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Despegar.Com (DESP)
NYSE:DESP
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Despegar
(NYSE:DESP)
Rating:72Outperform
Price Target:―
Positive Factors
Acquisition
The deal to sell DESP to Prosus for $19.50 per share in cash is 33% above the previous stock price, indicating a strong premium.
Financial Performance
DESP's adjusted EBITDA almost doubled, exceeding projections by 19%, and management raised its adjusted EBITDA guidance to over $170 million.
Stock Price Target
The price target for DESP has been increased to $19.50 from the prior $14.00, reflecting a more optimistic outlook.
Negative Factors
Cash Flow
Free cash flow conversion is low at 12% of EBITDA due to exclusion of major ongoing costs, with potential decline in future margins.
Foreign Exchange
Foreign exchange pressure is likely to continue, impacting DESP's financial performance negatively.
Market Recovery
DESP's recovery is below market expectations, with transactions down 28% compared to pre-pandemic levels.
Despegar (DESP) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.63B
Dividend YieldN/A
Average Volume (3M)2.27M
Price to Earnings (P/E)102695.6
Beta (1Y)0.81
Revenue Growth9.63%
EPS Growth-113.00%
CountryUS
Employees3,956
SectorConsumer Cyclical
Sector Strength72
IndustryTravel Services
Share Statistics
EPS (TTM)N/A
Shares Outstanding69,236,000
10 Day Avg. Volume1,952,938
30 Day Avg. Volume2,270,731
Financial Highlights & Ratios
PEG Ratio-3.96
Price to Book (P/B)-17.12
Price to Sales (P/S)0.00
P/FCF Ratio55.14
Enterprise Value/Market Cap0.90
Enterprise Value/Revenue0.49
Enterprise Value/Gross Profit2.60
Enterprise Value/Ebitda2.84
Forecast
1Y Price Target
$19.50Price Target Upside0.00%
Rating ConsensusHold
Number of Analyst Covering1
Despegar Business Overview & Revenue Model
Company DescriptionDespegar (DESP) is a leading online travel company in Latin America, providing a comprehensive platform for consumers to book a wide array of travel-related services. The company operates in the travel and tourism sector, offering services such as airline tickets, hotel reservations, car rentals, and vacation packages. Despegar is recognized for its user-friendly website and mobile application, which enable millions of users to access affordable travel options and tailor their travel experiences to their personal preferences.
How the Company Makes MoneyDespegar generates revenue primarily through commissions earned on the sale of travel services, which are offered through its online platform. The company earns a commission from airlines, hotels, car rental companies, and other travel service providers for each booking made by its users. Additionally, Despegar offers value-added services such as travel insurance and destination activities, which contribute to its revenue streams. Strategic partnerships with travel service providers and marketing agreements also play a significant role in the company's earnings by enhancing its service offerings and expanding its customer reach.
Despegar Financial Statement Overview
Summary
Despegar's financial performance shows a positive trajectory with strong revenue growth and improving profit margins. However, negative stockholders' equity and declining cash flow growth are significant concerns for long-term stability.Income Statement
Despegar has shown a strong recovery in revenue with a 9.63% increase in 2024 compared to 2023, continuing the positive trend from previous years. Gross profit margin is robust at 73.09%, indicating good cost management. The net profit margin of 3.61% and improvements in EBIT and EBITDA margins demonstrate a return to profitability, although there is room for further margin enhancement.75
Positive
Balance Sheet
The balance sheet shows a concerning negative stockholders' equity, indicating potential financial instability. The debt-to-equity ratio is not applicable due to negative equity, highlighting leverage issues. However, the company maintains substantial cash reserves, providing some liquidity buffer.50
Neutral
Cash Flow
Despegar's operating cash flow is positive, though it has decreased from the previous year, reflecting challenges in converting revenue into cash. The free cash flow is positive at $27.68 million, showing improved capital efficiency, but the free cash flow growth rate is negative, indicating a decline in cash generation capabilities.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 774.06M | 706.04M | 537.97M | 322.84M | 131.33M | Gross Profit |
| 565.92M | 477.10M | 359.56M | 165.84M | 45.66M | EBIT |
| 123.97M | 64.24M | -1.59M | -91.10M | -173.67M | EBITDA |
| 161.92M | 81.34M | 21.11M | -56.00M | -127.07M | Net Income Common Stockholders |
| 27.91M | 24.49M | -68.53M | -103.61M | -140.65M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 222.79M | 214.57M | 219.17M | 246.08M | 334.43M | Total Assets |
| 904.79M | 898.33M | 804.17M | 823.75M | 844.74M | Total Debt |
| 66.80M | 53.80M | 58.28M | 54.56M | 53.18M | Net Debt |
| -156.00M | -160.78M | -160.88M | -191.52M | -281.25M | Total Liabilities |
| 999.20M | 842.68M | 931.32M | 850.63M | 751.89M | Stockholders Equity |
| -94.41M | 8.95M | -127.15M | -29.48M | 92.85M |
| Cash Flow | Free Cash Flow | |||
| 27.68M | 61.76M | -4.60M | -59.40M | -121.38M | Operating Cash Flow |
| 64.50M | 102.73M | 26.06M | -38.21M | -103.86M | Investing Cash Flow |
| -36.22M | -52.56M | -50.18M | -26.94M | -14.78M | Financing Cash Flow |
| -5.11M | -38.22M | -15.62M | -1.17M | 158.11M |
Despegar Technical Analysis
Positive
19.50
Price Trends
19.22
Positive
19.22
Positive
16.54
Positive
Market Momentum
0.09
Positive
66.67
Neutral
100.00
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DESP, the sentiment is Positive. The current price of 19.5 is above the 20-day moving average (MA) of 19.42, above the 50-day MA of 19.22, and above the 200-day MA of 16.54, indicating a bullish trend. The MACD of 0.09 indicates Positive momentum. The RSI at 66.67 is Neutral, neither overbought nor oversold. The STOCH value of 100.00 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $172.81B | 33.04 | -146.32% | 0.68% | 9.47% | 20.70% | |
77 Outperform | $79.96B | 32.12 | 32.06% | ― | 9.68% | -47.83% | |
75 Outperform | $11.06B | 119.35 | 8.33% | ― | 28.51% | 367.34% | |
74 Outperform | $20.66B | 19.15 | 119.16% | 0.25% | 5.57% | 61.19% | |
74 Outperform | $40.86B | 17.85 | 12.49% | 0.45% | 16.23% | 56.05% | |
72 Outperform | $1.63B | 102,695.56 | 96.85% | ― | 9.63% | -113.00% | |
62 Neutral | $6.88B | 11.26 | 2.78% | 3.93% | 2.65% | -22.00% |
* Consumer Cyclical Sector Average
Performance Comparison
DESP
Despegar
19.50
4.50
30.00%
TCOM
Trip.com Group Sponsored ADR
61.06
8.55
16.28%
EXPE
Expedia
160.72
50.64
46.00%
MMYT
Makemytrip
103.37
24.13
30.45%
BKNG
Booking Holdings
5,332.80
1,568.89
41.68%
ABNB
Airbnb
126.72
-17.75
-12.29%
Despegar Earnings Call Summary
Earnings Call Date:May 15, 2025
(Q3-2024)
| % Change Since: 0.00%|
Next Earnings Date:Aug 14, 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.Q3-2024 Updates
Positive Updates
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.
Negative Updates
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.