for this, that our marketing team is managing now through the end of the year and, and into 2024.

Thank you, Jim. And just to add a few more thoughts there. I mean, the launch of the new marketplace was always a 2023 project, but the addition of the AI was always more of a 24 one. And thanks to the advancements of our own tech team, we have created what we believe to be the most powerful and the only fully integrated AI travel platform out there. So being a first mover and having this advantage, it makes total sense to deploy additional marketing resources before, you know, a few years from now when other players may develop their own AI platforms, right? So this is a first-mover advantage, and the way to capitalize and maximize the market share is to deploy additional resources in marketing. Another element here is, as Jim mentioned, there is a clear window of opportunity. We have seen... not only in the U.S., but also geographically, parts of Asia, Latin America, Europe, where we are expanding now. We have seen this movement of social media influencers and their interest in travel accelerating in the last few quarters. And then last but not least, in addition to the marketing campaigns you have seen, we have built a team of 14 individuals who came effectively from Amazon, from Google, from Microsoft in the last six or seven months. So this is an enhancement to our marketing team to focus on the new era experts of social media influencers, freelancers, et cetera. And now that we have assembled this team, we feel much more confident, but also we can quantify the types of marketing campaigns that are necessary to attract these new era customers of ours. I don't know if anybody else has anything to add on this.

Yes, I would add, this is Jesus, I would probably also add and point out the fact that we made the decision within the context of understanding our EBITDA still at 255% of 2022 adjusted EBITDA, right? So, you know, I want to make sure that we all also contemplate that.

And we anticipate to invest in our, you know, in implementing and continuing with our EI roadmap. which is important. We are an innovation-led company, and we continue to do that while we are, you know, reaping the benefits from the financially and to our, you know, capturing our market share. We will continue to invest into our AI platform roadmap.

That's all very helpful. Thank you. Just one last one for me. Is there any way to duplicate what organic revenue and EBITDA kind of growth was in the quarter. Thank you.

So as you know, I mean, usually we integrate all of our new acquisitions, get very quickly integrated in our ecosystem and platforms. So we do not track revenues or EBITDA coming out of new acquisitions, simply as that.

Yeah, I mean, and just to highlight here, again, this is Orestis, our strategy when it comes to acquisitions is that we are buying components. that we are adding into our own marketplace, right? So say we buy a company that is giving us hotel content in Latin America, and then we start selling to their customers, and then they, you know, our own content, the flight content, or they start selling to our own 65,000 customers their content, then it's very difficult, even if you keep the performance separately by company, it's very difficult to pinpoint what is organic and what is inorganic. And this is precisely because we're not necessarily buying companies, but we're buying components that we plug into one single and unified marketplace.

Thank you.

Thanks, Darren. Our next question comes from Nick Jones from JMP Securities. Nick, your line is now open. Please go ahead.

Great, thanks for taking the questions. I guess just kind of following up on the updated full year guidance, it looks like probably half of the revenue increase is coming from the SkyPass acquisition. And then with this kind of incremental investment in the back half, it doesn't seem like you're expecting any kind of return on that investment this year. So I guess, can you help contextualize kind of how we should think about the time to return on investment of this incremental kind of second half investment around the marketplace and the AI product?

Yes. Hi, Nick. Thank you for your question. So, yeah, obviously, SkyPass will contribute slightly to that, but it will not represent 100% of the increase of the guidance that we're providing on revenue.

Nick, it's Jim. I'll also just add that, bear in mind, when we acquire a company like that, we're bringing in an excellent management team understands their market well, have tuned their operation to that market. Now there are great synergies to be had from all of this, right? We bring these businesses in, we're able to bring them, provide them with technology they didn't have before, which then allows them to take that out to their customer base. But what we have learned over the several years that we've been doing acquisition successfully and accretively is that you want to do it in a very organized, disciplined and planned way. So, you know, usually we'll look at this and say, while there are immediate synergies to be had, we're going to work off of more like, say, a two- to three-quarter plan to get these things fully integrated, get the synergies so that you don't press too hard. So I think, yes, it's somewhat additive for whatever period of months, but you just have to make sure you be a little – let's say conservative in how you look at the future results and not just try to add them all in and throw the synergies on top day one. So we're generally a little more conservative having done this so successfully time and again over the last several years.

And remember, as we integrate companies to our platform, it creates a change. and change always brings its own challenges. And it takes a few months or a few quarters to settle that out and to get a good ramp in those companies. So our focus is on integration of these companies and not to expect a huge growth or synergies immediately, but to help us to fill in the components into our bigger vision. And while we're focusing you know, organically taking those components and to produce the results. And hence that, you know, the increase in our guidance comes from our overall reason to continue with it while, you know, the recent acquisition adds some contribution to those results, you know, in the next four months.

