Search

Despegar.com, Corp. (DESP) Q2 2020 Earnings Call Transcript - The Motley Fool

Logo of jester cap with thought bubble.

Image source: The Motley Fool.

Despegar.com, Corp. (NYSE:DESP)
Q2 2020 Earnings Call
Aug 21, 2020, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the Despegar Second Quarter 2020 Earnings Call. A slide presentation is accompanying today's webcast and is available in the Investors section of the Company's website, https://ift.tt/2KchTXX. There will be an opportunity for you to ask questions at the end of today's presentation. This conference call is being recorded. As a reminder, all participants will be in a listen-only mode.

Now, I will like to turn the call over to Ms. Natalia Nirenberg, Investor Relations. Please go ahead.

Natalia Nirenberg -- Investor Relations

Good morning, everyone, and thanks for joining us today for a discussion of our second quarter 2020 results. In addition to reporting financial results in accordance with U.S. generally accepted accounting principles, we discussed certain non-GAAP financial measures and operating metrics, including foreign exchange neutral calculation. Investors should read the definitions of these measures and metrics included in our press release carefully to ensure that they understand them. Non-GAAP financial measures and operating metrics should not be considered in isolation, as a substitute for, or superior to GAAP financial measures, and are provided as supplemental information only.

Before we begin our formal remarks, allow me to remind you that certain statements made during the course of the discussion may constitute forward-looking statements, which are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to materially differ, including factors that maybe beyond the Company's control. These include expectations and assumptions related to the impact of the COVID-19 pandemic. For a description of these risks, please refer to our filings with the Securities and Exchange Commission and our press release.

Speaking on today's call is our CEO, Damian Scokin, who will provide an overview of the second quarter and update you on our strategic priorities. Alberto Lopez Gaffney, our CFO, will afterwards discuss the quarter's financials. After that, we will open the call to your questions. Damian, please go ahead.

Damian Scokin -- Chief Executive Officer

Thank you, Natalia. Good morning, everyone, and thank you for joining us. I hope that you and your families are healthy and safe. This past quarter was clearly a challenge on many fronts, not just for us as a business, but for all of us as a global community. There is no doubt that the COVID-19 pandemic has profoundly impacted our business over the last few months. During this time of extraordinary changes and challenges, our teams responded with agility and executed well against factors within our control. Importantly, we remained focused on the four key areas we shared with you during the last earnings call, which are: First, further reduce the cost structure and reinforce our cash preservation strategy; second, enhance our cash position through the backing of two premier global investors; third, we made significant progress on our M&A strategy; and lastly, we are adjusting our value proposition to the new market circumstances.

I'd like now to spend a couple of minutes discussing each of these topics. Starting with cost structure reduction, when the crisis begun, we immediately started to cut cost, aiming at preserving cash. We made a number of very difficult, but proactive adjustments to our cost structure, which includes some permanent changes. By quarter-end, we have exceeded our previously discussed $34 million run rate for structural cost and are now on target to meet our $28 million goal for the third quarter of 2020. Additionally, we acted promptly during the quarter, implementing a range of actions to help maintain our strong liquidity and ended the quarter with a cash position similar to that at the end of Q1.

We made significant progress collecting outstanding accounts receivables. In addition, regulations in some geographies such as Colombia and Brazil allowed us to provide customers with pending travel with vouchers redeemable for future use. This process also entails that negotiation of our non-touristic payables, which enable us to generate cash this quarter despite the circumstances. I am proud of the quick and decisive actions we have taken as a Company to mitigate many of the challenges we face. As we shared, we expect the actions we have taken to better align our cost base where -- with our anticipated near-term sales performance as we navigate what may be a choppy recovery in the travel industry worldwide.

Second, not only do we want to preserve cash, we also wanted to enhance our liquidity position as a precautionary measure. During the quarter, we secured a $40 million committed revolving credit facility with a one-year term. As of today, we have not drawn on this facility. Subsequent to quarter-end, we raised $200 million in capital to a private placement with two unrelated private equity fund, L Catterton and Waha Capital. Our new partners share our vision of the future of the online travel industry in Latin America and support our role as the leader of the market. These new financing also provides us additional flexibility to navigate through the pandemic.

