Despegar.com Corp

Good morning and welcome to Despachar's first quarter 2022 earnings call. A slide presentation is accompanying today's webcast and is available in the investor section of the company's website, www.investor.despachar.com. There will be an opportunity for you to ask questions at the end of today's presentation. This conference call is being recorded. As a reminder, all participants will be in listen-only mode. Now I'd like to turn the call over to Ms. Natalia Nirenberg, Investor Relations. Please go ahead.

Good morning, everyone, and thanks for joining us today. In addition to reporting financial results in accordance with U.S. generally accepted accounting principles, we discussed certain non-GAAP financial measures and operating metrics, including foreign exchange neutral calculations. Investors should read the definition of these measures and metrics included in our press release carefully to ensure that they understand them. Non-GAAP financial measures and operating metrics should not be considered in isolation as substitute for or superior to GAAP financial measures and are provided as supplemental information only. Before we begin, our prepared remarks allow me to remind you that certain statements made during the course of the discussion may constitute forward-looking statements which are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that will cause actual results to materially differ, including factors that may be beyond the company's control. These include, but are not limited to, expectations and assumptions related to the impact of the COVID-19 pandemic and integration and performance of the businesses we acquire, including Best Day and Coins. For a description of these risks, please refer to our filings with the U.S. Securities and Exchange Commission and our press release. Speaking on today's call is our CEO, Damian Skokin, who will provide an overview of the fourth quarter and update you on our strategic priorities. Alberto Lopez-Hafny, our CFO, will then discuss the quarter's financial results in more detail. After that, we'll open the call for your questions. Damian, please go ahead.

Thanks, Natalia, and good day, everyone. Thank you for joining our earnings call and for your interest in the SPGAP. Our most recent results show that we continue to execute well against our strategy sustaining profitable growth. They also reflect how well positioned Despegar is in a recovering travel market. Omicron impacted demand levels once again, but this was limited to January and February, with the March gross bookings increasing 40% versus January's level. April was equally strong, as we show later in our presentation. For the quarter, gross bookings were 69% of first quarter 2019 levels of performing industry growth. On the other hand, ASPs were sequentially stable at $411, only 6% below the first quarter of 2019. For international transactions, however, gross bookings were 51% of the pre-pandemic levels. It is important to note that across our portfolio, the SPGAS recovery levels in terms of cross-bookings and transactions are higher than air industry growth vis-a-vis 2019. While we are focused on profitability overall, we're investing to gain shares in markets that are performing well, such as Colombia and domestic travel in Brazil. Our revenue margin was exceptionally strong at 14%, up 250 basis points versus first quarter 2018. Travel packages, hotels, and other non-air products accounted for 60% of first quarter revenues. These factors and our improved operational leverage in connection with cost of revenue combined to generate our highest gross margin since the pandemic began, 66.1% versus 66% in the first quarter 2018. We delivered our second consecutive quarter for positive aid justice EBITDA, which was also the highest level for the first quarter since 2018. Excluding COIN, EBITDA rose to over $12 million, even though bookings were still way below our first quarter of 2019 levels. At nearly $30 million, operating cash flow was also solid, as was our cash position at the end of the quarter. We also began the year advancing our M&A strategy with an agreement to acquire 51% of space, the leading channel manager in Brazil's vacation rental market, and adjusting product segments with significant growth potential. More recently, we signed an agreement to acquire 100% of ViaHana, one of Brazil's top travel sites. In a moment, I will elaborate on the ViaHana acquisition and also discuss the strategic alliance we are forming with MOBI in Colombia. Now, please turn to slide four. Now that Omicron is finally behind us and travel restrictions have been lifted in our market, demand has been recovered. The variant also coincided with seasonally slow period. Thankfully, in March and April, we observed the same recovery trend as those last October and November. As you can see in the graph on this slide, gross bookings in March and April reached 85% and 102% of first quarter 2018 levels, respectively. Of note, domestic bookings exceeded first quarter of 2018 by 7%. while international bookings were 51% of that quarter's levels. The recovery of international travel represents an important opportunity for us, as it is where Despelar has a particularly strong track record. On the right side of the slide, we have highlighted the restrictions that impacted travel demand in the quarter, notably Brazil's carnival parades, were postponed to April, while in Mexico and Argentina, travel restrictions were minimized. Slide five. We continue to make targeted acquisitions as another avenue of growth and comprehensive safeguards offered. More recently, we agreed to acquire 100% of Piajanet, one of Brazil's leading OTAs, with $30 million in annual revenues. In addition to expanding our presence in that important market, Piajanet brings a loyal customer base, air travel expertise, and a profitable business that has a great deal of potential when incorporating Espegal's non-air travel products. At the product level, 88% of Viajanet's gross bookings originate in the B2C China and 12% in B2B. Today, 98% of Viajanet's bookings are for air travel. So there's a huge opportunity to cross-sell Despegal's non-air inventory, such as accommodation and travel packages, which also command higher margins. There are other significant similarities that we expect to realize by plugging Despegal's technology platform into the AHAnet system, such as enhanced conversion rates and improved performance marketing capabilities. Finally, total consideration is approximately $70 million to acquire behind it. Let's now move to slide six. Colombia is another key market for us. To cap its large and rapidly growing BNPL market, COINS has established a strategic alliance with MOBI, one of the countries leading B2C and B2B filters. As many of you know, Colombia has a highly underbanked population with limited access to credit. also has fast-growing e-commerce market. The BNPL market there doubled in 2020. Moreover, in six years, BNPL transactions are forecasted to hit $4.5 billion, growing 40% per year. Mobi is expected to be an excellent partner for COVID, with over 3.5 million end users. Mobi has the largest base of active users in Colombia, to whom we can also cross-sell travel products. Mobi also offers the most electronic payments in the B2B segment. Mobi Payments Contractor is offered to more than 60,000 merchants. In Brazil, Coin continues to expand its merchandise beyond Decolar. In the first quarter, merchant TVB, excluding Decolar, increased 117% sequentially. It accounted for 21% of COIN's TTP. During the quarter, we also signed agreements with a number of important merchants, which we have listed on this slide. At the end of March, we had agreements with 92 merchants across verticals that include tourism, education, retail, and others. That concludes my portion of the presentation. Alberto, please go ahead.