6-K 1 a51718067.htm DESPEGAR.COM 6-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15b-16 OF
 THE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2017
Commission File Number 001-38209
DESPEGAR.COM, CORP.
(Exact name of registrant as specified in its charter)
British Virgin Islands
 (Jurisdiction of incorporation or organization)
Juana Manso 999
Ciudad Autónoma de Buenos Aires, Argentina C1107CBR
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ____X___ Form 40-F _______
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]


 Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes _______ No ___X____
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not applicable.

 
 
Despegar.com Announces 3Q17 YoY Growth of 32% in Gross Bookings and 24% in Revenues

Successfully Completes Initial Public Offering
 
Buenos Aires, November 16, 2017 – 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 nine-month periods ended September 30, 2017.  Financial results are expressed in U.S. dollars and are presented in accordance with U.S. generally accepted accounting principles.

Third Quarter 2017 Key Highlights

·
Transactions up 25% YoY
·
Gross bookings and revenues up 32% and 24% YoY, respectively
·
Number of mobile transactions up 55% YoY to 29% of total transactions
·
Over 35 million mobile APP downloads as of September 30, 2017, up 42% YoY
·
Packages, Hotels and Other Travel Products accounted for 55% of total revenue, up from 49% in third quarter 2016
·
Adjusted EBITDA increased 1% YoY, and was up 15% YoY excluding one-time tax recovery gains in both periods
·
Cash flow generated from operating activities of $10.7 million in 3Q17, versus a use of cash of $13.3 million in 3Q16

Message from CEO

“We are pleased today to report our first quarter as a public company with strong and profitable growth,” commented Damian Scokin, Despegar’s CEO. “Our growth and market share gains were a result of ongoing investment in cross-selling initiatives driving increased gross bookings particularly in higher margin Packages, Hotels and Other Travel Products. We are also successfully executing on our mobile strategy, with the share of mobile transactions up significantly year-on-year.”

 “A milestone for the Company during the quarter was the successful completion of our Initial Public Offering with net proceeds to the Company of $254 million which provides financial flexibility and additional resources to continue growing the business. We are beginning a new chapter as a public company, and are in the early stages of the development of the online travel industry in Latin America. We are focused on driving growth by executing on our long-term strategy of cross-selling, improving the customer experience and further broadening our product portfolio to continue the strong momentum across the business.”
 
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Operating and Financial Metrics Highlights
                  
(In millions, except as noted)
                  
                   
     
3Q17
      
3Q16
    
% Chg
  
Operating metrics
                      
Number of transactions
    
2.3
      
1.8
      
25
%
Gross bookings
  
$
1,116
    
$
845
      
32
%
Mix of mobile transactions
    
29
%
    
23
%
    
–
 
Financial metrics
                        
Revenues
  
$
131.5
    
$
106.1
      
24
%
  Air
    
58.5
      
54.6
      
7
%
  Packages, Hotels & Other Travel Products
    
72.9
      
51.5
      
42
%
Net income
    
11.2
      
14.4
      
(22
%)
Adjusted EBITDA
    
23.0
      
22.8
      
1
%
Adjusted EBITDA (Excl. one-time gains)
    
21.0
      
18.4
      
15
%
 
 
Overview of Third Quarter 2017 Results
Operating Metrics

Gross bookings of $1,116.0 million in 3Q17 increased 32% from $844.8 million in 3Q16, while transactions increased 25% to 2.3 million during 3Q17 from 1.8 million in 3Q16 despite the impact in the overall market from the earthquakes and hurricanes in the quarter.  The underlying results reflect ongoing business momentum and steady macroeconomic conditions in the region, despite softer market growth during the quarter as compared to the first half of 2017.

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), as well as stand-alone sales of accommodations (including hotels and vacation rentals), car rentals, bus tickets, cruise tickets, travel insurance and destination services. During 3Q17, 58% of transactions were from Air and 42% from its Packages, Hotels and Other Travel Products segment, compared with 59% and 41%, respectively in 3Q16. The average selling price (ASP) in the third quarter of 2017 increased 6% YoY to $486 per transaction driven by product mix shift to higher ASP packages, destination mix shift to higher ASP international destinations and supplier price increases within similar product segments, reflecting the Company’s strategy to drive growth in the higher-margin Packages, Hotels and Other Travel Products segment. Brazil remains the largest market by transactions for Despegar accounting for 41% of total transactions, increasing 29% YoY in the third quarter. Transactions increased 24% YoY in Argentina and 30% YoY in Mexico in 3Q17.

