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Despegar.com Announces 2Q18 Year-over-Year Growth of 18% in Transactions and 12% in Gross Bookings

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Despegar.com, Corp. (NYSE:DESP), ("Despegar" or the "Company") a
leading online travel company in Latin America, today announced
unaudited results for the three- and six-month periods ended June 30,
2018. Financial results are expressed in U.S. dollars and are presented
in accordance with U.S. generally accepted accounting principles.

Second Quarter 2018 Key Highlights

  • Transactions up 18% year-over-year
  • Gross bookings up 12% year-over-year
  • Revenue up 4% year-over-year
  • Packages, Hotels and Other Travel Products accounted for 59% of total
    revenue in 2Q18, up 704 basis points from second quarter 2017
  • Mobile transactions up 37% year-over-year, accounting for 33% of total
    transactions in 2Q18
  • Over 43 million cumulative mobile application downloads as of June 30,
    2018, up 32% year-over-year
  • Adjusted EBITDA decreased 9% year-over-year
  • Operating cash flow of $0.3 million in 2Q18, compared to $7.3 million
    in 2Q17

Message from CEO

Commenting on the Company's results, Damian Scokin, CEO stated, "Against
a challenging macro backdrop, we reported solid second quarter 2018
results, with gross bookings up 12% year-on-year.
Although a good
performance, currency volatility in Latin America hurt overall industry
demand, and caused a mix-shift from international to domestic travel and
impacted FX translation on gross bookings. In this context, we took
advantage of our leading market position and financial strength,
including lowest cost operating structure, to gain market share at an
accelerated pace compared with past quarters.
We also grew twice
as fast as our main competitors in some markets. Additionally, we
continued investing in enhancing customer satisfaction and in technology
to provide new products and services for our customers.
In the
near-term, these actions put pressure on margins, but will drive
benefits in the future, further differentiating us from the competition
and expanding our market share."

Mr. Scokin further commented, "With over two decades experience
operating in the region, we have the expertise and resources to navigate
through various economic cycles and a business model that provides
flexibility.
We are already well positioned with a large and
stable customer base as we continue to see consumers shift their travel
expenditures online and to mobile and believe we will be generating
improved margins when macro conditions improve.
We remain focused
on our long-term strategic priorities.
To that end, we have made
significant progress as higher margin Packages, Hotels and Other Travel
Products now account for 59% of revenue, over one-third of transactions
are now via mobile and NPS after trip experience scores have improved
400 basis points year over year".

               
Operating and Financial Metrics Highlights
(In millions, except as noted)
    2Q18   Pro Forma 2Q17   Adj.   2Q17   % Chg

1H18

 

Pro Forma
1H17

  % Chg
Operating metrics

 

Number of transactions     2.6       2.2           2.2     18 %   5.1       4.3     18 %
Gross bookings   $ 1,184.4     $ 1,061.0         $ 1,061.0     12 % $ 2,415.9     $ 2,080.1     16 %
Mix of mobile transactions     33 %     28 %         28 %       32 %     27 %   -  
Financial metrics                              
Revenues   $ 128.3     $ 123.4     ($0.1 )   $ 123.5     4 % $ 276.8     $ 245.1     13 %
Air     53.2       59.9     (1.1 )     60.9     (11 %) $ 114.1       116.6     (2 %)
Packages, Hotels & Other Travel Products     75.1       63.6     1.0       62.6     18 % $ 162.8       128.4     27 %
Net income     1.2       2.9     (0.5 )     3.4     (57 %)   17.6       15.0     17 %
Adjusted EBITDA     12.0       13.1     (0.1 )     13.2     (9 %)   39.3       37.8     4 %

Note: For comparison purposes, the Company has presented
Pro-forma 2Q17 figures which include the adjustments required
under the new

revenue recognition standards adopted
since the start of 2018. The YoY % change calculated against the
adjusted figures.

 

Overview of Second Quarter 2018 Results

Operating Metrics

Transactions rose 18% to 2.6 million in 2Q18 from 2.2 million in the
year-ago period, while gross bookings increased 12% to $1,184.4 million
in 2Q18, from $1,061.0 million in the second quarter of 2017. Across key
markets in which it operates, particularly Argentina, Despegar faced
slower travel market growth and currency depreciation. Against this
backdrop, the Company was focused on leveraging its strong competitive
position and lowest cost operating structure to accelerate market share
gains at a faster pace than historical, in the $100 billion Latin
American travel market, and improve customer satisfaction levels, which
contributed to higher transaction growth.