And Professor, just to answer directly the second part of Nick's question, mean the first part is it has been answered sufficiently that the sky pass is adding a few million out of those five right you can do the the bug of developed math so which means that we are only adding about three million or so from uh the new marketplace which to your point nick yes we anticipate most of the fruit of this incremental of this 20 million incremental investment to come into 2024 and this is because we are targeting uh new era audiences there is a lot of learning in the process uh even when we sign up uh the social media influencers uh so basically we are conservatively assuming that most of the incremental revenue uh will come in 24 with only a small part coming in 23. now it may end up being that we get more uh in 23 uh but again uh it's much more i mean from the new marketplace uh but it's much better to be conservative And also to remind you that this is our fourth quarter that we are reporting as a public company. And in the net revenue segment, we have been beating and raising every single quarter since we went public, right? So there is an element to that as well.

Great. Thanks for taking the questions.

Thanks, Nick. Our next question comes from Brett Nobloch from Cantor Fitzgerald. Brett, your line is now open. Please go ahead.

Thank you, and thanks for taking my questions. I guess the first one, if I look at maybe just revenue by geography, revenue in the U.S. is down 15% year over year, so it looks like most of growth came from international and specifically Brazil, which I guess I believe is coming from the Orta acquisition, because I guess, A, can you just talk to me about why U.S., revenues were down 15% year over year? And D, I guess if you're not tracking organic or inorganic growth from acquisitions you made, what criteria are you using to evaluate if that acquisition was successful or not? And how should we gauge if those acquisitions are successful or not?

Yeah, let me give you a few thoughts. I mean, the first part is that when we show the charts about the different the different geographies, everything is relative as well, right? So if we get more revenues from a certain geography, the percentage of revenues that comes from the US or another geography reduces, right? So that's the first point. The second point with regard to the success of acquisitions, as you know, most of the, all of these acquisitions, a substantial part of the consideration is linked uh to to future performance metrics uh in the form of earnouts right so you will be seeing most of which start to be triggered a year uh ahead uh of uh after the acquisition itself so uh one measure of the success of this acquisition will be whether those targets are made and the earnouts uh are paid right and number three uh and most importantly for us when we are acquiring uh companies like i said before we are acquiring contracts effectively and customers. So in the contract sense, we are evaluating and comparing those contracts. And whenever one of the targets that we acquired in a certain hotel or in a certain airline, they have a better contract, then we incorporate that in our own unified content hub. So basically, from our perspective, the success is number one in the ability to diversify and enrich and improve the content of the entire platform, and number two, to keep adding new customers and new travel experts in geographies where it would have been very difficult to acquire them organically, such as the U.S. and Canada. I don't know, Jim or Prasad, if you have any other thoughts.

No, I think you hit it correctly right at the beginning there, Orestes. I think, Brett, you're looking at a mixed issue. There are relative growth across all of the platforms and all of the geographic platforms. It's just that if some of the areas are growing faster, the relative percentage of one geography over another is going to moderate somewhat. I think that may be what you're seeing. If

Revenue in the U.S. is down 15%. Should I assume that less people are traveling in the U.S. and more of your transactions are international transactions in the quarter?

I mean, we don't see that it's 15% down, as Jim and Aristiz mentioned. It is the market share of that segment is, you know, on the market, that U.S. market is down by 15%, but not the actual, you know, real numbers is down. However, the other markets are going fastly. And by the way, for us, the international is a sweet market, and we see that as an improvement there is what we wanted to anticipate and what we are working for to create a good value for our customers. And historically, which we have a good share of market share in those segments and also countries.

And contribute that and I guess I could it got it then maybe just one last question. The second quarter from a seasonality perspective has historically been your largest quarter for the year. But I guess your guidance implies we're going to see a relatively stronger back half of the year relative to the first half of the year, at least on a net revenue basis. I guess any puts or takes as to why it's going to be different from a seasonality perspective this year relative to the previous two years?

Yeah, I mean, let me give you a few pointers there. Okay, Jim, go ahead and then I'll ask.

I was just going to say part of that, Brett, is, again, with some of these international acquisitions, that will change a little bit the seasonality because there are different seasonalities in different parts of the world. If you think about it, you even have different weather patterns as an example. So given that, what we will see is a little shift in the seasonality. But then the other part, the second part of it is also with what we've just introduced, the new technologies, the new markets that we're opening up, our seasonal pattern is probably going to be off a little bit simply because we will overwhelm that seasonal pattern with the organic growth of the business in all of these different market segments that previously we really weren't playing in very strongly.

There are two factors that impact seasonality. The other two factors that add the factors to the seasonality is the prices in the second quarter, the price of these airline tickets or the transactional cost is very high. And people have usually, when the prices are high, they look for alternative options and look for the other quotas to travel. And we see that trend based on the shopping requests, what we are receiving for the future periods. So this is supported and which we believe that we want to continue in the future period and may increase the transaction count there. And the second aspect is the recovery. So remember that we are only recovering of 88% of our pre-pandemic levels. And as you know, the international markets are opening and, you know, that more and more travel is coming. So it is changing these dynamics day by day. So it's not a linear thing or to follow the historical trends, but also we have to factor in all these important changes and the trends into consideration and which we believe that, you know, the second and third and fourth quarter would be better than second or first quarter. And thirdly, we are a growing business. So we are not thinking about ourselves as just following the trend of last year and doing that. It's about how we take the market share. The market may be having the same seasonality effect, but we plan to take more market share from other players, and that will increase our numbers. That may be different from the previous quarters. What do you understand?

