REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of each class |
Trading Symbol |
Name of each exchange on which registered | ||
At December 31, 2020 |
Large accelerated filer | ☐ | ☒ | ||||
Non-accelerated filer | ☐ | Emerging growth company |
† | The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
International Financial Reporting Standards as issued | Other ☐ | |||||||
by the International Accounting Standards Board | ☐ |
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ITEM 16B. |
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ITEM 16C. |
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ITEM 16D. |
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ITEM 16E. |
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ITEM 16F. |
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ITEM 16G. |
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ITEM 16H. |
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• | the ongoing COVID-19 pandemic is disrupting the global economy and the travel industry, and consequently adversely affecting our business, results of operations and cash flows, and it is difficult to predict the full extent of the impact that the pandemic will have on our Company; |
• | we are subject to the risks generally associated with doing business in Latin America and risks associated with our business concentration within this region; |
• | general declines or disruptions in the travel industry may adversely affect our business and results of operations; |
• | our business and results of operations may be adversely affected by macroeconomic conditions; |
• | we are exposed to fluctuations in currency exchange rates; |
• | if we are unable to maintain or increase consumer traffic to our sites and our conversion rates, our business and results of operations may be harmed; |
• | our business could be negatively affected by changes in search engine algorithms and dynamics or other traffic-generating arrangements; |
• | we operate in a highly competitive and evolving market, and pressure from existing and new companies, as well as consolidation within the industry, may adversely affect our business and results of operations; |
• | if we are unable to maintain existing, and establish new, arrangements with travel suppliers, our business may be adversely affected; |
• | we rely on the value of our brands, and any failure to maintain or enhance consumer awareness of our brands could adversely affect our business and results of operations; |
• | we rely on information technology, including third-party technology, to operate our business and maintain our competitiveness, and any failure to adapt to technological developments or industry trends, including third-party technology, could adversely affect our business; |
• | we are subject to payments-related fraud risk; |
• | any system interruption, security breaches or lack of sufficient redundancy in our information systems may harm our business; |
• | our ability to attract, train and retain executives and other qualified employees, particularly highly-skilled IT professionals, is critical to our business and future growth; |
• | our business depends on the availability of credit cards and financing options for consumers; |
• | internet regulation in the countries where we operate is scarce, and several legal issues related to the internet are uncertain; |
• | acquisitions could present risks and disrupt our ongoing business; |
• | we may not be able to consummate acquisitions or other strategic opportunities in the future; |
• | we are a foreign private issuer under U.S. securities regulations and, as a result, we will not be subject to U.S. proxy rules and will be subject to Exchange Act reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. issuer; and |
• | the strategic interests of our significant shareholders may, from time to time, differ from and conflict with our interests and the interests of our other shareholders. |
ITEM 1 |
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
ITEM 2 |
OFFER STATISTICS AND EXPECTED TIMETABLE |
ITEM 3 |
KEY INFORMATION |
A. |
Removed and Reserved. |
B. |
Capitalization and Indebtedness |
C. |
Reasons for the Offer and Use of Proceeds |
D. |
Risk Factors |
• | political, social and macroeconomic instability; |
• | cycles of severe economic downturns; |
• | currency devaluations and fluctuations; |
• | periods of high inflation; |
• | availability, quality and level of usage of the internet and e-commerce; |
• | high levels of credit risk and fraud; |
• | uncertainty or changes in governmental regulation, including applicable to travel services operations and internet and e-commerce services; |
• | uncertainty or changes in tax laws and regulations; |
• | limited access to financing, both for companies and for consumers; |
• | exchange and capital controls; |
• | limited infrastructure, including in the travel and technology sectors; |
• | adverse labor conditions and difficulties in hiring, training and retaining qualified personnel; |
• | the challenges of doing business across a region with multiple languages, different currencies and regulatory regimes that varies from country to country; and |
• | the impact of adverse global conditions in the region. |
• | health-related risks, such as the ongoing COVID-19 pandemic, or future outbreaks of Zika virus, H1N1 influenza, Ebola virus, yellow fever, avian flu, or any other serious contagious diseases; |