The Company's business is organized into two segments: (1) Air, which
consists of the sale of airline tickets, and (2) Packages, Hotels and
Other Travel Products, which consists of travel packages (the bundling
of two or more products together which can include airline tickets and
hotel rooms), as well as stand-alone sales of accommodations (including
hotels and vacation rentals), car rentals, bus tickets, cruise tickets,
travel insurance and destination services.

Despegar's focus on driving growth in the higher-margin Packages, Hotels
and Other Travel Products segment maintains momentum, reaching 42% of
transactions up from 40% in 2Q17. The average selling price ("ASP") in
2Q18 decreased 5% year-over-year to $454 per transaction, mainly
reflecting a mix-shift from international to domestic travel in
Argentina impacted by the challenging economic environment, along with
the effect from overall local currency depreciation, specifically, 30%
in Argentina and 15% in Brazil. This more than offset the continued
mix-shift to higher ASP packages and higher supplier local currency
price increases within similar product segments.

Brazil remains the largest market by transactions for Despegar,
accounting for 42% of total transactions and grew 21% year-over-year in
2Q18. Transactions increased 11% year-over-year in Argentina and 15%
year-over-year in Mexico in the second quarter of 2018.

Despegar continues to make solid progress in driving mobile transaction
growth. During 2Q18, the number of transactions via mobile rose 37%
year-over-year, with 33% of all transactions completed on the mobile
platform, up from 28% in 2Q17.

         
Key Operating Metrics
(In millions, except as noted)
2Q18 2Q17 % Chg
    $   % of total   $   % of total  
Gross Bookings   $ 1,184.4       $ 1,061.0       12 %
Average selling price (ASP) (in $)   $ 454       $ 480       (5 %)
Number of Transactions by Segment & Total                    
Air     1.5   58 %     1.3   60 %   14 %
Packages, Hotels & Other Travel Products     1.1   42 %     0.9   40 %   23 %
Total Number of Transactions     2.6   100 %     2.2   100 %   18 %
 

Revenue

Total revenue increased 4% to $128.3 million in 2Q18, from pro forma
$123.4 million in the year-ago period, reflecting solid growth in
Packages, Hotels & Other Travel Products. Total revenue margin declined
80 basis points year-on-year, to 10.8% in 2Q18, due to reductions in
customer fees and discounts in package transactions to gain market share
during the current weaker demand environment and mix-shift from
international to lower-margin domestic destinations.

  • Air segment revenue was $53.2 million in 2Q18, decreasing 11%
    year-over-year from pro forma $59.9 million in the year-ago period.
    Transactions were up 14% year-on-year resulting in market share gains
    despite increased competition, particularly from the supplier direct
    channel, and slower overall market growth. Higher volumes were offset
    by a 22% decrease in average revenue per transaction resulting from
    the Company's strategy of lowering air customer fees in several
    markets to drive market share gains and provide additional
    cross-selling opportunities, along with a mix-shift from international
    to lower-margin domestic travel driven by local currency depreciation,
    particularly in Argentina.
  • Packages, Hotels & Other Travel Products segment revenue
    rose 18% in the second quarter of 2018 in 2Q18 to $75.1 million, from
    pro forma $63.6 million in 2Q17, driven by a 23% increase in the
    number of transactions, partially offset by a 4% decline in revenue
    per transaction resulting mainly from the slower macro backdrop and
    currency depreciation along with price discounts. The Packages, Hotels
    and Other Travel Products segment accounted for 59% of total revenue
    in 2Q18, up from 52% in the same period of the prior year.
               
Revenue Breakdown1
 
2Q18 Pro Forma 2Q17 Adj. 2Q17 % Chg2
    $   % of total   $   % of total   $   $   % of total  
Revenue by business segment (in $Ms)                                
Air     53.2     41 %     59.9     48 %   (1.1 )     60.9     49 %   (11 %)
Packages, Hotels & Other Travel Products     75.1     59 %     63.6     52 %   1.0       62.6     51 %   18 %

Total revenue

$ 128.3 100 % $ 123.4 100 % ($0.1 ) $ 123.5 100 % 4 %
Revenue per transaction (in $)                                
Air     35.1           45.2         (0.8 )     46.0         (22 %)
Packages, Hotels & Other Travel Products     68.6           71.7         1.1       70.6         (4 %)
Total revenue per transaction   $ 49.2         $ 55.8         ($0.0 )   $ 55.9         (12 %)
 
Total revenue margin     10.8 %         11.6 %             11.6 %       (80) bps
1. Net of sales tax

2. For comparison purposes, the Company has
presented Pro-forma 2Q17 figures which include the adjustments
required under the new revenue recognition

standards
adopted since the start of 2018. The YoY % change calculated
against the adjusted figures.