Third, we continue capturing M&A opportunities without affecting our liquidity. As previously disclosed, we successfully renegotiated the terms of the pending Best Day acquisition, with a reduction of 58% of the purchase price. Importantly, we deferred any cash outlay for 36 months after closing. This acquisition will allow us to further strengthen our presence in Mexico, develop new verticals, and achieve synergies that will be further boosted by our low-cost technological platform. Additionally, subsequent to quarter-end, we acquired Koin, a leading Brazilian online point of sale payment platform. This acquisition will further enhance our payment methods offer.

Last, we are also working hard to strengthen our value proposition with a more flexible product offering. We have accelerated our efforts to add further automation with the customer fulfilling process. These actions will not only enhance customer satisfaction, but also reduce our cost through the reduction of calls to our call center.

As we lead our organization through the crisis and the near-term economic disruptions, our past experience navigating difficult periods is serving us well. In turn, we are taking a prudent approach to the near future. And while we have positioned ourselves well to weather the pandemic, we will almost certainly continue facing the heavy wind from this health crisis.

Moving next for a discussion of the second quarter transactions and gross bookings. As we shared during the first quarter of 2020 earnings call, the second quarter was expected to be the most challenging quarter in the Company's history. In the quarter, transactions on gross bookings plummeted 92% and 96% respectively. This was due not only to a dramatic drop in demand, but also from the restrictions imposed by the different governments in the region as most countries basically shut down their economies. Compared to other countries and regions, restrictions in some LatAm countries, such as Argentina and Colombia, have been rather long and severe. Additionally, although Latin America was the last major geographic region to be impacted by COVID, travel bans were implemented at the same time as Europe. Thus the limitations to travel have been in place for a longer period of time and the recovery has not yet begun.

I will now give a little bit more detail on how the quarter played out. This is in the info you see in the chart on the bottom right of the page. April was the slowest month of the quarter with transactions and gross bookings drastically below the same period of prior year. We saw an improving trend as we moved through the quarter with gross bookings in June doubling the May level and continued to improve in July and August. Although we're encouraged by these improving monthly trends, we want to remind you that there is still a high degree of uncertainty in the market that causes us to take a conservative approach as we look into the near future.

Moving next to Slide 5 for a discussion of cost savings and targets. Prior to COVID-19, we were already working in our cost savings program. Due to the completion of several initiatives that we launched in 2018 and 2019, we have taken a series of actions over the past three quarters to reduce cost and become an even leaner Company. That included achieving efficiency gains in support areas in Argentina, restructuring our fulfilment center, and reducing our corporate and support headcount significantly. Thanks to these efforts, we could achieve sequential reductions of 25% in payroll expenses and 19% in non-payroll costs during the second quarter. As a result, our structural costs declined 23% when compared to the first quarter of 2020, while operational cost overall, excluding one-time charges, were down 62% year-on-year. Additionally, we surpassed our second quarter of 2020 target of $34 million, and are now on track to meet our third quarter goal. Despite these cost reductions, we still have the ability to quickly ramp up as the travel markets start to recover.

Turning next to Slide 6 for the discussion on our cash preservation strategy. In these unprecedented times, cash preservation, along with strengthening financial options is key. Importantly, not only did we preserve our cash balances through this quarter ending flat with quarter one, but we also generated $20 million in cash. In total, $66.3 million or 53% of trade accounts receivables, net of provisions for bad debt and related party receivables as of March 31, 2020, were collective during the quarter. This performance is indicative of our ability to navigate this crisis and the strength of our receivables.

Moving next to a brief discussion about our financial obligations. We closed the quarter with only $10 million in short-term debt and no long-term debt. On the financing front, during the quarter, we secured a $40 million revolving credit facility, mainly to have the financial flexibility, if needed. To date, we have not drawn on this facility. Yesterday, we closed $200 million capital raise through a private placement with two funds that further support our liquidity position. This brings our total pro forma cash position as of June 30, 2020 to over $420 million, and I will discuss this new financing in more detail shortly.