• | terrorist attacks or threats of terrorist attacks or wars; |
• | fluctuations in currency exchange rates; |
• | increased prices in the airline ticketing, hotel, or other travel-related sectors; |
• | significant changes in oil prices; |
• | travel-related strikes or labor unrest, bankruptcies or liquidations; |
• | travel-related accidents or the grounding of aircraft due to safety or other concerns; |
• | political unrest; |
• | high levels of crime; |
• | natural disasters or severe weather conditions, including volcanic eruptions, hurricanes, flooding or earthquakes; |
• | changes in immigration policy; and |
• | travel restrictions or other security procedures implemented in connection with any major events, particularly those that affect travel by Latin Americans within their respective countries, across the region and outbound from the region to the rest of the world. |
• | we fail to offer compelling products; |
• | users increasingly engage with competing products instead of ours; |
• | we fail to introduce new and exciting products and services or those we introduce are poorly received; |
• | our websites or mobile apps fail to operate effectively on the iOS and Android mobile operating systems; |
• | we do not provide a compelling user experience; |
• | we are unable to combat spam or other hostile or inappropriate usage on our products, or if our anti-fraud measures are too conservative and we reject too many bona fide transactions; |
• | there are changes in user sentiment about the quality or usefulness of our existing products; |
• | there are concerns about the privacy implications, safety, or security of our products; |
• | our suppliers decide to discontinue the offering of their products through our platform; |
• | technical or other problems frustrate the user experience, particularly if those problems prevent us from delivering our products in a fast and reliable manner; |
• | we fail to provide adequate service to our travel customers and travel suppliers; |
• | we or other companies in our industry are the subject of adverse media reports or other negative publicity; or |
• | we do not maintain our brand image or our reputation is damaged. |
• | the hosting of our websites; |
• | certain software underlying our technology platform; |
• | transportation ticketing agencies to issue transportation tickets and travel assistance products, confirmations and deliveries; |
• | third-party local tour operators to deliver on-site services to our packaged-tour customers; |
• | assistance in conducting searches for airfares and process air ticket bookings; |
• | processing hotel reservations for hotels not connected to our management system; |
• | processing credit card, debit card and banking payments; |
• | providing computer infrastructure critical to our business; and |
• | providing customer relationship management (CRM) services. |
• | our ability to attract travel customers in a cost-effective manner, including in markets where we have lower brand awareness or operational history; |
• | our ability to improve the competitiveness of our product offerings including by expanding the number of suppliers and negotiating fares and rates with existing and potential suppliers; |
• | our ability to market and cross-sell our travel services and products to facilitate the expansion of our business; |
• | our ability to compete effectively with existing and new entrants to the Latin American travel industry; |
• | our ability to expand and promote our mobile platform and make it user-friendly; |
• | our ability to build required technology; |
• | our ability to expand our businesses through strategic acquisitions and successfully integrate such acquisitions; |
• | the general condition of the global economy (particularly in Latin America) and continued growth in demand for travel services, particularly online; |
• | the growth of the internet and mobile technology as a medium for commerce in Latin America; and |
• | changes in the regulatory environments where we operate. |
• | have a majority of our board of directors be independent; |
• | have a compensation committee or a nominating or corporate governance committee; |
• | have regularly scheduled executive sessions with only non-management directors; |
• | have an executive session of solely independent directors each year; or |
• | adopt and disclose a code of business conduct and ethics for directors, officers and employees. |
• | Our board of directors may without prior notice to shareholders, or obtaining any shareholder approval, amend our memorandum and articles of association to authorize and subsequently issue an unlimited number of preferred shares in one or more classes and series and designate the issue prices, rights, preferences, privileges, restrictions and terms of such preferred shares. |
• | Our board of directors is currently made up of eight directors divided into three classes, with each class having a three-year term. Class I’s, Class II’s and Class III’s terms will expire at the Company’s annual meetings in 2021, 2022 and 2023, respectively. The only circumstance in which shareholders can elect new directors is at an annual meeting and in respect of those board seats whose term is expiring at the annual meeting. Elections will take place by plurality voting. Shareholders do not have the power to increase or reduce the size of the board or fill a vacancy on the board, which matters are the exclusive authority of our board of directors. |