 

Cost of Revenue and Gross Profit

Cost of revenue, which mainly consists of credit card processing
fees, bank fees related to customer financing installment plans offered
and fulfillment center expenses, was $42.1 million in 2Q18 compared to
$35.1 million in 2Q17, an increase of 20%. As a percentage of revenue,
cost of revenue rose by 438 basis points to 32.8% from 28.4% in the
comparable period a year ago. The increase in cost of revenue was
primarily driven by a higher mix of transactions completed on an
installment plan, a marketing tool the Company uses to drive conversion,
along with higher installment plan costs from the sharp interest rate
hike primarily in Argentina. Incremental costs to operate the
fulfillment center reflecting the Company's increased focus on customer
service also contributed to higher cost of revenues, partially offset by
continued reduction in fraud and efficiency improvements in the
fulfillment center.

Additionally, credit card merchant fee expense increased reflecting a
higher mix of transactions where the Company was the credit card
merchant of record rather than airline suppliers which allowed Despegar
to offer more attractive customer financing options.

Gross Profit decreased 2% year-on-year to $86.2 million in 2Q18,
reflecting lower revenue margins as a result of the Company's
initiatives to accelerate market share growth and investments in support
of improving customer satisfaction levels.

         
Cost of Revenue and Gross Profit
(In millions, except as noted)
    2Q18  

Pro Forma
2Q17

  Adj.   2Q17   % Chg1
Revenue   $ 128.3     $ 123.4     ($0.1 )   $ 123.5     4 %
Cost of Revenue   $ 42.1     $ 35.1         $ 35.1     20 %
% of revenues     32.8 %     28.4 %         28.4 %   +438 bps
Gross Profit     86.2       88.3     (0.1 )     88.4     (2 %)
Gross Profit Margin     67.2 %     71.6 %         71.6 %   (438) bps

1. For comparison purposes, the Company has
presented Pro-forma 2Q17 figures which include the adjustments
required under the new revenue

recognition standards
adopted since the start of 2018. The YoY % change calculated
against the adjusted figures.

 

Operating Expenses

Total operating expenses in 2Q18 decreased 0.5% to $79.2 million,
from $79.6 million in 2Q17 mainly benefiting from the regional currency
depreciation, principally in Argentina which accounts for approximately
half of total operating expenses. As a percentage of revenue, total
operating expenses declined 274 basis points to 61.7%, from 64.5% in the
comparable period a year ago. Year-over-year declines of 120 basis
points in selling and marketing as a percentage of revenue and 184 basis
points in general and administrative, more than offset a 31 basis point
increase in technology and product development expenses.

  • Selling and marketing expenses of $43.5 million were basically
    flat as compared to 2Q17. As a percentage of revenue, selling and
    marketing expenses in 2Q18 decreased to 33.9% from 35.1% in 2Q17,
    benefiting from the regional currency depreciation, a lower level of
    marketing investment and improving efficiencies.
  • General and administrative (G&A) expenses declined 9%
    year-over-year to $17.0 million, from $18.6 million in the second
    quarter of 2017, driven by currency depreciation in Argentina during
    the period and reduced bonus expense. Consequently, G&A as a
    percentage of revenues declined 184 basis points to 13.2% in 2Q18 from
    15.1% in 2Q17.
  • Technology and product development expenses increased 6%
    year-over-year to $18.7 million in 2Q18, compared to $17.6 million in
    2Q17 reflecting increased technology headcount partially offset by
    lower expenses from currency depreciation in Argentina where the
    majority of headcount is based. As a percentage of revenue, technology
    and product expenses increased by 31 basis points year-over-year to
    14.6% as the Company continues to invest in its technology and product
    development platform.
       