During 3Q17, the number of transactions via mobile increased 55% YoY, with approximately 29% of all transactions completed on the mobile platform, compared with 23% in 3Q16. As of September 30, 2017, Despegar’s apps had over 35 million cumulative downloads.
 
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Key Operating Metrics
                              
(In millions, except as noted)
                              
     
3Q17   
      
3Q16   
    
% Chg
  
   
 
 $    
% of total
    
 
 $    
% of total
          
Gross Bookings
  
$
1,116.0
          
$
844.8
            
32
%
Average selling price (ASP) (in $)
  
$
486
          
$
459
            
6
%
Number of Transactions by Segment & Total
                                    
  Air
    
1.3
      
58
%
    
1.1
      
59
%
    
22
%
  Packages, Hotels & Other Travel Products
    
1.0
      
42
%
    
0.8
      
41
%
    
29
%
Total Number of Transactions
    
2.3
      
100
%
    
1.8
      
100
%
    
25
%
 
 
Revenue

During the third quarter of 2017 total revenue was up 24% to $131.5 million, compared to $106.1 million in 3Q16 primarily reflecting a strong performance in Packages, Hotels & Other Travel Products. Total revenue margin declined 78 basis points year-on-year, to 11.8% in 3Q17, mainly due to a planned reduction in Air customer fees.

·
Air segment revenue was $58.5 million, compared to $54.6 million in 3Q16, representing a year-over-year increase of 7%. Transaction growth of 22% in the period resulted in market share gains. Volume gains were partially offset by a 12% decrease in average revenue per transaction driven by Company’s strategy to selectively reduce customer fees in this segment to drive market share growth and provide additional cross-selling opportunities. Commissions remained stable.

·
Packages, Hotels & Other Travel Products segment revenue increased 42% in the quarter to $72.9 million, compared to $51.5 million in the same period of the prior year, reflecting increases of 29% in number of transactions and 10% in revenue per transaction driven mainly by a growing share of higher-margin packages to international destinations.  Packages, Hotels and Other Travel Products segment accounted for 55% of total revenue in 3Q17, up from 49% in the same period of the prior year.
 
Revenue Breakdown1
                              
     
3Q17
      
3Q16
    
% Chg
  
   
 
 $    
% of total
    
 
 $    
% of total
          
Revenue by business segment (in $Ms)
                            
  Air
    
58.5
      
45
%
    
54.6
      
51
%
    
7
%
  Packages, Hotels & Other Travel Products
    
72.9
      
55
%
    
51.5
      
49
%
    
42
%
Total revenue
  
$
131.5
      
100
%
  
$
106.1
      
100
%
    
24
%
Revenue per transaction (in $)
                                        
  Air
    
44.1
              
50.1
              
(12
%)
  Packages, Hotels & Other Travel Products
    
75.2
              
68.6
              
10
%
Total revenue per transaction
  
$
57.2
            
$
57.7
              
(1
%)
                                         
Total revenue margin
    
11.8
%
            
12.6
%
          
(78
 )bps 
(1) Net of sales tax
                                        
 
 
Cost of Revenue and Gross Profit

Cost of revenue, which primarily consists of credit card processing fees, bank fees related to customer financing installment plans offered and the cost to operate the fulfillment center, was $37.9 million in 3Q17 compared to $26.2 million in the same period of the prior year, an increase of 45%. Cost of revenue in the period ending 3Q16 includes a one-time tax recovery gain of $4.5 million. Excluding this effect, cost of revenue would have decreased 10 basis points to 28.8% from 28.9% in the same period of the prior year, primarily reflecting higher costs related to enhancements in customer financing installment plans offset by lower fraud and improved efficiency in the fulfillment center.
 
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Gross Profit for 3Q17 of $93.6 million increased 24% Y0Y excluding the one-time tax recovery gain in 3Q16. Gross margin for the quarter was 71.2%, a similar level as 3Q16.
 