• | Our shareholders may only remove directors for cause and only by resolution approved by shareholders holding not less than two-thirds of the voting rights at a meeting of shareholders called for the stated purpose of removing the director. |
• | There are a number of restrictions, conditions and other requirements (including advance notice period requirements) that apply to our shareholders’ ability to (i) request special meetings of our shareholders; (ii) nominate persons for election as directors at annual meetings of our shareholders; and (iii) propose other items of business or other matters for consideration at any annual or special meetings of our shareholders. |
• | All resolutions of the shareholders must be adopted at a meeting of our shareholders convened in accordance with our memorandum and articles of association. Shareholders are prohibited from adopting resolutions by written consent. |
• | There are restrictions on amending our memorandum and articles of association. Certain provisions of our memorandum and articles of association (including many of the provisions described above) may only be amended with the approval of both our shareholders and our board of directors. Provisions that may be amended by the shareholders without board approval require the affirmative vote of holders of two-thirds of the shares entitled to vote on the resolution. |
ITEM 4 |
INFORMATION ON THE COMPANY |
A. |
History and Development of the Company |
1999 |
• Launched site in Argentina. | |
2000 |
• Launched sites in Brazil, Chile, Colombia, Mexico and Uruguay. | |
2001 |
• Launched sites in the United States and Venezuela. | |
2007 |
• Launched site in Peru. | |
2009 |
• Expanded our offering to include hotels. | |
• Launched sites in Bolivia, Costa Rica, Dominican Republic, Ecuador, Guatemala, Nicaragua, Panama, Paraguay and Puerto Rico. | ||
2010 |
• Launched sites in El Salvador and Honduras, reaching our 20th market. | |
• Cumulative one million travel customers served. | ||
2012 |
• Launched our mobile apps on Android and iOS. | |
• Expanded offering to include packages, rental cars and cruise products. | ||
2013 |
• Reached one million downloads of our mobile app. | |
• Expanded our offering to include destination services. | ||
• Expanded hotel offering to include vacation rentals. | ||
2014 |
• Cumulative 10 million travel customers served. | |
• Our mobile app is included in the iTunes Store’s “Best of 2014”. | ||
• Launched travel affiliates program. | ||
• Expanded our offering to include travel insurance and travel assistance. | ||
2015 |
• Reached 10 million downloads of our mobile app. | |
• Deepened strategic partnership with Expedia, including its equity investment in our Company. | ||
2016 |
• Awarded “E-commerce Leader in the Tourism Industry in LATAM” by the Latin American E-Commerce Institute. | |
• Expanded our offering to include our bus product. | ||
• Expanded our destination services offering to include our local concierge product. | ||
2017 |
• Initial public offering and listing on the New York Stock Exchange. |
2018 |
• Launched sales call centers in Peru, Ecuador, Mexico, Chile, Colombia, Argentina and Brazil. • Developed tour operation business. | |
2019 |
• Completed rebranding our core business, including logos, website and images in order to update our outward facing content. • Acquired Viajes Falabella in Chile, Argentina, Peru and Colombia. • Entered into an API connectivity agreement with CTrip International Travel (Hong Kong) Ltd., for the integration of Despegar direct lodging offering in Latin America with Ctrip’s platform. • Entered into a ten-year exclusive agreement with Industrial and Commercial Bank of China Limited, to launch a co-branded credit card in Argentina in partnership with Mastercard. | |
2020 |
• Acquired Best Day, a leading travel agency in Mexico. • Acquired Koin, an online payment platform in Brazil. • Launched a co-branded credit card in Brazil jointly with Banco Santander.• Entered into a ten-year commercial partnership agreement with Tarjeta Naranja, the leading branded proprietary credit card issuer in Argentina and a subsidiary of Grupo Financiero Galicia.• Entered into an Investment Agreement for the issuance 150,000 Series A Preferred Shares of the Company and warrants to purchase 11,000,000 ordinary shares of the Company at an exercise price of $0.01 per share (the “Warrants”) with LCLA Daylight LP, an affiliate of L Catterton Latin America III, L.P. • Entered into an Investment Agreement for the issuance of 50,000 Series B Preferred Shares to Waha LATAM Investments Limited, an affiliate of Waha Capital PJS. |
B. | Business Overview |
• | Increasing internet penetration . |
• | Increasing adoption of mobile devices, including smartphones |
• | Superior user experience |
• | Growth in banked consumers and proliferation of credit products |
• | global OTAs with presence in Latin America, such as Booking.com and Expedia and travel metasearch sites; |
• | search websites and apps, such as Google and its travel businesses, and e-commerce and group buying websites and apps; |
• | alternative accommodation and vacation rental businesses, such as Airbnb; |
