| Over a week ago | ||||
Despegar.com provided an… Despegar.com provided an update on the impact of COVID-19 on the company's operations. Since mid-March, Despegar has experienced an almost complete stoppage in new travel bookings. As a result, during the second half of March, Despegar's gross bookings declined by over 95% vs. the comparable period of last year. The company expects that these minimum levels of activity are likely to persist throughout Q2. The outsourcing of the fulfillment center and a restructuring in Argentina undertaken in 4Q19, along with measures to protect cash balances implemented in March 2020, contributed to the following results in 1Q20: 12% YoY reduction in Structural Costs to $42.8M, vs. $48.7M in 1Q19, 26% YoY reduction in cost of revenue aligned with lower transactions; and Elimination of direct marketing spend starting as of March 13, 2020. The company undertook 566 layoffs, 397 furloughs and the reduction of working hours of 159 employees, among others. As a result, Despegar estimates that its run-rate for Structural Costs will be further reduced to: approximately $34M during 2Q; and approximately $28M during 3Q. The company believes that its existing cash and cash equivalents, will be sufficient to meet its currently-anticipated cash needs for the next twelve months: Unrestricted cash and cash equivalents amounted to $222M as of March 31, 2020 vs. $309.2M as of December 31, 2019. The company is undergoing negotiations with Best Day with respect to the previously announced pending acquisition. | ||||
Reports Q1 revenue… Reports Q1 revenue $$76.1, down 34% YoY on an FX neutral basis and 43% as reported, consensus $78.25M. Excluding extraordinary cancellations due to COVID-19, as reported revenues would have declined 33% to $88.6. Q1 transactions and Room Nights were down 23% and 30% YoY, respectively. The company's CEO stated, "Our results during the quarter were impacted by the COVID-19 pandemic, which has severely disrupted travel worldwide. We entered this global health crisis, with a strong balance sheet and healthy liquidity, closing 1Q20 with a cash position of $222M, no long term financial liabilities and only a minimal amount of working capital short term debt. We continue to carefully monitor our liquidity position and believe we have sufficient resources to weather the current challenging environment, for the next twelve months. We proactively addressed the impact of COVID-19, reducing our costs to better align with the decreasing demand. We substantially reduced marketing spend and we are pulling SG&A levers to cut costs. We are well on track to achieve the reductions in Structural Cost targets, which declined by 17% sequentially to $43M this quarter, and expect to bring them down to $34M in 2Q20 and $28M by 3Q20. Importantly, despite the measures announced, the Company remains ready to adjust to a quick ramp up of travel activity, when required". | ||||
| Over a month ago | ||||
UBS downgraded… UBS downgraded Despegar.com to Neutral from Buy with a price target of $7, down from $16. | ||||
The company believes that… The company believes that its existing cash and cash equivalents, together with expected cash flows generated from operating activities, will be sufficient to meet its currently-anticipated cash needs for the next twelve months. Unrestricted cash and cash equivalents are expected to amount to approximately $221M as of March 31, 2020, compared to $309.2M as of December 31, 2019. | ||||
Gross bookings are… Gross bookings are expected to amount to approximately $790M for the first quarter of 2020, compared to $1.158B during the first quarter of 2019, down 32% YoY. Gross bookings is an operating measure that represents the aggregate purchase price of all travel products booked by the company's travel customers through its platform during a given period. | ||||
Operating loss is… Operating loss is expected to range between ($26M)-($21M)for the first quarter of 2020, compared to operating income of $7.6M during the first quarter of 2019. Operating loss data for the first quarter of 2020 includes depreciation and amortization expenses and stock-based compensation expected to range between $8M-$10M. Q1 EPS consensus (4c). | |
Despegar.com provided a… Despegar.com provided a further update on measures being taken in connection with the impact of COVID-19. Despegar had $313M in cash and $180M in credit card receivables as of December 31, 2019. Despegar claims to be free of any long term debt and only a minimal amount of short term debt to fund working capital, as well as bearing no customer credit risk and no relevant advances to suppliers outstanding. Despegar is assisting its customers with changes to their travel arrangements through reallocation of employees to assist with customer care, doubling the number of representatives handling inbound calls; increased automation capabilities of digital channels; providing customers with flexible conditions to defer their travel plans primarily through the issuance of vouchers. As of the end of last year, Despegar began to further streamline operations and outsourced its fulfillment centers. These initiatives have achieved an annualized cost reduction of approximately $16M, or 7% of its FY19 Structural Costs, following a workforce reduction of 568 full time employees. Additionally, since the beginning of the COVID-19 crisis, Despegar has been reducing all non-critical spend and re-adjusting Structural Costs to deliver an additional 35% YoY savings by the end of Q3 and preserve cash. Cost containment/ cash preservation measures include: reducing salaries of the Executive Committee, Board Directors, and senior management by 50% and middle management by 25% throughout Q2; eliminating 1H20 bonuses to all employees; implementing a hiring freeze and limiting inflation salary increases; reducing working hours and implementing unpaid leave in certain locations; renegotiating supplier payment terms and conditions; reviewing all contracts and commitments; deferring non-critical capital expenditures. Combined, the measures taken in 4Q19 and those being taken in response to Covid-19 are expected to result in annualized cost savings of approximately $90M, representing a total 40% YoY reduction in Structural Costs by the end of Q3. The company has significantly reduced marketing investments, anticipated to result in additional savings of approximately $35M in Q2. | |
Despegar.com announced… Despegar.com announced that management is withdrawing Q1 guidance provided during its Q4 earnings call that took place on March 5 as the extent and duration of COVID-19 and the impact it will have on the travel industry, is difficult to predict at this time. As many countries issued travel and flight restrictions to mitigate the consequences of the spread of COVID-19, the travel market has deteriorated more than anticipated at the time of the company's Q4 earnings call. | |
Fly Intel: Chipotle upgrade, Lyft initiation among today’s Wall Street top calls »
, , , , , , , , , , , , , , ,
Check out today's top… | |
Check out this morning's… |