Release Date: November 14, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Despegar.com Corp (NYSE:DESP) reported a record high take rate of 14.6%, driven by successful commercial efforts and a focus on package sales.
• The company achieved a 35% year-over-year growth in gross bookings in constant currency, highlighting strong business fundamentals.
• Adjusted EBITDA increased by 94% year-over-year, reaching $48 million, marking a new record for the company.
• Despegar.com Corp (NYSE:DESP) signed a new 10-year lodging outsourcing agreement with Expedia, enhancing growth opportunities and improving net asset position.
• The launch of Sophia, an AI travel assistant, has significantly improved customer engagement and is being offered as a software as a service to business partners.

Negative Points

• Gross bookings declined slightly to $1.3 billion due to foreign exchange headwinds, particularly in Brazil and Mexico.
• Transactions in Mexico declined by 22% year-over-year, impacted by the divestiture of a business unit and reduced domestic air capacity.
• The company faces challenges from foreign exchange headwinds, which impacted reported revenue growth.
• There is a potential risk of take rates decreasing in the future due to competitive pressures and market dynamics.
• Despegar.com Corp (NYSE:DESP) continues to incur FX hedging costs in Argentina to mitigate currency risk, affecting profitability.

Q & A Highlights

• Warning! GuruFocus has detected 6 Warning Signs with DESP.

Q: How should we think about Despegar's ability to maintain the current take rate levels in Q4 and into 2025? A: (Unidentified_8) The company has a strong focus on driving profitable growth, which is evident in the current take rates. While not guiding specifically for 2025, the mid to long-term expectation is to operate at a 13% take rate, considering various strategies and market conditions.

Q: When will the benefits from the new Expedia agreement start reflecting in the P&L? A: (Unidentified_4) The new agreement with Expedia is transformational, and the profitability impact will start reflecting as early as the first quarter of next year. The agreement provides flexibility in sourcing inventory, which is crucial for the growth of our B2B business.

Q: Can you elaborate on the changes in Argentina that led to an inflection in the quarter? A: (Unidentified_4) The market showed a positive trend, and Despegar gained market share by offering unique payment solutions that align with Argentina's FX regulations. This strategy helped us provide significant value to customers and gain market share.

Q: What are the expectations for growth versus margins next year? A: (Unidentified_8) Currently in the budgeting process, the focus is on strategic growth initiatives like SAAS solutions and technology investments. The goal is to position the company for sustained industry-leading growth over the mid to long term, balancing growth and margin considerations.

Q: What is the real impact of FX in Mexico and Brazil, and do you expect this to improve in the short term? A: (Unidentified_4) In Mexico, there is a decline in transactions and FX impact, making foreign travel more expensive. Some factors like air capacity are temporary, and we are optimistic about market recovery in the coming months.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.