• | local offline travel agency chains and tour operators, such as CVC Brasil Operadora e Agência de Viagens; and |
• | smaller online travel agencies lacking a pan-regional presence. |
C. |
Organizational Structure |
City, Country |
Facility |
Address |
Approximate Square Meters |
Agreement Expiration Date | ||||||
Buenos Aires Argentina | Argentina operation and regional functions | Avenida Corrientes 746, 6th Floor | 406 | 02/28/2023 | ||||||
Buenos Aires, Argentina | Argentina operation and regional functions | Juana Manso 1069, 5 Floor | 1,203 | 05/21/2022 | ||||||
La Plata, Buenos Aires Argentina | Argentina operation | Camino Centenario esq. 511, La Plata | 2,600 | 08/31/2022 | ||||||
Bogotá, Colombia | Colombia operation and customer service center | Interior 101, Manzana 15, Carretera 106 Nbr. 15A-25, Free Trade Zone |
1,754 | 02/23/2021 | ||||||
Montevideo, Uruguay | International Hotels, Packages and Other Travel Products operations and Shared service center | Ruta 8 Km. 17,500, local 318, edificio 300, Zonamerica |
2,092 | 09/14/2020 | ||||||
Sao Paulo, Barueri, Brazil | Brazil operation | Alameda Grajuá 219 | 5,600 | 08/16/2023 | ||||||
Ciudad de Cancún | Quintana Roo | Av. Bonanpak Sm 10 Mz 2 Lote 7 | 4,478 | 10/31/2024 |
ITEM 4A. |
UNRESOLVED STAFF COMMENTS |
ITEM 5 |
OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
A. |
Operating Results |
• | Consolidated net revenue of $131.3 million and $524.9 million, respectively; |
• | Consolidated operating losses of $177.2 million and $8.9 million, respectively; |
• | Consolidated net losses of $142.9 million and $20.9 million, respectively; |
• | Consolidated Adjusted Segment EBITDA attributable to our Air segment of $(32.9) million and $3.3 million, respectively. |
• | Consolidated Adjusted Segment EBITDA attributable to our Packages, Hotels and Other Travel Products segment of $(82.4) million and $36.5 million, respectively. |
• | Consolidated Adjusted Segment EBITDA that is not allocated to either of our segments of $(6.5) million and $(13.2) million, respectively. |
• | Consolidated Adjusted EBITDA of $(121.8) million and $26.6 million, respectively. |
• | Growth in and Retention of our Traveler Customer Base |
• | Cross-Selling |
• | Changes in Product Mix and New Product Offerings |
• | Shift to Mobile Transactions |
• | Selling and Marketing Expenditures COVID-19 pandemic, we reduced our selling and marketing expenditures by 70% compared to 2019. |
• | Integration of recent acquisitions |
• | it requires us to make an assumption because information was not available at the time or it included matters that were highly uncertain at the time, we were making the estimate; and |
• | changes in the estimate or different estimates that we could have selected may have had a material impact on our financial condition or results of operations. |
Year Ended December 31, |
||||||||||||
2020 |
2019 |
% of Change |
||||||||||
In thousands |
||||||||||||
Operational Metrics |
||||||||||||
Number of transactions |
||||||||||||
By country |
||||||||||||
Brazil |
1,940 | 4,121 | (52.9 | ) | ||||||||
Argentina |
457 | 2,324 | (80.3 | ) | ||||||||
Mexico |
803 | 1,542 | (47.9 | ) | ||||||||
Other |
891 | 2,691 | (66.9 | ) | ||||||||
|
|
|
|
|
|
|||||||
Total number of transactions |
4,091 | 10,678 | (61.7 |
) | ||||||||
By segment |
||||||||||||
Air |
2,435 | 6,220 | (60.9 | ) | ||||||||
Packages, Hotels and Other Travel Products |
1,656 | 4,458 | (62.9 | ) | ||||||||
|
|
|
|
|
|
|||||||
Total number of transactions |
4,091 | 10,678 | (61.7 |
) |
Year Ended December 31, |
||||||||||||
2020 |
2019 |
% of Change |
||||||||||
In thousands |
||||||||||||
Gross Bookings |
||||||||||||
By country |
||||||||||||
Brazil |
591,749 | 1,878,312 | (68.5 | ) | ||||||||
Argentina |
206,871 | 1,027,359 | (79,9 | ) | ||||||||
Mexico |
270,870 | 604,648 | (55,2 | ) | ||||||||
Other |
362,845 | 1,223,874 | (70,4 | ) | ||||||||
|
|
|
|
|
|
|||||||
Total gross bookings |
1,432,335 |
4,734,193 |
(69.7 |
) | ||||||||
Financial Metrics |
||||||||||||
Consolidated revenues |
131,334 | 524,876 | (75.0 | ) | ||||||||
Consolidated operating loss |
(177,217 | ) | (8,920 | ) | 1,886.7 | |||||||
Consolidated net loss |
142,869 | 20,910 | 583.3 | |||||||||
Consolidated Adjusted EBITDA (unaudited) |
(121,813 | ) | (26,643 | ) | (557.2 | ) | ||||||
Consolidated Adjusted Segment EBITDA: |
||||||||||||
Air |
(32,890 | ) | 3,346 | (1,083.0 | ) | |||||||
Packages, Hotels and Other Travel |
||||||||||||
Products |
(82,377 | ) | 36,546 | (325.4 | ) | |||||||
Unallocated |
(6,546 | ) | (13,249 | ) | (50.6 | ) |
Year Ended December 31, |
||||||||
2020 |
2019 |
|||||||
(in thousands) |
||||||||
Consolidated net loss |
$ | (142,869 | ) | $ | (20,910 | ) | ||
Add (deduct): |
||||||||
Financial expense/ (income), net |
(12,910 | ) | 17,215 | |||||
Income tax (benefit) |
(21,438 | ) | (5,225 | ) | ||||
Depreciation expense |
7,981 | 6,659 | ||||||
Impairment of long-lived assets and goodwill |
1,917 | — | ||||||
Amortization expense |
21,699 | 16,137 | ||||||
Stock-based compensation expense |
7,312 | 11,686 | ||||||
Restructuring and related reorganization charges |
13,360 | — | ||||||
Acquisition-related expenses |
3,135 | 1,081 | ||||||
|
|
|
|
|||||
Consolidated Adjusted EBITDA (unaudited) |
$ | (121,813 | ) | $ | 26,643 | |||
|
|
|
|
Year Ended December 31, |
||||||||||||||||||||
2020 |
2019 |
|||||||||||||||||||
(in thousands) |
||||||||||||||||||||
