Despegar.com Corp

Good morning and welcome to the Despergar second 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.despergar.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 would like to turn the call over to Mr. Luca Pfeiffer, 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 and neutral calculations. Investors should read the definitions 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 substitutes for or superior to GAAP financial measures and are provided as a 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 expectation and belief, and are subject to a number of risks and uncertainties that could cause actual results to materially differ, including factors that may be beyond the company's control. These include, but are not limited to, expectations, assumptions related to the impact of the COVID-19 pandemic, and integration and performance of the businesses we acquire, including Best Day, Stays, and Coins. For a description of these risks, please refer to our filings with the U.S. Security and Exchange Commission and our press release. Speaking on today's call is our CEO, Damian Skokin, who will provide an overview of Desperado's second quarter performance, as well as an update on our strategic initiatives. Alberto Lopez-Gaffney, our CFO, will then discuss the court's financial results in more detail. After that, we'll open the call for questions. Damian, please go ahead.

Thanks, Luca, and good day, everyone. Thank you for joining our earnings call and for your interest in Despegar. We maintained a profitable growth trajectory during the second quarter. Once again, our results evidence that we have the right strategy in place to effectively leverage Despegar's leadership position and core competencies to fully explode both resurgent travel demand in the near term and the long-term dynamics that make LATAM such and attractive travel market. And although we have been investing in expanding the SPGARC travel ecosystem to capture more of the market growth, we have maintained a lean cost structure that drives operating leverage. We are also successfully integrating into the SPGARC ecosystem the targeted acquisitions that we have been making. Whether it is organic or inorganic growth, we are gradually driving earnings power and increasing shareholders' value. With that in mind, let us begin our review of the quarter with some financial highlights on the slide. Solid execution of our growth strategy delivered a third consecutive quarter of positive EBITDA as we continue capitalizing on improving market conditions while also positioning our company to take full advantage of the longer-term growth opportunities in LATAM's massive travel market. Our winning business model and expanding travel ecosystem are enabling us to capture the still strong recovery in travel demand, particularly in Brazil. Strong transaction growth combined with higher ASPs drove gross bookings just above second quarter 2018 levels. And while we grew revenue 113% to $134 million, we did so with a take rate in line with our long-term guidance. Alberto will talk about this later on. Operating expenses increased 37% year on year, as we stepped up marketing efforts to better capture rising demand levels and increase our market share. We also invested more in technology and product development during the quarter. Nevertheless, our operating expenses fell over 5 percentage points year on year to nearly 8% of gross bookings. Higher ASPs and an improving revenue mix combined with the operating leverage we have built into the business resulted in over $10 million in EBITDA, our highest profit level since the outbreak of COVID-19. Also during the quarter, we repurchased $5.5 million worth of Despegar shares as another means to increase shareholder value and in light of the steep discount at which our shares were trading and continue to trade. In July, we bought back another $4.5 million worth of shares. Gross bookings grew 129% year-on-year to $1.1 billion and, as I said, were slightly above second quarter 2018. Granted, second quarter 2018 is not a 100% apples-to-apples comparison given the impact of the rebranding initiative that year. but it's nevertheless a meaningful baseline measure. We successfully capitalized on recovering travel demand across LATAM with our domestic gross bookings exceeding those in last year's comparable quarter by 28%, while our international gross bookings grew 200%, reaching 85% of comparable 2018 level. On the right side of the slide, you can see the geographic distributions of our gross bookings. Brazil accounted for 32% of total gross bookings, up 345% year on year, aided by 106% increase in ASPs, and reaching 77% of second quarter 2019 levels. Mexico represented 22% of our gross bookings, They grew 17%, although transactions decreased 5% year-on-year. Keep in mind that Mexico was one of the first countries to lift mobility restrictions last year, meaning that pent-up demand was lower than in other countries this year. Additionally, there was a decline in domestic flights due to price increases. Compared to second quarter 2018, our gross bookings in Mexico increased significantly. 26%. The rest of LATAM accounted for 46% of our gross bookings, which increased 160% year on year, but were slightly lower than the second quarter 2018, despite an 11% increase in ASPs. Turning to slide six. In addition to the complementary businesses that we have acquired to round out our product portfolio, and enhance Despegal's overall value proposition for travelers, we are stepping up investments in product development. Products we will launch in the near future include early bird packages, which offer significant discounts for booking travel much, much further in advance than is customary. Another new product gives visitors to our travel site the ability to freeze a price before actually booking travel. while still being able to take advantage of any price decrease in the future. And yet, another innovation is automatic adjustments to a customer's travel package, should any of their flights be delayed or cancelled. Building on past experience with other acquisitions, we have been successfully integrating STACE, Brazil's leading channel manager, in the vacation rental segment. Consistent with what we communicated during our investor day in June, through STACE, we have added 20,000 direct listings to the SPGAR inventory of vacation rentals. That equates to 42% year-on-year growth in our inventory. At the same time, we are now generating vacation rental sales outside Brazil, having launched STACE in seven new geographic markets. I would be remiss if I didn't note here that we have already launched the full integration of Viajanet into the Espegar's technology platform. Viajanet is one of Brazil's largest OTAs, thus we have acquired a large customer base into which we are now selling Espegar's higher-margin non-air products. We continue to innovate to provide a complete travel experience at the most competitive price. To that end, we have leveraged our best-in-class IT teams to develop a technology that allows us to compete on par with the market's best OTAs in the miles intermediation business. Also, we continue advancing constructive conversations with our parallel airlines to determine the most effective distribution strategy. During the quarter, we welcomed another 2.6 million customers to our loyalty program, Pasaporte Despegada, that represented and 82% sequential increase in membership. As we've emphasized in the past, the loyalty program helps drive customer engagement and repeat purchases. I will now turn the call to Alberto, who will review our second quarter results in more detail.