Cost of Revenue and Gross Profit
                  
(In millions, except as noted)
                  
                       
     
3Q17
      
3Q16
    
% Chg
  
Revenue
 
$
131.5
    
$
106.1
      
24
%
Cost of Revenue
  
$
37.9
    
$
26.2
      
45
%
   % of revenues
    
28.8
%
    
24.6
%
  
+416
 bps
Gross Profit
    
93.6
      
79.9
      
17
%
  Gross Profit Margin
    
71.2
%
    
75.4
%
  
(416)
 bps 
Adj. Cost of Revenue (Excl. one-time gains)
    
37.9
      
30.6
      
24
%
Adj. Gross Profit (Excl. one-time gains)
    
93.6
      
75.5
      
24
%
Adj. Gross Profit (Excl. one-time gains) Margin
    
71.2
%
    
71.1
%
  
+6
bps
 
 
Operating Expenses

Total operating expenses in 3Q17 were $75.3 million, compared to $60.7 million in 3Q16, a year over year increase of 24% primarily due to higher selling and marketing expenses. As a percent of revenue, total operating expenses were 57.3%, in-line with the same period of the prior year. Lower general & administrative and technology and product development expenses, which decreased 158 basis points Y/Y, largely offset the 169 basis points increase in selling and marketing expenses.

·
Selling and marketing expenses of $41.1 million were 31% higher than 3Q16, slightly below the 32% YoY increase in gross bookings as the Company continues to invest in direct marketing to drive growth.  Selling and marketing expenses as a percentage of revenue in 3Q17 were 31.3% compared to 29.6% in the same period of the prior year, reflecting the reduction in air fees in the period.
 
·
General and administrative (G&A) expenses were $15.3 million, compared to $13.6 million in 3Q16, an increase of 13% YoY due to increased stock compensation expense, consulting expenses, bonus accrual and higher personnel expenses.  G&A expense was 11.7% of revenue and 115 basis points lower than 3Q16.  G&A in 3Q17 includes a one-time tax recovery gain of $2.0 million.
 
·
Technology and product development expenses in 3Q17 increased 20% YoY to $18.9 million, compared to $15.7 million in 3Q16.  As a percent of revenue, technology and product expenses declined 43 basis points during the quarter to 14.4%.

Excluding the $2.0 million tax recovery gain in 3Q17, total operating expenses would have increased 27% YoY and total operating expenses as a percentage of revenue would have increased 163 basis points to 58.8% in 3Q17.
 
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Operating Expenses
                  
(In millions, except as noted)
                  
                       
     
3Q17
      
3Q16
    
% Chg
  
 Selling and marketing
  
$
41.1
    
$
31.4
      
31
%
     % of revenues
    
31.3
%
    
29.6
%
  
+169
 bps 
 General and administrative
  
$
15.3
    
$
13.6
      
13
%
     % of revenues
    
11.7
%
    
12.8
%
  
(115)
 bps
 Technology and product development
  
$
18.9
    
$
15.7
      
20
%
     % of revenues
    
14.4
%
    
14.8
%
  
(43)
 bps
 Total operating expenses
 
$
75.3
    
$
60.7
      
24
%
Total operating expenses as a % of revenues
    
57.3
%
    
57.2
%
  
+11
 bps
 Total operating expenses (Excl. one-time gain)
  
$
77.3
    
$
60.7
      
27
%
Total operating expenses (Excl. one time gain) as a % of revenues
    
58.8
%
    
57.2
%
  
+163
 bps
 
 
Financial Income/Expenses

In the third quarter of 2017, the Company reported a net financial expense of $2.9 million compared to $0.9 million in 3Q16. The increase was primarily due to a decline in financial income from lower foreign exchange gains partially offset by lower credit card receivable factoring expenses in Brazil as a result of a reduction in local interest rates.

Income Taxes

The Company reported an income tax expense of $4.2 million in 3Q17, compared to $4.1 million in 3Q16.  The effective tax rate in 3Q17 was 27%, compared to 22% in 3Q16.  The increase in effective tax rate was due to improved profitability in entities with limitations on the use of tax loss carryforwards, particularly in Brazil.