% of Revenue |
% of Revenue |
% of change |
||||||||||||||||||
Total revenue |
$ | 131,334 | 100.0 | $ | 524,876 | 100.0 | (75.0 | ) | ||||||||||||
Cost of revenue |
(85,518 | ) | (65.1 | ) | (179,565 | ) | (34.2 | ) | (52.4 | ) | ||||||||||
|
|
|
|
|||||||||||||||||
Gross profit |
45,816 |
34.9 |
345,311 |
65.8 |
(86.7 |
) | ||||||||||||||
Operating expenses |
||||||||||||||||||||
Selling and marketing |
(57,292 | ) | (43.6 | ) | (187,894 | ) | (35.8 | ) | (69.5 | ) | ||||||||||
General and administrative |
(94,722 | ) | (72.1 | ) | (92,962 | ) | (17.7 | ) | 1.9 | |||||||||||
Technology and product development |
(67,043 | ) | (51.0 | ) | (73,375 | ) | (14.0 | ) | (8.6 | ) | ||||||||||
Impairment of long-lived assets and goodwill |
(1,917 | ) | (1.5 | ) | — | — | NM | |||||||||||||
|
|
|
|
|||||||||||||||||
Total operating expenses |
(220,974 |
) |
(168.3 |
) |
(354,231 |
) |
(67.5 |
) |
(37.6 |
) | ||||||||||
|
|
|
|
|||||||||||||||||
Equity loss |
(2,059 | ) | (1.6 | ) | — | — | NM | |||||||||||||
Operating loss |
(177,217 |
) |
(134.9 |
) |
(8,920 |
) |
(1.7 |
) |
1,886.7 |
|||||||||||
Financial income / expense, net |
12,910 | 9.8 | (17,215 | ) | (3.3 | ) | (175.0 | ) | ||||||||||||
|
|
|
|
|||||||||||||||||
Net loss before income taxes |
(164,307 |
) |
(125.1 |
) |
(26,135 |
) |
(5.0 |
) |
528.7 |
|||||||||||
Income tax benefit |
21,438 | 16.3 | 5,225 | 1.0 | 310.3 | |||||||||||||||
|
|
|
|
|||||||||||||||||
Net loss |
(142,869 |
) |
(108.8 |
) |
(20,910 |
) |
(4.0 |
) |
583.3 |
|||||||||||
Net loss attributable to redeemable non-controlling interest |
282 |
0.2 |
— |
— |
NM |
|||||||||||||||
|
|
|
|
|||||||||||||||||
Net loss attributable to Despegar.com, Corp. |
$ |
(142,587 |
) |
(108.6 |
) |
$ |
(20,910 |
) |
(4.0 |
) |
581.9 |
|||||||||
|
|
|
|
Year Ended December 31, |
||||||||||||||||||||
2020 |
2019 |
|||||||||||||||||||
(in thousands) |
||||||||||||||||||||
% of Revenue |
% of Revenue |
% of change |
||||||||||||||||||
Revenue |
||||||||||||||||||||
Air |
$ | 62,713 | 47.8 | $ | 201,638 | 38.4 | (68.9 | ) | ||||||||||||
Packages, Hotels and Other Travel Products |
68,621 | 52.2 | 323,238 | 61.6 | (78.8 | ) | ||||||||||||||
|
|
|
|
|||||||||||||||||
Total revenue |
$ | 131,334 | 100.0 | $ | 524,876 | 100.0 | (75.0 | ) | ||||||||||||
|
|
|
|
Year Ended December 31, |
||||||||
2020 |
2019 |
|||||||
(in thousands) |
||||||||
Commissions and service fees |
$ | 100,908 | $ | 426,082 | ||||
Incentives |
17,040 | 72,912 | ||||||
Advertising |
5,040 | 15,063 | ||||||
Others |
8,346 | 10,819 | ||||||
|
|
|
|
|||||
Total revenue |
$ | 131,334 | $ | 524,876 | ||||
|
|
|
|
(1) | Net of sales tax. |
Year Ended December 31, |
||||||||
2020 |
2019 |
|||||||
(in thousands) |
||||||||
Pre-pay model |
$ | 102,591 | $ | 407,258 | ||||
Pay-at-destination model |
1,305 | 13,130 | ||||||
Other (1) |
27,438 | 104,488 | ||||||
|
|
|
|
|||||
Total revenue |
$ | 131,334 | $ | 524,876 | ||||
|
|
|
|
(1) | Primarily includes incentives from our travel suppliers, primarily airlines and GDSs. |
Year Ended December 31, |
||||||||
2020 |
2019 |
|||||||
(in thousands) |
||||||||
Air |
$ | (32,890 | ) | $ | 3,346 | |||
Packages, Hotels and Other Travel Products |
(82,377 | ) | 36,546 | |||||
Unallocated |
(6,546 | ) | (13,249 | ) |
B. |
Financial Position, Liquidity and Capital Resources |
(i) | temporarily reducing salaries of the senior and middle management; |
(ii) | suspending bonuses to all employees; |
(iii) | reducing part of our workforce and implementing a hiring freeze and limiting inflation salary increases; |
(iv) | reducing working hours and implementing unpaid leave in certain locations; |
(v) | accelerating synergies from acquisitions; |
(vi) | renegotiating supplier payment terms and conditions; |
(vii) | reviewing and renegotiating, to the extent possible, all contracts and commitments; |
(viii) | reducing marketing expenses and |
(ix) | deferring non-critical capital expenditures. |
Year Ended December 31, |
||||||||
2020 |
2019 |
|||||||
(in thousands) |
||||||||
Net cash flows (used in) / provided by operating activities |
$ | (118,345 | ) | $ | 44,238 | |||
Net cash flows used in investing activities |
(14,743 | ) | (30,784 | ) | ||||
Net cash flows provided by / (used in) financing activities |
173,696 | (53,180 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents |
(3,767 | ) | 1,181 | |||||
|
|
|
|
|||||
Net increase / (decrease) in cash and cash equivalents |
$ |
36,841 |
$ |
(38,545 |
) | |||
|
|
|
|
C. |
Research and Development, Patents and Licenses |
D. |
Trend Information |
Brazil |
||||||||
2020 |
2019 |
|||||||
Real GDP growth (decline) (1) |
(4.1 | )% | 0.6 | % | ||||
Population (in millions) (1) |
211.8 | 211 | ||||||
Inflation (1) |
4.52 | % | 3.74 | % | ||||
Exchange rate (2) |
5.20 | 4.03 |
(1) | Source: Instituto Brasileiro de Geografia e Estatistica (IBGE), measured in local currency. |
(2) | Source: Banco Central do Brasil. Data as of December 31 of each year. |
Argentina |
||||||||
2020 |
2019 |
|||||||
Real GDP growth (decline) (1) |
(11.8 | )% | (3.1 | )% | ||||
Population (in millions) (1) |
45.40 | 44.93 | ||||||
Inflation (1) |
36.1 | % | 53.8 | % | ||||
Exchange rate (2) |
89.25 | 59.87 |
(1) | Source: Instituto Nacional de Estadistica y Censos (INDEC), measured in local currency. |
(2) | Source: Banco de la Nación Argentina. Data as of December 31 of each year. |
Mexico |
||||||||
2020 |
2019 |