Operating Expenses
(In millions, except as noted)
    2Q18  

Pro Forma
2Q17

  2Q17   % Chg1
Selling and marketing   $ 43.5     $ 43.3     $ 43.3    

0.4

%

% of revenues     33.9 %     35.1 %     35.1 %   -120 bps
General and administrative   $ 17.0     $ 18.6     $ 18.6     (9 %)
% of revenues     13.2 %     15.1 %     15.1 %   (184) bps
Technology and product development   $ 18.7     $ 17.6     $ 17.6     6 %
% of revenues     14.6 %     14.3 %     14.3 %   +31 bps
Total operating expenses   $ 79.2     $ 79.6     $ 79.6    

(0.5

%)

Total operating expenses as a % of revenues     61.7 %     64.5 %     64.4 %   (274) bps

1. For comparison purposes, the Company has
presented Pro-forma 2Q17 figures which include the adjustments
required under the new revenue

recognition standards
adopted since the start of 2018. The YoY % change calculated
against the adjusted figures.

 

Financial Income/Expenses

In 2Q18, the Company reported a net financial expense of $5.3 million
compared to a net financial expense of $1.6 million in 2Q17. The
increase was mainly due to higher foreign exchange losses from currency
fluctuations across the region and higher credit card receivable
factoring expenses in Brazil as a result of the increase in gross
bookings. This was partially offset by higher interest income from
invested cash balances.

Income Taxes

The Company reported an income tax expense of $0.5 million in 2Q18,
compared to $3.8 million in 2Q17. The effective tax rate in 2Q18 was
28%, compared to 59% in 2Q17. The lower rate in 2Q18 is primarily driven
by the full recognition of deferred tax assets in certain subsidiaries
that were reduced by a valuation allowance in previous years.

Adjusted EBITDA & Margin

Adjusted EBITDA was $12.0 million in 2Q18 compared to pro-forma $13.1
million in the comparable year-ago period, with the margin contracting
128 basis points to 9.3% from 10.6% in the prior year period. The
reduction in margin is primarily related to lower customer fees in air
and price discounts in packages, together with higher installment
expense to support top line growth.

       
Adjusted EBITDA Reconciliation & Adjusted EBITDA Margin
(In millions, except as noted)  
    2Q18  

Pro Forma
2Q17

  Adj.   2Q17   % Chg1
Net income/ (loss)   $ 1.2     $ 2.9     ($0.5 )   $ 3.4     (57 %)
Add (deduct):                    
Financial expense, net     5.3       1.6           1.6     228 %
Income tax expense     0.5       4.3     0.4       3.8     (89 %)
Depreciation expense     1.5       1.4     -       1.4     8 %
Amortization of intangible assets     2.2       2.0     -       2.0     9 %
Share-based compensation expense     1.3       0.9     -       0.9     36 %
Adjusted EBITDA $ 12.0 $ 13.1 ($0.1 ) $ 13.2 (9 %)
Adjusted EBITDA Margin     9.3 %     10.6 %         10.7 %   (128) bps

1. For comparison purposes, the Company has
presented Pro-forma 2Q17 figures which include the adjustments
required under the new revenue

recognition standards
adopted since the start of 2018. The YoY % change calculated
against the adjusted figures.

 

Balance Sheet and Cash Flow

Unrestricted cash and cash equivalents at June 30, 2018 was $390.7
million, compared to $371.0 million at December 31, 2017, reflecting
cash flow generated during the six-months ended June 30, 2018.

Despegar generated positive cash flow from operating activities of $0.3
million compared to $7.3 million in 2Q17. This reduction was mainly due
to an increase in VAT credits, other tax credits related to a technology
incentive program and a reduction in travel supplier payables.

During 2Q18, the Company's capital expenditures were $7.8 million
compared to $5.4 million during 2Q17. Funds were primarily used for
technology hardware and office expansion.

Subsequent Events

Board of Directors Approves Share Repurchase Program

On August 9, 2018, the Company's board of directors approved a share
repurchase program that enables the Company to repurchase up to $75
million of its shares effective immediately and expiring in one year.
Share repurchases may be made through a variety of methods, including in
the open market, a 10b5-1 program and through privately negotiated
transactions. The timing and number of shares repurchased will depend on
a variety of factors, including price, general business and market
conditions, and alternative investment opportunities.

The Company is not obligated to acquire any specific number of shares
and the repurchase program may be suspended, terminated or modified at
any time for any reason.