Adjusted EBITDA & Margin

Adjusted EBITDA in 3Q17 increased 1% to $23.0 million from $22.8 million in 3Q16, with an Adjusted EBITDA margin of 17.5% compared to 21.5% in the prior year period.

Excluding one-time tax recoveries of $4.5 million in 3Q16 and $2.0 million in 3Q17, Adjusted EBITDA would have increased 15%, with Adjusted EBITDA margins of 16.0% in 3Q17 and 17.3% in 3Q16.
 
Adjusted EBITDA Reconciliation & Adjusted EBITDA Margin
              
(In millions, except as noted)
                  
                       
     
3Q17
      
3Q16
    
% Chg
  
Net income/ (loss)
  
$
11.2
    
$
14.4
      
(22
%)
Add (deduct):
                        
      Financial expense, net
    
2.9
      
0.9
      
239
%
      Income tax expense
    
4.2
      
4.1
      
3
%
      Depreciation expense
    
1.3
      
1.5
      
(8
%)
      Amortization of intangible assets
    
2.5
      
2.1
      
19
%
      Share-based compensation expense
    
1.0
      
0.1
      
1818
%
Adjusted EBITDA
  
$
23.0
    
$
22.8
      
1
%
Adjusted EBITDA Margin
    
17.5
%
    
21.5
%
  
(400)
 bps
One-time tax recovery gains
    
2.0
      
4.5
      
(55
%)
Adjusted EBITDA (Excl. one-time gains)
    
21.0
      
18.4
      
15
%
Adjusted EBITDA Mg. (Excl. one-time gains)
    
16.0
%
    
17.3
%
  
(131)
 bps 
 
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Balance Sheet and Cash Flow

Unrestricted cash and cash equivalents at September 30, 2017 were $356.0 million, primarily reflecting net proceeds to the Company of $254.3 million from the recent Initial Public Offering, compared to $75.9 million at December 31, 2016.

The Company generated positive net cash flow from operating activities of $10.7 million in 3Q17 versus a use of cash of $13.3 million in 3Q16. For the nine months ended September 30, 2017 and September 30, 2016, net cash provided by operating activities was $36.0 million versus a use of cash of $60.9 million.

Accounts receivables net of allowances were $160.1 million at September 30, 2017, up 32% from $121.1 million at December 31, 2016 due to the increase in sales volume, accumulation of credit card receivables in Brazil as part of Despegar’s currency hedging strategy along with the Company’s increased use of its own credit card merchant identification in Argentina to improve customer financing alternatives.

Travel suppliers’ payables were $132.5 million, a 30% increase from $ 102.2 million at December 31, 2016 basically in line with sales growth and affected by the mix shift to Packages, Hotels & Other Travel Products that are typically settled on a slower schedule than Air transactions. Related party payables increased 14% to $81.0 million from $71.0 million at December 31, 2016.

Non-current contingent liabilities, declined by $12.4 million, from $22.4 million at December 31, 2016 largely due to the settlement of a fully reserved tax contingency.

Capital expenditures were $5.1 million and $4.3 million in the three month periods ending September 30, 2017 and September 30, 2016 respectively and $15.3 million and $11.8 million in the nine months ending September 30, 2017 and 2016 respectively. Funds were primarily used for software and website development.  The increase reflects the increased investment in technology as well as the expansion of our regional headquarters.

 
Quarter Relevant Events
Despegar.Com, Corp Completes Initial Public Offering
On September 20, 2017, the Company’s ordinary shares began trading on the New York Stock Exchange in the United States.  Despegar sold 10,578,931 primary ordinary shares including the green-shoe generating total net proceeds to the Company of $254.3 million.  The IPO price was $26 per share. Funds are expected to be used in support of the Company’s growth initiatives.
 
 
3Q17 Earnings Conference Call

When:
5:30 p.m. Eastern time, November 16, 2017
 
 
Who:
 Mr. Damián Scokin, Chief Executive Officer
 
Mr. Michael Doyle, Chief Financial Officer
 
Ms. Ines Lanusse, IR and External Communication Manager
 
 
Dial-in:
1-833-299-8120 (U.S. domestic); 1-647-788-3415 (international)
 
 
Webcast:
https://event.on24.com/wcc/r/1525833/49C5FBF40B5900745EC173A97BC9A628
 
 
Replay:
Participants can access the replay through December 16, 2017 by dialing: 1-800-585-8367 (U.S. domestic) and 1-416-621-4642 (international). Replay ID: 98672740.

