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Despegar.com Corp. (DESP)
NYSE:DESP
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Despegar
(NYSE:DESP)
68Neutral
Positive Factors
Acquisition
The deal to sell Despegar to Prosus at $19.50 per share in cash, which is 33% above the previous price, has been agreed upon by certain shareholders, boosting sentiment around the stock.
Financial Performance
Despegar's adjusted EBITDA almost doubled year-over-year, exceeding projections by 19%, indicating strong financial performance.
Negative Factors
Foreign Exchange Impact
Foreign exchange pressure is likely to continue, impacting Despegar's financial performance and posing a risk to future profitability.
Market Recovery
Despegar's recovery in the B2C segment has underperformed the overall Latin American market, with transactions down 28% compared to pre-pandemic levels.
Despegar (DESP) vs. S&P 500 (SPY)
Market Cap
$1.57B
Dividend YieldN/A
Average Volume (3M)2.78M
Price to Earnings (P/E)100370.0
Beta (1Y)1.33
Revenue Growth16.73%
EPS Growth3705.88%
CountryUS
Employees4,593
SectorConsumer Cyclical
Sector Strength54
IndustryTravel Services
Share Statistics
EPS (TTM)0.00
Shares Outstanding83,587,720
10 Day Avg. Volume3,931,741
30 Day Avg. Volume2,780,356
Financial Highlights & Ratios
PEG Ratio27.08
Price to Book (P/B)N/A
Price to Sales (P/S)1.96
Price to Cash Flow (P/CF)N/A
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$19.50Price Target Upside3.12% Upside
Rating ConsensusHold
Number of Analyst Covering1
Despegar Business Overview & Revenue Model
Company DescriptionDespegar.com, Corp., online travel company, provides a range of travel and travel-related products through its websites and mobile applications in Latin America. The company operates in two segments, Air; and Packages, Hotels and Other Travel Products. It offers airline tickets; and travel packages, hotel rooms, car rentals, bus tickets, cruise tickets, travel insurance, destination services, and other travel-related products, which enable consumers to find, compare, plan, and purchase travel products through its marketplace. The company also provides a technology platform for its travel suppliers to manage the distribution of their travel products and access to traveler customers. In addition, it offers travel products and services under the Despegar, Decolar, Best Day, BD Experience, and HotelDo brands. Further, the company operates Koin, an online payment and consumer lending services platform. Despegar.com, Corp. was founded in 1999 and is based in Buenos Aires, Argentina.
How the Company Makes MoneyDespegar makes money primarily through commissions and fees associated with the travel services it offers. The company generates revenue by taking a commission on each booking made through its platform, which includes airline tickets, hotel reservations, and vacation packages. Additionally, Despegar earns from service fees charged to customers for facilitating these bookings. The company also benefits from its partnerships with hotels, airlines, and other travel service providers, which may involve negotiated rates or exclusive deals that enhance its revenue. Despegar's earnings are further bolstered by its ancillary services, such as travel insurance and car rentals, which provide additional streams of income.
Despegar Financial Statement Overview
Summary
Despegar shows strong revenue and profit margin growth, indicating potential for future growth. However, the negative equity and challenges in maintaining free cash flow highlight financial instability. Improved balance sheet and cash flow efficiency are crucial for long-term viability.Income Statement
Despegar's income statement shows a positive trend with substantial revenue growth, evident from the 35.7% increase from 2022 to TTM (Trailing-Twelve-Months). The gross profit margin improved from 66.4% to 71.6%, while net profit margin rose to 5.1%, indicating enhanced profitability. EBIT and EBITDA margins have also improved significantly, underscoring operational efficiency. However, historical losses in earlier years suggest some volatility in earnings.72
Positive
Balance Sheet
The balance sheet reflects financial instability, with a negative equity position of -$80.98 million in TTM, indicating potential solvency issues. The debt-to-equity ratio is not meaningful due to negative equity, but the total debt remains relatively low compared to assets. Although liabilities are high, the company maintains substantial cash reserves, which could buffer against financial distress. Improvement in equity is necessary for a stronger financial standing.45
Neutral
Cash Flow
Despegar's cash flow statement is moderately strong, with a positive free cash flow of $31.99 million in TTM, reflecting improved liquidity management. The operating cash flow to net income ratio is 1.84, indicating good cash conversion efficiency. However, the decrease in free cash flow from the previous year suggests potential challenges in sustaining liquidity if not addressed.65
Positive
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 756.30M | 706.04M | 537.97M | 322.84M | 131.33M | 524.88M | Gross Profit |
| 541.49M | 477.10M | 359.56M | 165.84M | 45.66M | 345.31M | EBIT |
| 114.72M | 64.24M | -1.59M | -91.10M | -173.67M | -8.92M | EBITDA |
| 133.42M | 81.34M | 21.11M | -56.00M | -127.07M | 13.88M | Net Income Common Stockholders |
| 33.67M | 24.49M | -68.53M | -103.61M | -140.65M | -20.91M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 382.30M | 214.57M | 219.17M | 246.08M | 334.43M | 309.19M | Total Assets |
| 796.25M | 898.33M | 804.17M | 823.75M | 844.74M | 767.84M | Total Debt |
| 15.49M | 53.80M | 58.28M | 54.56M | 53.18M | 26.80M | Net Debt |
| -366.81M | -160.78M | -160.88M | -191.52M | -281.25M | -282.39M | Total Liabilities |
| 522.69M | 842.68M | 931.32M | 850.63M | 751.89M | 573.60M | Stockholders Equity |
| 273.56M | 8.95M | -127.15M | -29.48M | 92.85M | 194.24M |
| Cash Flow | Free Cash Flow | ||||
| 32.00M | 61.76M | -4.60M | -59.40M | -121.38M | 14.53M | Operating Cash Flow |
| 70.23M | 102.73M | 26.06M | -38.21M | -103.86M | 51.16M | Investing Cash Flow |
| -40.70M | -52.56M | -50.18M | -26.94M | -14.78M | -36.87M | Financing Cash Flow |
| -34.44M | -38.22M | -15.62M | -1.17M | 158.11M | -54.02M |
Despegar Technical Analysis
Neutral
18.91
Price Trends
19.19
Negative
18.41
Positive
15.52
Positive
Market Momentum
-0.09
Positive
37.17
Neutral
44.59
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DESP, the sentiment is Neutral. The current price of 18.91 is below the 20-day moving average (MA) of 19.11, below the 50-day MA of 19.19, and above the 200-day MA of 15.52, indicating a neutral trend. The MACD of -0.09 indicates Positive momentum. The RSI at 37.17 is Neutral, neither overbought nor oversold. The STOCH value of 44.59 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for DESP.