Files Registration Statement

We expect to file this week a registration statement with the Securities
and Exchange Commission to register shares held by affiliates of Tiger
Global. The primary purpose of this registration statement is to enable
Tiger Global to distribute its shares to its limited partners as one of
its funds nears its end of life. We expect a majority of the shares
being registered will be distributed to Tiger's LPs.

Argentina Considered Hyperinflationary Market

As of July 1, 2018, as a result of a three-year cumulative inflation
rate greater than 100% and following the guidance of ASC 830 the U.S.
dollar became the functional currency of the Company's Argentine
subsidiary. This change in functional currency is to be recognized
prospectively in the financial statements. As a result, the impact of
any change in currency exchange rate on the Company's balance sheet
accounts will be reported in the Net financial income/(expense) line of
the income statement instead of Other comprehensive income.

2Q18 Earnings Conference Call

 
When: 8:00 a.m. Eastern time, August 16, 2018
 
Who: Mr. Damián Scokin, Chief Executive Officer
Mr. Michael Doyle, Chief Financial Officer
Mr. Javier Kelly, Investor Relations
 
Dial-in: 1-866-270-1533 (U.S. domestic); 1-412-317-0797 (international)
 
Webcast:

CLICK
HERE

 

Use of Non-GAAP Financial Measures

This announcement includes certain references to Adjusted EBITDA and
non-GAAP financial measures. The Company defines:

Adjusted EBITDA is defined as net
income/(loss) exclusive of financial income/(expense), income tax,
depreciation, amortization and share-based compensation expense.

Free cash flow is defined as cash flow from
operating activities less capital expenditures including capitalized
software.

Adjusted EBITDA and Free cash flow are not measures recognized under
U.S. GAAP. Accordingly, readers are cautioned not to place undue
reliance on this information and should note that these measures as
calculated by the Company, may differ materially from similarly titled
measures reported by other companies, including its competitors.
Adjusted EBITDA margin refers to Adjusted EBITDA as defined above
divided by revenue.

Definitions and concepts

Average Selling Price (ASP): reflects gross bookings divided by
the total number of transactions.

Gross Bookings: Gross bookings is an operating measure that
represents the aggregate purchase price of all travel products booked by
the Company's customers through its platform during a given period. The
Company generates substantially all of its revenue from commissions and
other incentive payments paid by its suppliers and service fees paid by
its customers for transactions through its platform, and, as a result,
it monitors gross bookings as an important indicator of its ability to
generate revenue.

Number of Transactions: The number of transactions for a period
is an operating measure that represents the total number of customer
orders completed on our platform in such period. The number of
transactions is an important metric because it is an indicator of the
level of engagement with the Company's customers and the scale of its
business from period to period but, unlike gross bookings, the number of
transactions is independent of the average selling price of each
transaction, which can be influenced by fluctuations in currency
exchange rates among other factors.

Revenue: The Company reports its revenue on a net basis,
deducting cancellations and amounts that it collects as sales taxes.
Despegar derives substantially all of its revenue from commissions and
other incentive payments paid by its suppliers and service fees paid by
its customers for transactions through its platform. To a lesser extent,
Despegar also derives revenue from the sale of third-party
advertisements on its websites and from certain suppliers when their
brands appears in the Company advertisements in mass media.

Revenue Margin: calculated as revenue divided by gross bookings.

Seasonality: Despegar's financial results experience fluctuations
due to seasonal variations in demand for travel services. Bookings for
vacation and leisure travel are generally higher during the fourth
quarter, although to date and prior to the revenue recognition change
beginning in the second quarter of 2018, the Company has recognized more
revenue associated with those bookings in the second quarter of each
year. Latin American travelers, particularly leisure travelers, who are
Despegar's primary customers, tend to travel most frequently at the end
of the fourth quarter and during the second quarter of each year.

About Despegar.com

Despegar is the leading online travel company in Latin America.
Operating across 20 countries, Despegar provides a broad suite of travel
products, including airline tickets, travel packages, hotel bookings and
other travel products to over 17 million customers. With a mission "to
make travel possible", the Company's one-stop marketplace enables
millions of users to find, compare, plan and easily purchase travel
services and products. Through Despegar's websites and leading mobile
apps, it offers products from over 300 airlines, more than 450,000
accommodation options, as well as approximately 1,000 car rental
agencies and approximately 240 destination services suppliers with more
than 7,700 activities throughout Latin America. The Company owns and
operates two well-recognized brands, Despegar, its global brand, and
Decolar, its Brazilian brand. Despegar is traded on the New York Stock
Exchange (NYSE:DESP). For more information, please visit www.despegar.com.