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Use of Non-GAAP Financial Measures

This announcement includes certain references to Adjusted EBITDA and Free Cashflow, 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.

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

Adjusted EBITDA and Free cashflow 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, the 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 the Company has recognized more revenue associated with those bookings in the first 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 first quarter of each year.
 
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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 16 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 250 airlines and more than 300,000 hotels, as well as approximately 900 car rental agencies and approximately 250 destination services suppliers with more than 7,000 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 includes forward-looking statements. We have based these forward-looking statements largely 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.

Investor Relations Contact

 Ines Lanusse
IR and External Communications Manager
Phone: (+5411) 4894 3582
E-mail: investorelations@despegar.com
 
-- Financial Tables Follow --
 
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Unaudited Consolidated Statements of Operations for the Three- and Nine-Month Periods ended September 30, 2017 and 2017
(in thousands U.S. dollars)
                                             
     
3Q17
      
3Q16
    
% Chg
      
9M17
      
9M16
    
% Chg
  
Revenue
  
$
131,468
    
$
106,088
      
24
%
  
$
379,929
    
$
300,000
      
27
%
Cost of revenue
    
37,869
      
26,150
      
45
%
    
104,096
      
93,396
      
11
%
Gross profit
    
93,599
      
79,938
      
17
%
    
275,833
      
206,604
      
34
%
Operating expenses
                                                
      Selling and marketing
    
41,097
      
31,374
      
31
%
    
119,932
      
89,084
      
35
%
      General and administrative
    
15,318
      
13,576
      
13
%
    
52,805
      
42,722
      
24
%
      Technology and product development
    
18,907
      
15,718
      
20
%
    
51,959
      
47,221
      
10
%
Total operating expenses
    
75,322
      
60,668
      
24
%
    
224,696
      
179,027
      
26
%
                                                 
Operating income
    
18,277
      
19,270
      
(5
%)
    
51,137
      
27,577
      
85
%
Net financial income (expense)
    
(2,880
)
    
(850
)
    
239
%
    
(10,647
)
    
(4,889
)
    
118
%
Net income before income taxes
    
15,397
      
18,420
      
(16
%)
    
40,490
      
22,688
      
78
%
Income tax expense
    
4,190
      
4,067
      
3
%
    
10,482
      
8,891
      
18
%
Net income
    
11,207
      
14,353
      
(22
%)
    
30,008
      
13,797
      
117
%
                                                 
Basic EPS
    
0.19
      
0.25
              
0.51
      
0.24
          
Diluted EPS
    
0.19
      
0.25
              
0.51
      
0.24
          
                                                 
Basic shares weighted average1 
    
59,694
      
58,518
              
58,910
      
58,518
          
Diluted shares weighted average1 
    
58,653
      
58,609
              
59,001
      
58,609
          
As a % of Revenues
                                                
Cost of revenue
    
28.8
%
    
24.6
%
  
+416
bps     
27.4
%
    
31.1
%
  
(373)
 bps 
Gross profit
    
71.2
%
    
75.4
%
  
(416)
 bps     
72.6
%
    
68.9
%
  
+373
  
Operating expenses
                                                
      Selling and marketing
    
31.3
%
    
29.6
%
  
+169
bps     
31.6
%
    
29.7
%
  
+187
 
      General and administrative
    
11.7
%
    
12.8
%
  
(115)
bps    
13.9
%
    
14.2
%
  
(34)
 bps 
      Technology and product development
    
14.4
%
    
14.8
%
  
(43)
bps    
13.7
%
    
15.7
%
  
(206)
 bps 
Total operating expenses
    
57.3
%
    
57.2
%
  
+11
bps    
59.1
%
    
59.7
%
  
(53)
 bps 
Operating income
    
13.9
%
    
18.2
%
  
(426)
 bps     
13.5
%
    
9.2
%
  
+427
bps
Net income before income taxes
    
11.7
%
    
17.4
%
  
(565)
 bps     
10.7
%
    
7.6
%
  
+309
bps 
Net income
   
8.5
%
    
13.5
%
  
(500)
 bps    
7.9
%
    
4.6
%
  
+330
bps 
1. In thousands
                                                
 
9 of 12
 
 
Key Financial & Operating Trended Metrics
(in thousands U.S. dollars, unless otherwise stated)
                                                         