Moving next to Slide 7 for the discussion of our recent $200 million capital raise. We engaged with two unrelated funds. First, we raised $150 million from L Catterton through the sale of preferred stock plus warrant. Second, we raised $50 million from Waha Capital through the sale of newly issued Series B preferred shares convertible into ordinary shares. L Catterton is one of the largest and most global consumer-focused private equity fund that has [Technical Issues] in Latin America and in the travel sector, while Waha Capital has a strong track record investing in companies that provide growth opportunities. Proceeds from this transaction will be allocated to mezzanine equity in our equity accounts of our balance sheet. For more details on this transaction, refer to the slide and today's 6-K filing.

Moving next to Slide 8. The recent capital raise will enable us to continue growing our business by strengthening our competitive levers, which is a key strategic initiative for us as discussed during our Investor Day in December. The timing of the capital raise is also important and opportunistic as it provides the financial flexibility to allow us to enhance our leading position in LatAm during this unique period in time as many local competitors are struggling.

Let me discuss a few key strategic reasons. First, we want to advance our digital products and services through the integration of the multiple brands that are and will be part of the Despegar ecosystem. Now, this powerful network also includes Koin, our recent acquisition, which will -- we will explain in detail shortly. At the same time, we will be supporting further engagement through our app, which is already one of the most downloaded travel apps in the region. Second, investing in our low-cost delivery model and platform translates into a better value proposition that promotes flexibility in our offering, which is key for our customers, particularly in these uncertain times. Additionally, by enhancing automation to our processes and making the integration of acquired companies more agile, we can further save costs. Although we are already one of the largest OTAs in the region, there is still ample room for us to grow further as we expect to strengthen our leadership in the industry.

In a global travel industry impacted by COVID-19, growing the opportunistic acquisitions is an attractive near-term option for us. Our two new partners also share that vision. COVID-19 has provided us with a unique opportunity to acquire assets at valuation significantly lower than those we were seeing over the past few years. Koin and Best Day are clear examples of this. This new capital raise provides us with additional liquidity to continue executing on our M&A plan. As a reminder, we have a very focused M&A strategy. Geographically, Mexico and Brazil are our key target markets, given sizes and opportunities. And our target companies must also exhibit a core set of competencies, such as strong brand awareness, focus on the leisure travelers, as well us unique online and all product capabilities that will be quick for us to adapt and leverage across our platform.

Now, please turn the Slide 9. Best Day is an important acquisition for us as it increases our presence in Mexico, a key travel and destination market in LatAm. With COVID-19, working havoc on the global traveler market, we went back to the sellers to renegotiate the terms. As shown in this page, we have highlighted the key terms from the original agreement as well as the revised one. As we have already disclosed these and held a conference call to discuss the key items that I want to reiterate are that we were able to achieve a lower price and defer any cash outlay until 36 months after closing. We expect to be closing this acquisition in the second half of 2020 once we obtain regulatory authorizations.

Now moving to Slide 10. Yesterday, we closed on the acquisition of Koin. The company is a Brazilian fintech that operates as a point of sale consumer lender for travel-related companies. Since early 2018, we have been offering Koin's financing solutions on our website to our customers in Brazil. Koin offers a buy now, pay later instalment solution through Boleto Parcelado. For those of you who may not be familiar, Boleto Parcelado is an official Brazilian payment method regulated by the Central Bank of Brazil. It is a push payment system that in 2018 generated close to 4 billion transactions and accounted for approximately 19% of all online payment transactions. Boleto is a must for companies doing online business in Brazil.

On the blue boxes on the left side of this slide, you can see our core set of distinct competencies as we laid out during our Investor Day in late 2018. Let me discuss each one to give you an idea of why Koin makes so much sense for us. Starting with scale, close to $5 billion in gross bookings flowed through our platform last year. Therefore, when demand comes back, we can leverage the Koin financing solution. Our strong brand has also allowed us to be recognized as a safe platform to conduct purchases. Right now, Koin is only offered to Brazilian customer, but we have a deep understanding of LatAm customers' trouble and purchase preferences. This has translated into more than 24 million LatAm customers over the past five years. And last, we have a best in class fraud and error platform and over 20 years of UX experience as well as one of the best IT teams in LatAm. Koin is not an unknown entity to us. We have been providing the solution to our Brazilian customers for over one year with over 50,000 transactions generated in that time. We don't see any risk in the integration of both systems. As of June 30, 2020, Koin's loan book amounted to only BRL13 million, reflecting the disruption of COVID on the global travel industry.