Forward-Looking Statements

This press release may include forward-looking statements. We base these
forward-looking statements on our current beliefs, expectations and
projections about future events and financial trends affecting our
business and our market. Many important factors could cause our actual
results to differ substantially from those anticipated in our
forward-looking statements. Forward-looking statements are not
guarantees of future performance. Forward-looking statements speak only
as of the date they are made, and we undertake no obligation to update
publicly or to revise any forward-looking statements.

-- Financial Tables Follow --

               

Unaudited Consolidated Statements of Operations for the three
and six - month periods ended June

30, 2018 (in
thousands U.S. dollars, except as noted)

 
    2Q18  

Pro Forma
2Q17

  Adj.   2Q17   % Chg2 1H18  

Pro Forma
1H17

  % Chg
Revenue   $ 128,259     $ 123,403     ($59 )   $ 123,462     4 % $ 276,852     $ 245,082     13 %
Cost of revenue     42,088       35,087           35,087     20 %   85,734       66,227     29 %
Gross profit     86,171       88,316     (59 )     88,375     (2 %)   191,118       178,855     7 %
Operating expenses
Selling and marketing     43,450       43,289           43,289     0 %   89,860       78,835     14 %
General and administrative     16,986       18,618           18,618     (9 %)   32,874       37,487     (12 %)
Technology and product development     18,732       17,644           17,644     6 %   37,957       33,052     15 %
Total operating expenses 79,168 79,551 79,551 (0 %) 160,691 149,374 8 %
                               
Operating income     7,003       8,765     (59 )     8,824     (20 %)   30,427       29,481     3 %
Net financial income (expense)     (5,292 )     (1,611 )         (1,611 )   228 %   (8,123 )     (7,767 )   5 %
Net income before income taxes     1,711       7,154     (59 )     7,213     (76 %)   22,304       21,714     3 %
Income tax expense     471       4,254     448       3,806     (89 %)   4,706       6,672     (29 %)
Net income     1,240       2,900     (507 )     3,407     (57 %)   17,598       15,041     17 %
 
Basic EPS (in $)     0.02       0.05           0.06     (64 %)   0.25       0.26     (1 %)
Diluted EPS (in $)     0.02       0.05           0.06     (64 %)   0.25       0.26     (1 %)
 
Basic shares weighted average1     69,179       58,518           58,518         69,142       58,518      
Diluted shares weighted average1     69,189       58,609           58,609         69,152       58,609      
As a % of Revenues                              
Cost of revenue     32.8 %     28.4 %         28.4 %   +438 bps   31.0 %     27.0 %   +395 bps
Gross profit     67.2 %     71.6 %         71.6 %   (438) bps   69.0 %     73.0 %   (395) bps
Operating expenses                              
Selling and marketing     33.9 %     35.1 %         35.1 %   (120) bps   32.5 %     32.2 %   +29 bps
General and administrative     13.2 %     15.1 %         15.1 %   (184) bps   11.9 %     15.3 %   (342) bps
Technology and product development     14.6 %     14.3 %         14.3 %   +31 bps   13.7 %     13.5 %   +22 bps
Total operating expenses     61.7 %     64.5 %         64.4 %   (274) bps   58.0 %     60.9 %   (291) bps
Operating income     5.5 %     7.1 %         7.1 %   (164) bps   11.0 %     12.0 %   (104) bps
Net income before income taxes     1.3 %     5.8 %         5.8 %   (446) bps   8.1 %     8.9 %   (80) bps
Net income     1.0 %     2.4 %         2.8 %   (138) bps   6.4 %     6.1 %   +22 bps
1. In thousands

2. For comparison purposes, the Company has
presented Pro-forma 2Q17 figures which include the adjustments
required under the new revenue recognition

standards
adopted since the start of 2018. The YoY % change calculated
against the adjusted figures.

