1Q23 Financial and Operating Highlights Message from the CEO<\/b><\/p>\n \nCommenting on the Company\u2019s performance, Damian Scokin, CEO, said:<\/i><\/p>\n \nOur Q1 performance was strong across the board, achieving record-high revenue in the seasonally weakest travel period as well as $17.3 million in EBITDA, our strongest since 1Q18. The quarter\u2019s performance reflects our ability to consistently deliver the best travel experience to customers while maintaining our disciplined focus on profitable growth and leveraging Despegar\u2019s scale with suppliers.<\/p>\n \nOur strategy to enhance the revenue mix resulted in a significant rise in the proportion of higher margin vacation packages – which accounted for 34% of total Gross Bookings, up from 30% in 1Q22. At the same time, we grew transactions 5% year-on-year while maintaining a high Take Rate of 13.8%, supported by the continuing recovery in Latam travel demand, particularly with regards to international traffic.<\/p>\n \nFrom a geographic standpoint, we are particularly pleased with the performance of our Brazilian business. Gross Bookings in Brazil grew 89% YoY to $458 million, as demand for international traffic continued to recover, while transactions increased 35% in the same period.<\/p>\n \nOperating leverage helped drive profitability even higher during the first quarter. Specifically, General and Administrative expenses and Technology and Product Development costs as a percentage of Gross Bookings declined 96 bps and 32 bps, respectively. Our continued focus on operating efficiency yielded an 11% EBITDA margin. In line with our margin expansion, we remain on track to achieve the financial guidance that we gave during our previous earnings call.<\/p>\n \nThe performance of our Buy Now Pay Later business, Koin, also continued to improve. Despite Brazil\u2019s still challenging economy and credit market, Koin\u2019s EBITDA improved $2.1 million YoY to negative $2.5 million, another step closer to reaching breakeven in the second half of this year.<\/p>\n \nInnovation remains a cornerstone of our corporate strategy to continually strengthen Despegar\u2019s competitive position and extend our leadership in Latin America. With that in mind, we have implemented new features on our landing page and mobile app that not only enhance customer engagement but also improve cross selling opportunities, such as travel package sales. For customers interested in being aided by an agent during the booking process, we launched a video-assisted sales channel helping customers transition from offline to online. This not only improves conversion rates, but also enables our sales team to cross sell travel products, such as travel insurance and extra baggage. Initial results across all initiatives have been very encouraging, helping us better monetize Despegar\u2019s customer base.<\/p>\n \nIn summary, our first quarter results demonstrate Despegar\u2019s growing earnings power as we leverage the ongoing recovery in international travel, enabling us to meet both our near and long-term performance guidance, all while continually improving the overall customer experience that makes Despegar the preferred choice for Latin American travelers.<\/p>\n 2023 Financial Guidance<\/b><\/p>\n \nThe Company reaffirms its 2023 annual guidance, which is as follows:<\/p>\n \nThe above guidance assumes that the Latin American travel market will continue recovering and reach 2019 demand levels by year-end 2023. Importantly, this guidance is in line with the 2024 financial targets presented at the Company\u2019s June 2022 Investor Day. See our Investor Relations website at www.investor.despegar.com<\/a>.<\/p>\n Disclaimer:<\/i><\/b> The 2023 financial guidance reflects management\u2019s current assumptions regarding numerous evolving factors that are difficult to accurately predict, including those discussed in the Risk Factors set forth in the Company\u2019s filings with the United States Securities and Exchange Commission.<\/i><\/p>\n Reconciliations of forward-looking non-GAAP measures, specifically the 2023 Adjusted EBITDA guidance, to the relevant forward-looking GAAP measures are not being provided, as the Company does not currently have sufficient data to accurately estimate the variables and individual adjustments for such guidance and reconciliations. Due to this uncertainty, the Company cannot reconcile projected Adjusted EBITDA to projected net income without unreasonable effort.<\/i><\/p>\n The 2023 financial guidance includes forward-looking statements. For more information, please see the \u201cForward-Looking Statements\u201d section in this release.<\/i><\/p>\n\n Operating and Financial Metrics Highlights<\/b><\/p>\n \nThe following table presents key operating metrics of Despegar\u2019s travel and financial services businesses as well as key financial metrics on a consolidated basis, post-intersegment eliminations between these businesses.<\/p>\n
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