Yeah, and one last point. I mean, I think Prasad and Jim covered all the points, but one last point is that if you look at the last 12 years of our history, Q2 is not our strongest quarter. I mean, Q2 in 22 was a very strong quarter, particularly because you had Omicron in Q1. So a lot of the travel that was going to happen in Q1 happened in Q2, right? So you have that element of the equation for 2022 in particular. But as far as Monday's concerned, traditionally, you know, our strongest quarters were towards the end of the year, specifically Q4. And to that, you have to add all the elements that Jim mentioned, you know, the changing seasonality in geographies we have added, the growth that Prasad mentioned. So if you add all these three, four variables, we are very confident that Q3 and Q4, which will be much stronger than Q2, which itself is an exceptional quarter, so.

Understood. Thank you, guys. Really appreciate it. Congrats on Twitter.

Thanks, Brett. As a reminder, if you would like to ask a question, you may do so by pressing Start followed by 1 on your telephone keypad. My next question is from Mike Brondle from Northland Security. Mike, your line is now open. Please go ahead.

Hey, thanks, guys. Just a couple more questions on the $20 million investment. How would you describe the mix between peer or direct marketing and personnel cost? And then secondly, would you say the marketing dollars are more targeted at influencers or agents? And I'm just trying to understand, you know, in the marketing, what will the hook be for for each one?

So I'll, hey, Mike, it's Jim. I'll start. So I like the last part first. I mean, look, the hook here is if you think about the whole millennial Gen Z, you know, the whole millennial Gen Z buying population, which is now the most significant buying population in travel. I mean, these are tech savvy people to begin with, right? And they are looking for, they're the ones that have most embraced all of the generative AI features that have come out anywhere in any industry vertical. So the hook here is you have, I mean, this is not just AI supporting a little bit of shopping. This is AI supporting the entire experience creation. the entire ability to go hyperlocal, et cetera. So, you know, when you think about that, the hook here is just going to be, it's more than just a new toy. This is truly the new way of, as an individual, building my experiences, right, as an expert or a channel to market of facilitating that happening most effectively, most efficiently. So our hook is not just at the end traveler, it's all the way through the chain here to include the service support, because this is, I mean, the unique thing about our platform is it is fully deployed end to end. So that's primarily on the hook side. In terms of the way we're thinking of the investment that we'll continue to make here, you know, about 50% of it will be in the marketing programs. And then the other 50% is going to be in personnel as well as continued enhancement and deployment of the AI capabilities within our platform. So it's generally in that range.

And just to add a bit more color, right? Sure, go ahead. So just a little bit more color, Mike. You may recall that before we were focusing our marketing mostly on credits. We would go to travel experts and tell them, look, we give you $1,000 credit and you can use it on the first 30 transactions that you make. Now, like you rightly mentioned, we are targeting the new era experts, which is more freelancers and social media influencers. The way that these new customers are making money is they're making 1% of all transactions of their followers that they book through our platform. And then for the traveler, the traveler gets a $10 credit, et cetera, et cetera. So we need to educate the marketer to know, how would you know? If you're an influencer, how would you know about this platform? If you are an traveler, how would you know about the $10 credit? So now we have to do different types of campaigns, which are more performance marketing as opposed to credit. So this basically explains also why we built an additional team to our existing marketing team with 14 individuals with experience in this new era, expert and customer.

Got it.

And then one more. If you look at the overall transactions and take rates, In the second quarter, is there anything to call out there, like air travel was better or worse, hotels, cruises, the ancillaries? Any kind of detailed commentary on that underlying performance, if you will, whether it's transactions or take rates?

I think, Mike, one of the main things to point out is that as we continue expanding on our hotel offering, that take rate is going to continue to improve. And that's probably, as you referred to second quarter, is probably our main driver for that improvement in that take rate.

Okay.

Thank you. That concludes the Q&A for today. I'd like to turn the call back over to Jeff Houston, Senior Vice President. Jeff, please go ahead.

Sure. Thank you, and thanks to all who tuned in for our second quarter 2023 earnings call, whether it was here on the live call, the replay, or reading the transcript. We really appreciate your interest in MONDI and welcome the opportunity to further connect with you. If you have any questions or would like to learn more about MONDI, please don't hesitate to schedule a call with us. You can get more information at our IR site, which is investors.mondi.com, or send an email to ir at mondi.com. Thank you.

This concludes today's call. Thank you for your participation. You may now disconnect your lines.