|||||||
Real GDP growth (decline) (1) |
(8.3 | )% | (0.1 | )% | ||||
Population (in millions) (2) |
126.0 | — | ||||||
Inflation (3) |
3.15 | % | 2.83 | % | ||||
Exchange rate (4) |
19.95 | 18.45 |
(1) | Source: Instituto Nacional de Estadística y Gegrafía (INEGI), measured in local currency. |
(2) | Source: Instituto Nacional de Estadística y Gegrafía (INEGI). Census information is updated every five years. Latest census was conducted in 2020/ |
(3) | Source: Instituto Nacional de Estadística y Gegrafía (INEGI), measured in local currency. |
(4) | Source: Banco de México. Data as of December 31 of each year. |
E. |
Off-Balance Sheet Arrangements |
F. |
Tabular Disclosure of Contractual Obligations |
Payments Due by Period |
||||||||||||||||||||
Total |
Within 1 Year |
2-3 Years |
4-5 Years |
After 5 Years |
||||||||||||||||
Operating lease obligations |
$ | 46,544 | $ | 8,650 | $ | 10,956 | $ | 8,607 | $ | 18,331 | ||||||||||
Seller financing Viajes Falabella |
5,750 | 5,750 | — | — | — | |||||||||||||||
Other long-term liabilities (1) |
125,000 | — | — | — | 125,000 | |||||||||||||||
Promissory notes issued |
14,490 | 14,490 | ||||||||||||||||||
Accrued earnout liability |
3,765 | 3,765 | ||||||||||||||||||
Redemption of non-controlling interest(2) |
2,880 | — | 2,880 | — | — | |||||||||||||||
Seller financing Best Day Group |
8,768 | 8,768 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total contractual obligations |
$ |
207,197 |
$ |
14,400 |
$ |
35,094 |
$ |
12,372 |
$ |
143,331 |
||||||||||
|
|
|
|
|
|
|
|
|
|
(1) | We may be required to make a termination payment of $125.0 million to Expedia if, among other things: we elect to terminate the Expedia Outsourcing Agreement on or after March 6, 2022; Expedia elects to terminate the Outsourcing Agreement if bookings sourced through Expedia are reduced such that the marketing fees payable back to us fall below $5.0 million over a six-month period; or if a bookings shortfall occurs, for any consecutive three months or any three months within a six-month period. The amount of the termination payment is reflected as a long-term liability on our balance sheet. For more information on our relationship of Expedia, see “Item 7. Major Shareholders and Related Party Transactions —B. Related Party — Relationship with Expedia.” |
(2) | Pursuant to the Koin acquisition agreement, we have the right to call the non-controlling interest in Koin, and the non-controlling owners have the right to put their interest back to us, assuming we do not exercise our call right, at dates and prices defined in the agreement. The put price is fixed at $2,880. |
G. |
Safe Harbor |
ITEM 6 |
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
A. |
Directors and Senior Management |
• | the Class I Directors are Adam Jay and Michael James Doyle, and their terms will expire at the annual meeting of stockholders to be held in 2021; |
• | the Class II Directors are Martín Rastellino and Mario Eduardo Vázquez, and their terms will expire at the annual meeting of stockholders to be held in 2022; and |
• | the Class III Directors are Nilesh Lakhani and Damián Scokin, and their terms will expire at the annual meeting of stockholders to be held in 2023. |
Name |
Age |
Position | ||
Nilesh Lakhani | 61 | Chairman of the Board and Director | ||
Damian Scokin | 54 | Chief Executive Officer and Director | ||
Adam Jay | 44 | Director | ||
Martín Rastellino | 49 | Director | ||
Mario Eduardo Vázquez | 85 | Director | ||
Michael James Doyle II | 50 | Director | ||
Dirk Donath | 54 | Director | ||
Aseem Gupta | 39 | Director |
Name |
Age |
Position | ||
Damián Scokin | 54 | Chief Executive Officer | ||
Alberto López Gaffney | 49 | Chief Financial Officer | ||
Mariano Scagliarini | 48 | General Counsel | ||
Gonzalo García Estebarena | 41 | Chief Commercial Director | ||
Sebastián Mackinnon | 49 | Executive VP Travel Partners & Corporate Affairs |
B. |
Compensation |
C. |
Board Practices |
• | selecting our independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by our independent auditors; |
• | regularly reviewing the independence of our independent auditors; |
• | reviewing all related party transactions on an ongoing basis; |
• | discussing the annual and quarterly audited consolidated financial statements with management and our independent auditors; |
• | periodically reviewing and reassessing the adequacy of our audit committee charter; |
• | meeting separately and periodically with management and our internal and independent auditors; |
• | reporting regularly to our full board of directors; and |
• | such other matters that are specifically delegated to our audit committee by our board of directors from time to time. |
• | carrying out the Board’s responsibilities in relation to compensation of the Company’s CEO and his direct reports (including plans, policies and programs), overseeing the implementation of the Company’s compensation policy, and providing such guidance with respect to compensation matters as the Committee deems appropriate; |
• | (i) identifying individuals to become Directors of the Company, (ii) nominating qualified individuals for election to the Board at the annual meeting of shareholders, (iii) recommending to the Board the individual directors to serve on the committees of the Board, and (iv) recommending the Board a set of corporate governance principles applicable to the Company; and |