     
1Q16
      
2Q16
      
3Q16
      
4Q16
      
1Q17
      
2Q17
      
3Q17
  
FINANCIAL RESULTS
                                                        
Revenue
  
$
95,115
    
$
98,797
    
$
106,088
    
$
111,162
    
$
124,999
    
$
123,462
    
$
131,468
  
Cost of revenue
    
33,494
      
33,752
      
26,150
      
33,279
      
31,140
      
35,087
      
37,869
  
Gross profit
    
61,621
      
65,045
      
79,938
      
77,883
      
93,859
      
88,375
      
93,599
  
Operating expenses
                                                        
      Selling and marketing
    
28,577
      
29,133
      
31,374
      
32,382
      
35,546
      
43,289
      
41,097
  
      General and administrative
    
15,186
      
13,960
      
13,576
      
21,961
      
18,869
      
18,618
      
15,318
  
      Technology and product development
    
15,561
      
15,942
      
15,718
      
16,030
      
15,408
      
17,644
      
18,907
  
Total operating expenses
    
59,324
      
59,035
      
60,668
      
70,373
      
69,823
      
79,551
      
75,322
  
                                                         
Operating income
    
2,297
      
6,010
      
19,270
      
7,510
      
24,036
      
8,824
      
18,277
  
Net financial income (expense)
    
(386
)
    
(3,653
)
    
(850
)
    
(1,863
)
    
(6,156
)
    
(1,611
)
    
(2,880
)
Net income before income taxes
    
1,911
      
2,357
      
18,420
      
5,647
      
17,880
      
7,213
      
15,397
  
Income tax expense
    
2,646
      
2,178
      
4,067
      
1,647
      
2,486
      
3,806
      
4,190
  
Net income /(loss)
    
(735
)
    
179
      
14,353
      
4,000
      
15,394
      
3,407
      
11,207
  
                                                         
KEY METRICS
                                                        
Operational
                                                        
Gross bookings
  
$
661,577
    
$
755,413
    
$
844,782
    
$
998,462
    
$
1,019,102
    
$
1,061,026
    
$
1,116,022
  
- YoY growth
    
(19
%)
    
(13
%)
    
(10
%)
    
3
%
    
54
%
    
40
%
    
32
%
Number of transactions
    
1,632
      
1,706
      
1,839
      
2,035
      
2,129
      
2,210
      
2,298
  
- YoY growth
    
(6
%)
    
(8
%)
    
(9
%)
    
(3
%)
    
30
%
    
30
%
    
25
%
 Air
    
927
      
1,009
      
1,089
      
1,225
      
1,246
      
1,325
      
1,328
  
- YoY growth
    
(1
%)
    
(4
%)
    
(4
%)
    
(3
%)
    
34
%
    
31
%
    
22
%
 Packages, Hotels & Other Travel Products
    
704
      
697
      
750
      
810
      
883
      
885
      
970
  
- YoY growth
    
(13
%)
    
(12
%)
    
(16
%)
    
(2
%)
    
25
%
    
27
%
    
29
%
Revenue per transaction
  
$
58.3
    
$
57.9
    
$
57.7
    
$
54.6
    
$
58.7
    
$
55.9
    
$
57.2
  
- YoY growth
    
5
%
    
4
%
    
8
%
    
0
%
    
1
%
    
(4
%)
    
(1
%)
 Air
  
$
44.8
    
$
50.2
    
$
50.1
    
$
48.1
    
$
44.8
    
$
46.0
    
$
44.1
  
- YoY growth
    
(11
%)
    
(4
%)
    
4
%
    
(4
%)
    
(0
%)
    
(8
%)
    