 
 

Key Financial & Operating Trended Metrics (in thousands
U.S. dollars, except as noted)

 

  Pro Forma    
    1Q17   2Q17   3Q17   4Q17 1Q18   2Q18
FINANCIAL RESULTS      
Revenue   $ 124,999     $ 123,462     $ 131,468     $ 144,011   $ 148,593     $ 128,259  
Revenue Recognition Adjustment     ($3,321 )     ($59 )   $ 1,310     $ 7,578        
Cost of revenue     31,140       35,087       37,869       38,383     43,646       42,088  
Gross profit 90,538 88,316 94,909 113,206 104,947 86,171
Operating expenses
Selling and marketing     35,546       43,289       41,097       46,356     46,410       43,450  
General and administrative     18,869       18,618       15,318       19,821     15,888       16,986  
Technology and product development     15,408       17,644       18,907       19,349     19,225       18,732  
Total operating expenses     69,823       79,551       75,322       85,526     81,523       79,168  
 
Operating income     20,715       8,765       19,587       27,680       23,424       7,003  
Net financial income (expense)     (6,156 )     (1,611 )     (2,880 )     (6,232 )   (2,831 )     (5,292 )
Net income before income taxes     14,559       7,154       16,707       21,448     20,593       1,711  
Adj. Net Income tax expense     2,418       4,254       4,373       2,617     4,235       471  
Income tax expense     2,486       3,806       4,190       1,512     4,235       471  
Adjustment   $ 68       ($448 )     ($183 )     ($1,105 )      
Net income /(loss)     12,141       2,900       12,334       18,831     16,358       1,240  
 
KEY METRICS
Operational
Gross bookings   $ 1,019,102     $ 1,061,026     $ 1,116,022     $ 1,258,398   $ 1,231,497     $ 1,184,355  
- YoY growth     54 %     40 %     32 %     26 %   21 %     12 %
Number of transactions     2,129       2,210       2,298       2,419     2,514       2,607  
- YoY growth     30 %     30 %     25 %     19 %   18 %     18 %
Air     1,246       1,324       1,328       1,386     1,362       1,513  
- YoY growth     34 %     31 %     22 %     13 %   9 %     14 %
Packages, Hotels & Other Travel Products     883       886       970       1,033     1,152       1,094  
- YoY growth     25 %     27 %     29 %     28 %   30 %     23 %
Revenue per transaction   $ 57.2     $ 55.8     $ 57.8     $ 62.7   $ 59.1     $ 49.2  
- YoY growth                   3 %     (12 %)
Air   $ 45.6     $ 45.2     $ 44.3     $ 47.7   $ 44.7     $ 35.1  
- YoY growth                   (2 %)     (22 %)
Packages, Hotels & Other Travel Products   $ 73.5     $ 71.7     $ 76.2     $ 82.7   $ 76.2     $ 68.6  
- YoY growth                   4 %     (4 %)
ASPs   $ 479     $ 480     $ 486     $ 520   $ 490     $ 454  
- YoY growth     18 %     8 %     6 %     6 %   2 %     (5 %)
 
                       
Net income/ (loss)   $ 12,141     $ 2,900     $ 12,334     $ 18,831   $ 16,358     $ 1,240  
Add (deduct):                      
Financial expense, net     6,156       1,611       2,880       6,232     2,831       5,292  
Income tax expense     2,418       4,254       4,373       2,617     4,235       471  
Depreciation expense     1,343       1,362       1,337       1,033     859       1,475  
Amortization of intangible assets     1,517       2,039       2,454       2,741     2,018       2,228  
Share-based compensation expense     1,176       930       959       1,224     983       1,266  
Adjusted EBITDA   $ 24,751     $ 13,096     $ 24,337     $ 32,678   $ 27,284     $ 11,972  
 
 

Unaudited Consolidated Balance Sheets as of June 30, 2018

(in thousands U.S. dollars, except as noted)
 

 

 

 