Summing up, we have a broad understanding of how to finance our customers, because we have been providing that service to our consumers for over 20 years. Fintech solutions is a natural complement to our product offering that allow us to add new capabilities and to continue offering innovative solutions to our customers in the attractive Brazilian market.

Next, turning to Slide 11. I have seen us move and innovate very rapidly. Even in a time of uncertainty, we know innovations remain critical to our business. Adapting to the current market conditions, we have introduced a flexible booking offering that allows our consumers to reschedule trips as needed. During the quarter, we also added value to our platform by building a more robust help experience that will allow our customers to self-manage their bookings, while reducing their need to contact our call center. We are proud to this new service by adding the main questions we have been receiving for consumers. At the same time, we're able to anticipate when consumers will start redeeming the vouchers as travel restrictions get lifted. Additionally, and in the case of refundable ties, customers will be able to cancel the refunds online. So, with this online help experience, we will be able to forward queries and concern through the right channel, creating a more efficient and transparent process.

I will now turn the call over to Alberto to discuss the financial performance in more detail.

Alberto Lopez Gaffney -- Chief Financial Officer

Thank you, Damian, and thank you all for joining us today. I want to build on Damian's remarks and comment on our team's ability to adapt, execute, and make smart decisions quickly during this unprecedented time. As we expected and shared last quarter, the second quarter was extremely difficult with a top line challenge due to COVID-19-related softness in travel demand. Revenues were also negatively impacted by $13.9 million in customer cancellations, both reflecting refunds issued in the quarter as well as provisions covering potential customer cancellations through the end of September in our main markets.

Remember that in the first quarter, we have made provisions for cancellations in second quarter 2020 except for Argentina, where we took provisions for cancellations covering up to the end of August. This increase in cancellation is driven by the effect of a more customer-friendly refund initiative implemented during the second quarter. By delivering on it, we have resold approximately 64% of non-air and 90% of air ticket cancellations. Excluding these extraordinary cancellations and provisions, revenues would have decreased 96% with $4.2 million, in line with the decline in transactions on gross bookings.

Moving on to cost on Slide 12, let me share that we have drastically taken cost out of the business in areas where we cannot currently operate due to COVID-19, including making difficult decisions to reduce staff and to simplify our organization. As a result, we reduced structural cost by 23% sequentially to $33.1 million in the second quarter, exceeding our run rate goal for the quarter by 3%. This represented a 35% decline from fourth quarter '19 levels. This has not only allowed us to navigate through this period of limited revenues, but also to prepare the Company for a slow and non-linear ramp up, as governments adjust travel restrictions.

Now, taking a deeper look at our cost structure and the steps we have taken throughout the Company. First, cost of revenue declined 66% year-on-year, and we significantly reduce variable cost such as cost of installments. Additionally, credit card purchasing fees declined mirroring the lower level of transactions. There was also an important cut in fulfilment center costs following the outsourcing of these services that we used to provide in-house.

Second, selling and marketing expenses were trimmed by 86% against the same quarter last year as we basically curtailed all direct marketing activities. Excluding the impact of two months from the Viajes Falabella and $2.9 million in severance charges in the quarter, the decrease would have been even more relevant, down 97% year-on-year. Technology and content plus G&A increased 9% year-on-year, impacted by $15.7 million in extraordinary charges. Importantly, on a comparable basis and excluding these one-time charges, along with two months of Viajes Falabella, tech content plus G&A would have declined 39% year-on-year. Of these extraordinary charges, 89% represent non-cash items, comprising $11.7 million in expected credit losses from four airlines in Latin America that filed for bankruptcy and $0.5 million related to the accelerated amortization of a portion of Viajes Falabella's non-core portfolio. Importantly, we have provisioned these two bad debt charges to fulfill the prudence principle of accounting. However, we remain confident that we will be able to collect these amounts in the near future.