(12
%)
 Packages, Hotels & Other Travel Products
  
$
76.1
    
$
69.1
    
$
68.6
    
$
64.4
    
$
78.4
    
$
70.7
    
$
75.2
  
- YoY growth
    
23
%
    
16
%
    
13
%
    
5
%
    
3
%
    
2
%
    
10
%
ASPs
  
$
405
    
$
443
    
$
459
    
$
491
    
$
479
    
$
480
    
$
486
  
- YoY growth
    
(13
%)
    
(6
%)
    
(1
%)
    
6
%
    
18
%
    
8
%
    
6
%
                                                         
                                                         
Net income/ (loss)
  
$ 
(735
)
  
$
179
    
$
14,353
    
$
4,000
    
$
15,394
    
$
3,407
    
$
11,207
  
Add (deduct):
                                                        
      Financial expense, net
    
386
      
3,653
      
850
      
1,863
      
6,156
      
1,611
      
2,880
  
      Income tax expense
    
2,646
      
2,178
      
4,067
      
1,647
      
2,486
      
3,806
      
4,190
  
      Depreciation expense
    
1,265
      
1,263
      
1,450
      
1,111
      
1,343
      
1,362
      
1,337
  
      Amortization of intangible assets
    
1,728
      
1,918
      
2,060
      
2,129
      
1,517
      
2,039
      
2,454
  
      Share-based compensation expense
    
50
      
50
      
50
      
424
      
1,176
      
930
      
959
  
Adjusted EBITDA
  
$
5,340
    
$
9,241
    
$
22,830
    
$
11,174
    
$
28,072
    
$
13,155
    
$
23,027
  
 
10 of 12
 
 
Unaudited Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016
(in thousands U.S. dollars)
             
   
As of September 30, 2017
    
As of December 31, 2016
  
ASSETS
            
Current assets
            
Cash and cash equivalents
  
$
356,018
    
$
75,968
  
Restricted cash and cash equivalents
    
30,020
      
22,738
  
Accounts receivable net of allowances
    
160,061
      
121,098
  
Related party receivable
    
4,581
      
2,240
  
Other current assets and prepaid expenses
    
32,837
      
27,184
  
Total current assets
    
583,517
      
249,228
  
Non-current assets
                
Restricted cash and cash equivalents
    
10,000
      
20,459
  
Property and equipment net
    
15,413
      
13,717
  
Intangible assets net
    
34,236
      
31,412
  
Goodwill
    
40,023
      
38,894
  
Total non-current assets
    
99,672
      
104,482
  
TOTAL ASSETS
    
683,189
      
353,710
  
LIABILITIES AND SHAREHOLDERS’ DEFICIT
                
Current liabilities
                
Accounts payable and accrued expenses
    
39,512
      
25,335
  
Travel suppliers payable
    
132,502
      
102,237
  
Related party payable
    
80,962
      
71,006
  
Loans and other financial liabilities
    
8,092
      
7,179
  
Deferred Revenue
    
24,003
      
29,095
  
Other liabilities
    
51,961
      
49,686
  
Contingent liabilities
    
4,546
      
3,613
  
Total current liabilities
    
341,578
      
288,151
  
Non-current liabilities
                
Other liabilities
    
1,302
      
409
  
Contingent liabilities
    
10,011
      
22,413
  
Related party liability
    
125,000
      
125,000
  
Total non-current liabilities
    
136,313
      
147,822
  
TOTAL LIABILITIES
    
477,891
      
435,973
  
                 
SHAREHOLDERS’ EQUITY (DEFICIT)
                
Common stock 1
    
254,311
      
6
  
Additional paid-in capital
    
315,220
      
312,155
  
Other reserves
    
(728
)
    
(728
)
Accumulated other comprehensive income
    
16,469
      
16,286
  
Accumulated losses
    
(379,974
)
    
(409,982
)
Total Shareholders' Equity Attributable to Despegar.com Corp
    
205,298
      
(82,263
)
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
    
683,189
      
353,710
  
1. Represents 58,518 (at USD 0.0001) and 10,579 (issued at USD 26, incorporated at USD 24, net of issuance expenses) thousands shares issued and outstanding at September 30, 2017 and 58,518 (at USD 0.0001) thousands shares issued and outstanding at December 31, 2016.
  