As of June 30, 2018 As of December 31, 2017
ASSETS      
Current assets      
Cash and cash equivalents   $ 390,716   $ 371,013  
Restricted cash and cash equivalents   $ 12,790   $ 29,764  
Accounts receivable, net of allowances   $ 195,472   $ 198,273  
Related party receivable     6,004     5,253  
Other current assets and prepaid expenses     42,739     29,405  
Total current assets     647,721     633,708  
Non-current assets      
Other Assets     4,789     4,658  
Restricted cash and cash equivalents     10,000     10,000  
Property and equipment net     17,221     16,171  
Intangible assets, net     37,261     35,424  
Goodwill     36,108     38,733  
Total non-current assets     105,379     104,986  
TOTAL ASSETS     753,100     738,694  
LIABILITIES AND SHAREHOLDERS' DEFICIT      
Current liabilities      
Accounts payable and accrued expenses     45,549     45,609  
Travel suppliers payable     153,961     174,817  
Related party payable     94,022     84,364  
Loans and other financial liabilities     23,479     8,220  
Deferred Revenue     1,178     30,113  
Other liabilities     33,336     39,751  
Contingent liabilities     4,061     4,732  
Total current liabilities     355,586     387,606  
Non-current liabilities      
Other liabilities     2,045     1,015  
Contingent liabilities     2,704     7,115  
Related party liability     125,000     125,000  
Total non-current liabilities     129,749     133,130  
TOTAL LIABILITIES     485,335     520,736  
 
SHAREHOLDERS' EQUITY (DEFICIT)      
Common stock     253,535     253,535  
Additional paid-in capital     318,693     316,444  
Other reserves     (728 )   (728 )
Accumulated other comprehensive income     3,681     16,323  
Accumulated losses     (307,416 )   (367,616 )
Total Shareholders' Equity Attributable / (Deficit) to Despegar.com
Corp
    267,765     217,958  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY     753,100     738,694  
 
 

 

Unaudited Statements of Cash Flows for the three and six-month
period ended June 30, 2018 and 2017

(in thousands U.S. dollars, except as noted)
       
3 months ended June 30, 6 months ended June 30,
    2018

2017

  2018 2017
Cash flows from operating activities                
Net income   $ 1,240     $ 3,407     $ 17,598     $ 18,801  
Adjustments to reconcile net income to net cash flow from operating
activities
               
Unrealized foreign currency translation losses     861       28       1,228       686  
Depreciation expense     1,475       1,362       2,334       2,705  
Amortization of intangible assets     2,228       2,039       4,246       3,556  
Stock based compensation expense     1,266       930       2,249       2,106  
Interest and penalties     (257 )     4             454  
Income taxes     142       1,623       3,007       2,795  
Allowance for doubtful accounts     (330 )     175       313       743  
Provision / (recovery) for contingencies     609       302       1,124       779  
Changes in assets and liabilities, net of non-cash transactions                
(Increase) / Decrease in accounts receivable, net of allowances     179       (27,399 )     (17,588 )     (40,544 )
(Increase) / Decrease in related party receivables     68       (122 )     (757 )     (1,386 )
(Increase) / Decrease in other assets and prepaid expenses     (16,871 )     (2,143 )     (27,191 )     430  
Increase / (Decrease) in accounts payable and accrued expenses     (1,970 )   5,523       7,627       13,621  
Increase / (Decrease) in travel suppliers payable     5,427       20,482       9,461       14,251  
Increase / (Decrease) in other liabilities     7,134       3,534       2,507       2,528  
Increase / (Decrease) in contingencies     (3,780 )     (152 )     (4,383 )     (637 )
Increase / (Decrease) in related party liabilities     3,688     (1,864 )     14,230       10,208  
Increase / (Decrease) in deferred revenue     (818 )     (434 )     (1,480 )     (5,815 )
Net cash flows provided by / (used in) operating activities     291       7,295       14,525       25,281  
Cash flows from investing activities                
Payments for short-term investments           (238 )           (238 )
Acquisition of property and equipment     (3,851 )     (1,970 )     (7,264 )     (4,122 )

Increase of intangible assets including internal-use software and
website
development

    (3,987 )     (3,381 )     (6,632 )     (6,157 )
Net cash (used in) /provided by investing activities     (7,838 )     (5,589 )     (13,896 )     (10,517 )
Cash flows from financing activities                
Increase / (Decrease) in loans and other financial liabilities     9,357       5,318       16,376       6,676  
Net cash (used in) / provided by financing activities     9,357       5,318       16,376       6,676  

Effect of exchange rate changes on cash, cash equivalents and
restricted
cash

    (13,653 )     (556 )     (14,276 )     689  

Net increase / (decrease) in cash, cash equivalents

and restricted cash

    (11,843 )     6,468       2,729       22,129  

Cash, cash equivalents and restricted cash as of beginning of the
period

    425,349       134,826       410,777       119,165  
Cash, cash equivalents and restricted cash as of end of the period     413,506       141,294       413,506       141,294  
 

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