Turning to profitability on Slide 13. Comparable Adjusted EBITDA for the quarter was a loss of $32 million, compared with a gain of nearly $3 million in the same quarter last year. Comparable Adjusted EBITDA excludes nearly $34 million in extraordinary charges include in the second quarter 2020 in connection with COVID-19, customer travel cancellations, severance payments from recent cost saving measures, and provisions for bad debt in connection with the three Latin American airlines that files for Chapter 11 in the quarter. We also incurred other extraordinary charges related to the suspension of operation of Avianca Brasil as I discussed earlier, and one-time M&A and other professional services expenses. Comparable figures also exclude $10 million in extraordinary charges in the second quarter '19, mainly rebranding cost, and to a lesser extent, the cessation of operations of Avianca Brasil.

With respect to the $7.3 million we provisioned for the three airlines bad debt, we are in ongoing discussions with them and remain confident that we will recover a significant, if not all what is owned. Subsequent to quarter-end, we calculated over $200,000.

Next, liquidity on Slide 14. Despegar is in a strong financial position, and we ended the quarter with just over $228 million in cash and cash equivalents, flat with March. Despite the challenging demand environment during the quarter, we generated positive cash flow from operations of $20 million, reflecting a decline in receivables and higher trade payables. This was up from $9.5 million in the same period last year.

As we have mentioned, we are encouraged by the slightly positive trends we are beginning to see. Gross bookings in June and July were better than the lows we saw earlier in the year. So far in August, gross bookings have retained this positive trend. In this context, we continued to operate in unprecedented times with many unknown and uncontrollable factors still impacting consumer behavior and the travel industry.

Despite this, we remain focused on four goals as we continue to adjust to the current operating environment. First, focus on cash perseveration and generation, while leveraging the newly added flexibility to our value proposition. Brazil and Mexico remain our key growth markets, while taking advantage of unpaid marketing channels. Second, maintain a strict focus on cost controls. Third, continue to protect liquidity, while at the same time, taking care of our customers as we continue processing the refund that are still pending. And finally, as we've done with the Best Day and more recently with Koin, we're taking advantage of the current competitive environment to pursue selective M&A opportunities that complement our business and can benefit from our operating leverage.

In conclusion, we're extremely proud of the way our team and industry partners have risen to the occasion, and I remain confident our business and our brands will emerge even stronger on the other side. This short-term disruption to our business does nothing to dampen our long-term prospects.

With this, we conclude our prepared remarks. Operator, you can open the line for questions.

Questions and Answers:

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Today's first question comes from Edward Yruma, with KeyBanc Capital Markets. Please go ahead.

Edward Yruma -- KeyBanc Capital Markets -- Analyst

Hey, good morning. Thanks for taking my questions. I guess, first, I noticed that sequentially the payables to travel suppliers went up. Just kind of curious how that happened given the revenue trend. Two, as the environment improves and you start to have consumers redeem vouchers, how will that get reflected on the cash flow statement, or just maybe more simply, kind of does that then become trade payables as you start to pay your travel suppliers? And then finally, with the acquisition of Koin, does this now start to expose you to more consumer credit risk? Thank you.

Alberto Lopez Gaffney -- Chief Financial Officer

Hi, Ed, good morning, Alberto here. So, first and -- mainly, thanks for your questions. With regard to actually trade tables going up, I think they have been -- they have gone marginally up, OK? The Company has got some things, OK? So, from that perspective, that is pretty much explained by that. With regards to -- you didn't ask the question about certainly the receivable front, we showed good performance when it comes to our ability to collect our receivables. In past quarters, there were actually questions along those topics and we were able to collect over 50% with little volume [Indecipherable], etc. So, that speaks nicely about the performance.

And with regards to your second question on Koin, OK, I think it's important to highlight that the current volumes that Koin is processing are de minimis vis-a-vis what is the run rate of the company when the market comes back, OK? While we are actually betting on through this platform is to continue increasing the offer of the different solutions and methods of payments, and I think the focus is more on method of payments rather on the risk management. And as you know, OK, all these consumer loans can be securitized. Also, the plan of the Company is less so on actually getting on increasing the exposure to our times credit risk, but more importantly, to continue increasing the number of -- the method of payments available on target in a market that as you know is particularly relevant and that makes a difference with a big unbanked population in Brazil. So, I hope that addresses your question.