• | any such other duties as may be from time to time assigned to it by the Board or required by the rules and regulations of the SEC or the New York Stock Exchange. |
• | assist and consult with the Board of Directors on the objectives for the Company’s strategic plans, and review management’s recommendations with respect to the strategic direction of the Company, oversee management’s implementation of the Company’s strategy and regularly report to the Board of Directors with respect thereto; |
• | identify significant opportunities and challenges facing the Company, including potential transactions, the impact of external developments and factors on the Company’s corporate strategy and its execution, such as the changes in economic and market conditions, competition in the industry, regulations, among others; and |
• | Review and make recommendations to the Board of Directors, with respect to any mergers, acquisitions, joint ventures, minority investments, and other strategic investments, as well as financing for those strategic investments in case they require approval of the Board of Directors. |
D. |
Employees |
Number of Employees as of December 31, |
||||||||||||
Division/Function |
2020 |
2019 |
2018 |
|||||||||
Operations and customer service |
1,146 | 1,150 | 1,349 | |||||||||
Sales and marketing |
1,025 | 355 | 263 | |||||||||
Technology and content |
778 | 1,172 | 1,227 | |||||||||
General and administrative (1) |
628 | 352 | 559 | |||||||||
|
|
|
|
|
|
|||||||
Total |
3,577 |
3,029 |
3,398 |
|||||||||
|
|
|
|
|
|
(1) | Includes business development, administration, finance and accounting, legal and human resources. |
E. |
Share Ownership |
Outstanding Ordinary Shares as of March 31, 2021 |
||||||||
Name of Beneficial Owner |
Number |
% |
||||||
Directors and Executive Officers: |
||||||||
Nilesh Lakhani (1) |
47,462 | * | ||||||
Damián Scokin (2) |
— | — | ||||||
Adam Jay |
— | — | ||||||
Martín Rastellino (3) |
474,627 | * | ||||||
Mario Eduardo Vázquez (4) |
18,393 | * | ||||||
Michael Doyle II (5) |
77,147 | * | ||||||
Dirk Donath |
— | — | ||||||
Aseem Gupta |
— | — | ||||||
Alberto Lopez Gaffney (6) |
51,416 | * | ||||||
Mariano Scagliarini (7) |
— | — | ||||||
Gonzalo García Estebarena (8) |
— | — | ||||||
Sebastián Mackinnon (9) |
38,309 | * | ||||||
|
|
|||||||
Directors and Executive Officers as a Group (13 persons) |
972,549 | 1.3 | % | |||||
|
|
* | Represents beneficial ownership of less than 1%. |
(1) | Consists of 47,462 ordinary shares held by Mr. Lakhani, Chairman and member of our board of directors. Mr. Lakhani also holds 8,041 RSUs which will vest on January 1, 2022; provided that Mr. Lakhani remains in continuous service as an employee, director or consultant of the Company through each applicable date. See “Item 6—B. Compensation.” |
(2) | Mr. Scokin, our Chief Executive Officer, holds options for the issuance of 86,901 shares that will vest in three equal installments in December 2021, 2022 and 2023 and 301,957 RSUs that will vest in three equal installments in December 2021, 2022 and 2023; in each case provided that Mr. Scokin remains in continuous service as an employee, director or consultant of the Company through each applicable date. See “Item 6—B. Compensation.” Mr. Scokin is our Chief Executive officer and a member of our board of directors. |
(3) | Consists of 5,212 ordinary shares held by Mr. Rastellino, 469,415 ordinary shares held by Birbey S.A. Mr. Rastellino has sole voting and dispositive control over such shares and directly or indirectly owns 100% of the share capital of Birbey S.A. Mr. Rastellino also holds 6,031 RSUs which will vest on January 1, 2022; provided that Mr. Rastellino remains in continuous service as an employee, director or consultant of the Company through each applicable date. See “Item 6—B. Compensation.” |
(4) | Consists of 18,393 ordinary shares held by Mr. Vázquez, a member of our board of directors. Mr. Vázquez also holds 6,031 RSUs which will vest on January 1, 2022; provided that Mr. Vázquez remains in continuous service as an employee, director or consultant of the Company through each applicable date. See “Item 6—B. Compensation.” |
(5) | Consists of 77,147 ordinary shares held by Mr. Doyle, a member of our board of directors. Mr. Doyle also holds 4,021 RSUs which vest on January 1, 2022; provided that Mr. Doyle remains in continuous service as an employee, director or consultant of the Company through such date. See “Item 6—B. Compensation.” |
(6) | Consists of 51,416 ordinary shares held by Mr. Lopez Gaffney, our Chief Financial Officer. Mr. Lopez Gaffney also holds: options for the issuance of 34,310 ordinary shares: which will vest in two equal installments on December 1, 2021 and 2022 and 82,896 RSUs which will vest in five equal installments on June 1, 2021, December 1, 2021, June 1, 2022, December 1, 2022 and December 1, 2023; in each case provided that Mr. Lopez Gaffney remains in continuous service as an employee, director or consultant of the Company through each applicable date. See “Item 6—B. Compensation”. |
(7) | Mr. Scagliarini, our General Counsel, holds 12,369 RSUs which will vest in five equal installments on June 1, 2021, December 1, 2021, June 1, 2022, December 1, 2022 and December 1, 2023; in each case provided that Mr. Scagliarini remains in continuous service as an employee, director or consultant of the Company through each applicable date. See “Item 6—B. Compensation.” |