 
11 of 12
 
 
Unaudited Statements of Cash Flows for the three and nine-month periods ended September 30, 2017 and 2016
(in thousands U.S. dollars)
             
   
3 months ended September 30,
   
9 months ended September 30,
 
   
2017
    
2016
    
2017
    
2016
  
Cash flows from operating activities
                        
Net income / (loss)
  
$
11,207
    
$
14,353
    
$
30,008
    
$
13,797
  
Adjustments to reconcile net income / (loss) to net cash flow from operating activities
                                
Unrealized foreign currency translation losses
    
(229
)
    
(384
)
    
457
      
610
  
Depreciation expense
    
1,337
      
1,450
      
4,042
      
3,978
  
Amortization of intangible assets
    
2,454
      
2,060
      
6,010
      
5,706
  
Stock based compensation expense
    
959
      
50
      
3,065
      
150
  
Interest and penalties
    
156
      
702
      
610
      
1,058
  
Income taxes
    
3,081
      
3,021
      
5,876
      
3,730
  
Allowance for doubtful accounts
    
(55
)
    
435
      
688
      
1,832
  
Provision / (recovery) for contingencies
    
(1,285
)
    
(100
)
    
(506
)
    
(222
)
Changes in assets and liabilities, net of non-cash transactions 
                                
(Increase) / Decrease in accounts receivable, net of allowances
    
944
      
(15,374
)
    
(39,600
)
    
(49,041
)
(Increase) / Decrease in related party receivables
    
(956
)
    
(290
)
    
(2,342
)
    
(400
)
(Increase) / Decrease in other assets and prepaid expenses
    
(6,921
)
    
(3,640
)
    
(6,491
)
    
(233
)
Increase / (Decrease) in accounts payable and accrued expenses
    
864
      
2,402
      
14,485
      
(9,946
)
Increase / (Decrease) in travel suppliers payable
    
14,579
      
4,915
      
28,830
      
(28,921
)
Increase / (Decrease) in other liabilities
    
(5,765
)
    
3,346
      
(3,237
)
    
555
  
Increase / (Decrease) in contingencies
    
(9,484
)
    
(5,098
)
    
(10,121
)
    
(197
)
Increase / (Decrease) in related party liabilities
    
(865
)
    
(18,097
)
    
9,343
      
4,781
  
Increase / (Decrease) in deferred revenue
    
692
      
(3,013
)
    
(5,123
)
    
(8,150
)
Net cash flows provided by / (used in) operating activities
    
10,713
      
(13,262
)
    
35,994
      
(60,913
)
Cash flows from investing activities
                                
Payments for short-term investments
    
238
      
–
      
–
      
40,013
  
Acquisition of property and equipment
    
(2,232
)
    
(1,693
)
    
(6,354
)
    
(3,568
)
Increase of intangible assets including internal-use software and website development
    
(2,830
)
    
(2,570
)
    
(8,987
)
    
(8,253
)
(Increase) / Decrease in restricted cash and cash equivalents
    
9,518
      
(3,569
)
    
4,045
      
(4,027
)
Net cash (used in) /provided by investing activities
    
4,694
      
(7,832
)
    
(11,296
)
    
24,165
  
Cash flows from financing activities
                                
Increase in loans and other financial liabilities
    
530
      
2,500
      
9,848
      
4,500
  
Decrease in loans and other financial liabilities
    
(6,247
)
    
–
      
(8,889
)
    
(1,000
)
Capital contributions
    
254,305
      
–
      
254,305
      
–
  
Net cash provided by financing activities
    
248,588
      
2,500
      
255,264
      
3,500
  
Effect of exchange rate changes on cash and cash equivalents
    
(84
)
    
(113
)
    
88
      
(2,006
)
Net increase / (decrease) in cash and cash equivalents
    
263,911
      
(18,707
)
    
280,050
      
(35,254
)
Cash and cash equivalents as of beginning of the period
    
92,107
      
85,569
      
75,968
      
102,116
  
Cash and cash equivalents as of end of the period
    
356,018
      
66,862
      
356,018
      
66,862
  
 
12 of 12
 
Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


DESPEGAR.COM, CORP.

 
 

By: /s/ MICHAEL DOYLE

Name: Michael Doyle

Title: Chief Financial Officer

 
 

Date: November 16, 2017