Edward Yruma -- KeyBanc Capital Markets -- Analyst

Thank you.

Operator

And our next question today comes from Eric Sheridan with UBS. Please go ahead.

Eric Sheridan -- UBS -- Analyst

Thanks so much for taking the question. Everyone is well on the Despegar team and staying safe. Two longer duration questions, your peers -- your global peers have talked about it taking multiple years to get back to the levels of trouble we saw in 2019. But in your region of the world, obviously, there are dynamics around offline to online penetration shifts that might speed up return to those types of volumes or levels. So first question, I wanted to know what your general world view is on how investors should be thinking about a multiyear recovery in travel volumes in your business.

And second on the cost savings side, obviously you've done [Technical Issues] repositioning the business on the cost side for the current environment, how should investors think medium- to long-term about the prominence of some of those cost cuts and the result maybe being a larger margin trajectory in the business over the medium- to long-term versus some of those costs having to come back into the model as end demand improves? Thanks so much.

Damian Scokin -- Chief Executive Officer

Hi, Eric, how are you? This is Damian. Thanks a lot for your question. In terms of market return or coming back, you're right in the sense that in Latin America, as you probably know, historically in 2018, we saw approximately only 40% of total bookings being transacted online. So, there is more room for growth and certainly the consumer patterns of the pandemic have moved -- have shift or accelerated that shift into online for many verticals. We expect that to accelerate the growth of the portion of online with the travel industry.

Having said that, our view with the uncertainties of this context is that it will also take a couple of years at least to recover to previous -- to pre-COVID levels, again, maybe accelerated by a faster shift to online, but that will not represent a significant difference from developed markets. That's our current view. Obviously, this will evolve and we'll monitor it very closely, but we don't see a significant change based on that pattern.

As per your second question in terms of margins and the cost reduction and the impact on margins, yes, I believe that you have been -- have done a superb job in reducing cost, and we believe that when volumes return, our cost base will remain the same in support factors, but obviously in the technology team, the user experience team, and more importantly, in the operational team, we need to grow at the fraction of the growth of the volume. We expect, therefore, that margins will return to higher level than previously based on this new construct -- this new cost base. So the new normal, we expect to be at the higher margins than in the past.

Eric Sheridan -- UBS -- Analyst

Thank you so much.

Operator

And our next question today comes from Brian Nowak, with Morgan Stanley. Please go ahead.

Alex Wong -- Morgan Stanley -- Analyst

Morning. This is Alex Wong on for Brian. Thanks for taking the questions. First one just on the gross bookings trend you referred to, think that the figures on Slide 4 were helpful. Maybe you can help us understand a little bit what that translates to from a pre-cancellation year-over-year growth rate perspective in June and July, so we can get a sense for some underlying growth as we sort of evaluate the recovery? And within that, can you speak to any regions that are driving the recovery and any new types of consumer behavior whether it's more domestic travel, more adoption of alternative accommodation that you're seeing, that's question one?

The second question if you can just also talk about an update on the Best Day transaction. I think you mentioned in the slide second half '20 closing. Is that slightly pushed out from the third quarter that [Indecipherable], and if there's any update on sort of the financial profile year-to-date for Best Day and potential synergies as well?

Alberto Lopez Gaffney -- Chief Financial Officer

Sure. And with regards to gross bookings, OK, what we have seen in the quarter that finished, clearly, when you actually look at reductions in gross bookings in the quarter that you are, let's say, in Q2 minus 95% for argument's sake relative last year, clearly, over there, you do have an impact of currencies and certainly level of activity.

When you look at number of transactions, OK, the reductions has been smaller than that, OK, in the minus 90% vis-a-vis the minus 95%, OK? So, over there, you can actually see the impact of not only FX, OK, but at the same time on the changing mix of the travel, given that today what you're seeing is the minimum travel in Q2, you actually have many people returning, going back to their country of origin, etc., so there was a bit of like reorganization of the industry with legal activity actually going on. So, I think those are the two factors to point.