Despegar Risk Analysis
Despegar disclosed 71 risk factors in its most recent earnings report. Despegar reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Despegar Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $21.61B | 18.74 | 79.84% | 0.24% | 6.64% | 69.85% | |
72 Outperform | $153.76B | 27.14 | -146.32% | 0.77% | 11.11% | 47.03% | |
68 Neutral | $1.57B | 100,369.98 | ― | 16.73% | 3705.88% | ||
65 Neutral | $3.10B | 8.68 | -46.70% | 4.44% | 3.52% | 2.49% | |
61 Neutral | $1.97B | 867.27 | 0.55% | ― | 2.63% | -58.77% | |
59 Neutral | $12.18B | 11.09 | -1.08% | 3.77% | 1.26% | -19.82% | |
40 Underperform | $1.00B | ― | 20.22% | ― | 4.19% | 53.84% |
* Consumer Cyclical Sector Average
Performance Comparison
DESP
Despegar
18.91
7.43
64.72%
EXPE
Expedia
152.37
21.94
16.82%
BKNG
Booking Holdings
4,450.53
957.77
27.42%
TRIP
TripAdvisor
12.98
-14.08
-52.03%
TNL
Travel + Leisure Co
42.84
-1.51
-3.40%
SABR
Sabre
2.34
-0.23
-8.95%
Despegar Earnings Call Summary
Earnings Call Date: Mar 6, 2025 | % Change Since: -1.66% | Next Earnings Date: May 15, 2025
Earnings Call Sentiment Neutral
The call highlighted strong financial performance with record take rates, adjusted EBITDA, and net income growth. Positive developments in partnerships and technology initiatives were significant. However, challenges remain with foreign exchange headwinds and transaction declines in key markets like Mexico, balancing the overall sentiment.Highlights
Record High Take Rate
Achieved a record high take rate of 14.6%, driven by package sales and recovery in Argentina, significantly contributing to revenue growth.
Strong Growth in B2B Segment
B2B gross bookings grew by 23% year-over-year, representing 19% of total gross bookings, reflecting a strong technological platform and new partnerships.
Adjusted EBITDA and Net Income Growth
Adjusted EBITDA increased by 94% year-over-year to $48 million, with an adjusted EBITDA margin at an all-time high of 25%. Adjusted net income rose by 309% year-over-year to $36 million.
Positive Reception of AI Assistant SOFIA
The AI travel assistant SOFIA has seen increased adoption, doubling user interactions every 5 weeks and contributing to a NPS score of 71.1%.
New Partnership with Expedia
Signed a new 10-year lodging outsourcing agreement with Expedia, expected to enhance growth opportunities and improve net asset position.
Loyalty Program Growth
Pasaporte Despegar loyalty program grew by over 50% year-over-year, reaching 30 million members, enhancing customer retention and satisfaction.
Lowlights
Gross Bookings Decline
Gross bookings declined slightly to $1.3 billion due to foreign exchange headwinds, especially in Brazil and Mexico.
Challenges in Mexico
Transactions in Mexico declined by 22% year-over-year due to strategic focus on profitability and reduced air capacity.
Continued FX Headwinds
Foreign exchange challenges impacted revenues across the region, with FX-neutral revenue growth much stronger at 53% year-over-year compared to reported 9%.
Company Guidance
During Despegar's Q3 2024 earnings call, the company reported a robust financial performance with several key metrics highlighted. Gross bookings slightly declined to $1.3 billion due to foreign exchange headwinds, but in constant currency, they exhibited a 35% year-over-year growth. The company achieved a record high take rate of 14.6%, driven by a 250 basis point increase in packaged sales, which now constitute 33% of gross bookings. Total revenues rose 9% year-over-year to $194 million, and when adjusted for foreign exchange, they increased by 53%. Non-air revenues represented 62% of the consolidated top line. The company reported a gross margin of nearly 74%, the strongest since its IPO in 2017, and adjusted EBITDA soared 94% year-over-year to $48 million, with an adjusted EBITDA margin of 25%. Adjusted net income increased 309% year-over-year to $36 million, and adjusted earnings per share rose to $0.34. In the B2B segment, gross bookings grew 23% year-over-year, now accounting for nearly 19% of total gross bookings. Despegar also announced a new 10-year lodging outsourcing agreement with Expedia, set to begin on January 1, 2025.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.