Despegar.com Corp

Ladies and gentlemen, thank you for your patience. This call is due to start in a couple minutes time. Good morning, and welcome to Despargar's fourth quarter 2022 earnings call. The slide presentation is accompanying today's webcast and is available in the investor section of the company's website, www.investor.despargar.com. There will be an opportunity for you to ask questions at the end of today's presentation. This conference call is being recorded, and as a reminder, all participants will be in listen-only mode. Now I'd 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 unaudited 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 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 substitute for or superior to GAAP financial measures and are provided as supplemental information only. Before we begin our prepared remarks, please turn to slide two and 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 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 and assumptions related to the impact of the COVID-19 pandemic and the integration and performance of the businesses we acquire, including Best Day, Stace, Via Hanet, and Coin. For 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 Despargar's fourth quarter performance, as well as an update on strategic initiatives. Alberto Lopez-Gaffney, our CFO, will then discuss the quarter financial results in more detail, after which Damian will end our prepared remarks providing annual guidance and a wrap-up before opening the call for your questions. Damian will begin his remarks in slide three. Damian, please go ahead.

Thanks, Luca, and good day, everyone. Thank you for joining today's earnings call and for your interest in Despegado. We continue executing our growth strategy with focus and discipline, leading to Despegado's highest EBITDA since the global travel market was hit by the COVID-19 pandemic. We achieved this even with expected weak travel demand during the fourth quarter, normally our strongest one. Over the last two months, we've seen demand levels rebound strongly, and therefore we are expecting first quarter revenues to increase around 40% versus last year, and almost 20% versus 2019. We have adjusted EBITDA in US dollars for the Q1 in the mid-teens area, implying an EBITDA above the 2019 levels. With the travel recovery regaining its strength, we are also bullish about the remainder of the year. Later in our presentations, we'll talk more about the annual guidance that we publish with this morning's earnings release. The discipline execution that I mentioned is reflected in our fourth quarter take rate. which rose sequentially and was well above our long-term target of 12 to 12.5%. That helped offset weak travel demand, driving revenues significantly higher year on year, and keeping them in line with fourth quarter 2018. It also helped us book our fifth consecutive quarter of positive EBITDA, which rose sequentially and year on year to 12.5 million. our improving revenue mix and higher ASPs also contributed to EBITDA growth. Importantly, as we continue driving profitability higher, we are better able to make the strategic investments that are building additional scale and other competitive advantages that reinforce Despegar's market leadership in the long term. Overall, the operational leverage we built into the business and the growth that we expect to generate this year and beyond are expected to continuously drive our earnings power as we communicated in our last investor day lastly on this slide given our solid 2022 performance our expectations for 2023 and considering the performance trajectory that we outline at the investor day we think that our shares are grossly undervalued Please turn to slide four. The fourth quarter weakness in industry travel demand that I highlighted was across our markets, particularly for international travel, which contracted approximately 13% sequentially on average based on air passengers. Nonetheless, our gross bookings rose 10% year on year to 1.1 billion on higher ASPs, which increased 29%. And, as I noted earlier, we are experiencing a strong rebound in demand levels based on January and February's numbers. Let's take a closer look at growth bookings in the fourth quarter to explain the transitory weakness in the market. Starting with Mexico, we observed a sequential industry decline in international passenger traffic of more than 12%. This market trend coupled with our continued focus on profitability, particularly in Mexico, led to a quarter-on-quarter decrease in gross bookings. Nonetheless, our gross bookings increased 5% year-on-year on the back of higher ASPs, which rose 40% in the same period. In Brazil, our gross bookings were sequentially stable and up 44% year-on-year. We continued investing in raising the visibility of the Despegar brand in this market and gaining additional traction, specifically with international travel, which is experiencing a strong year-on-year recovery in Brazil. Like Mexico, ASPs rose sharply with airfares due to holiday travel and higher inflation, which in turn impacted prices for other travel services. Overall travel demand in Brazil was 79% of the fourth quarter of 2018 levels in terms of passenger traffic. In the rest of LATAM, our gross bookings decreased 7% sequentially in line with the demand contraction we observed in the region. This mostly impacted international travel as in Mexico. I'll now turn the call to Alberto for a deeper dive on our revenue and profitability, starting with slide five.