With regards to new trends, consumer behavior, etc., the way we are looking at this is, we are certainly looking at -- that the recovery will first start looking at domestic traveling, OK? The recovery will actually start with domestic traveling. And from that perspective, that coupled with your other question that is, OK, which countries are pulling the current level of activity, the countries are actually helping the recovery, that Damian was pointing before, that actually from volumes, very, very low in April, May, then the plateauing at that point, and actually now, with a steady increase, OK, what you're seeing is that Mexico and Brazil, both countries certainly are setting apart the level of activity vis-a-vis other regions in that -- other countries in Latin America. For argument's sake, countries such as Argentina and Colombia, you see almost no flights whatsoever, given the current level of activity that is everything is very much locked down.

And last, on your Best Day question, OK, and we continue -- we are just awaiting for the results of the Cofece ruling on the antitrust. Cofece is the antitrust authority in Mexico. We also have filings in other geographies, particularly in Hawaii. As you might imagine, the process with the governmental agencies, actually given the whole lockdown, the environment lockdown, you actually see a lower speed that is understandable under the current circumstances. They all have a very strong perspective that in our level of participation in the market and given how automized the market is, OK, doesn't represent any issues, and we actually look at a favorable outcome when the authorities actually finalize their analysis.

Alex Wong -- Morgan Stanley -- Analyst

Thanks so much.

Operator

[Operator Instructions] Today's next question comes from Kevin Kopelman with Cowen & Company. Please go ahead.

Emily Lavin -- Cowen -- Analyst

Hi. Good morning. This is Emily Lavin on for Kevin. Thanks for the question. I just wanted to follow-up on your comment, your answer to the last question about the recovery starting with domestic travel. How would you plan to position yourself to capture that demand? And do you expect the domestic travel to increase in the summer season in the southern hemisphere? And as a follow-up, what percentage of travel in Latin America is domestic versus international in a normalized environment? Thanks.

Damian Scokin -- Chief Executive Officer

Hi, Emily. This is Damian. Getting to your question, remember that, historically, 30% of our revenues are -- and bookings are coming out of domestic travel. We expect that to grow significantly and we are uniquely positioned in terms of inventory and relationship with the airlines, hotels and other accommodations in our home region if you want. You see even that today when you look at the markets that are performing, the better like Mexico and Brazil, we are seeing a strong concentration of domestic bookings vis-a-vis historic trends. Remember also that even last year, we launched series of activities that were aimed at capturing the opportunities of short-term locations, what we call gateways and activities that will prove significantly relevant vis-a-vis how the market is going to evolve.

Emily Lavin -- Cowen -- Analyst

Thank you.

Operator

[Operator Instructions] And ladies and gentlemen, I'm showing no questions at this time. So, I'd like to turn the conference back over to Damian Scokin, for any final remarks.

Damian Scokin -- Chief Executive Officer

Well, thank you. Thank you all for joining us today. We look forward to see you in our next call and please stay safe, you and your families. Take care. Bye.

Operator

[Operator Closing Remarks]

Duration: 47 minutes

Call participants:

Natalia Nirenberg -- Investor Relations

Damian Scokin -- Chief Executive Officer

Alberto Lopez Gaffney -- Chief Financial Officer

Edward Yruma -- KeyBanc Capital Markets -- Analyst

Eric Sheridan -- UBS -- Analyst

Alex Wong -- Morgan Stanley -- Analyst

Emily Lavin -- Cowen -- Analyst

More DESP analysis

All earnings call transcripts

AlphaStreet Logo

Let's block ads! (Why?)



"corp" - Google News
August 22, 2020 at 03:30AM
https://ift.tt/3j7j1gL

Despegar.com, Corp. (DESP) Q2 2020 Earnings Call Transcript - The Motley Fool
"corp" - Google News
https://ift.tt/2RhVoHj
Shoes Man Tutorial
Pos News Update
Meme Update
Korean Entertainment News
Japan News Update

Bagikan Berita Ini

0 Response to "Despegar.com, Corp. (DESP) Q2 2020 Earnings Call Transcript - The Motley Fool"

Post a Comment

Powered by Blogger.