(8) | Mr. Estebarena,, our Chief Commercial Director, holds options for the issuance of 58,597 which will vest in two equal installments on December 1, 2021 and on December 1, 2022 and 27,452 RSUs which will vest in five equal installments on June, 2021, December 1, 2021, June 1, 2022, December 1, 2022 and December 1, 2023; in each case provided that Mr. García Estebarena remains in continuous service as an employee, director or consultant of the Company through each applicable date. See “Item 6—B. Compensation.” |
(9) | Consists of 38,309 ordinary shares held by Mr. Mackinon, our Executive VP Travel Partners & Corporate Affairs. Mr. Mackinon also holds: options for the issuance of 26,241 ordinary shares which will vest in two equal installments on December 1, 2021 and on December 1, 2022 and 81,107 RSUs which will vest in five equal installments on June 1, 2021, December 1, 2021, June 2022, December 1, 2022, and December 1, 2023; in each case provided that Mr. Mackinon remains in continuous service as an employee, director or consultant of the Company through each applicable date. See “Item 6—B. Compensation.” |
ITEM 7 |
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
A. |
Major Shareholders |
Outstanding Ordinary Share as of March 31, 2021 |
||||||||
Name of Beneficial Owner |
Number |
% |
||||||
% Shareholders: |
||||||||
LCLA Daylight LP (1) |
11,000,000 | 13.58 | ||||||
Expedia, Inc. (2) |
9,590,623 | 11.84 | ||||||
Tiger Global Management LLC (3) |
9,256,550 | 11.71 | ||||||
Waha LATAM Investments Limited (4) |
5,405,405 | 7.20 | ||||||
Dorsey Asset Management LLC (5) |
4,255,213 | 5.95 | ||||||
Arisaig Global Emerging Markets Consumer Fund (Singapore) Pte Ltd. (6) |
3,856,160 | 5.51 |
(1) | Based on Schedule 13D filed with the SEC on September 23, 2020. Consists of ordinary shares issuable upon exercise by LCLA Daylight LP of warrants to purchase up to 11,000,000 ordinary shares. CALA2 Managers, Ltd. is the sole general partner of LCLA Daylight LP. Scott A. Dahnke and Dirk Donath are members of the managing board of CALA2 Managers Ltd. Accordingly, such shares may be deemed to be beneficially owned by CALA2 Managers Ltd., Mr. Dahnke and Mr. Donath. Mr. Dahnke and Mr. Donath disclaim beneficial ownership of such ordinary shares. The principal business address of LCLA Daylight LP, CALA2 Managers, Ltd. and Mr. Donath is c/o Catterton Latin America Management Co., 30 Rockefeller Plaza, Suite 5405, New York, NY 10112. The principal business address of Mr. Dahnke is 599 West Putnam Avenue, Greenwich, CT 06830. |
(2) | Consists of ordinary shares held by Expedia, Inc., a Washington corporation, a direct wholly owned subsidiary of Expedia Group, Inc., a Delaware corporation. The principal business address for Expedia Inc. is 333 108th Avenue NE, Bellevue, WA 98004. |
(3) | Based on Schedule 13-F filed with the SEC on February 16, 2021. The principal business address of Tiger Global Management, LLC, 9 West 57th Street, 35th Floor, New York, NY 10019. |
(4) | Based on the Schedule 13D filed with the SEC on March 1, 2021. Consists of 50,000 Series B Preferred Shares held by Waha LATAM Investments Limited representing 5,405,405 ordinary shares on an as-converted basis. The Series B Preferred Shares are convertible, at the option of the holders, at any time into ordinary shares at an initial conversion price of $9.251 per share and an initial conversion rate of 108.1081 ordinary shares per Series B Preferred Share, subject to certain anti-dilution adjustments. Waha Latam Investments Limited is a wholly owned subsidiary of Waha Capital PJSC. Accordingly, Waha Capital PJSC may be deemed to share beneficial ownership of the securities held of record by Waha Latam Investments Limited. The principal business address of each of the entities named in this footnote is 42 / 43 Floor Etihad Towers, Tower 3, Abu Dhabi, United Arab Emirates. |
(5) | Based on the Schedule 13G/A filed with the SEC on February 16, 2021. Dorsey Asset Management LLC is the direct owner of and has sole dispositive power over 4,255,213 ordinary shares. The principal business address of Dorsey Asset Management LLC is 150 North Wacker Dr., Suite 960, Chicago, Illinois 60606. |
(6) | Based on the Schedule 13G/A filed with the SEC on February 12, 2021. Arisaig Global Emerging Markets Consumer Fund (Singapore) Pte Ltd. is the holder of record of 3,856,160 ordinary shares. Such shares may deemed to be beneficially owned by Arisaig Partners (Mauritius) Ltd., its investment manager, and Arisaig Partners (Asia) Pte Ltd., its sub-investment manager. The principal business address for eah of Arisaig Global Emerging Markets Consumer Fund (Singapore) Pte Ltd. and Arisaig Partners (Asia) Pte Ltd. is 6 Lorong Telok, #02-01 Singapore 049019. The business address for Arisaig Partners (Mauritius) Ltd. is IFS Court, Bank Street, TwentyEight Cybercity, Ebene 72201 Mauritius. |
B. |
Related Party Transactions |
C. |
Interests of Experts and Counsel |
ITEM 8 |
FINANCIAL INFORMATION |
A. |
Consolidated Statements and Other Financial Information |
• | Subject to the Company satisfying the solvency test described above, our board of directors may authorize payment of a dividend or other distribution at such time and of such an amount and pursuant to such method or methods of payment or other distribution as it thinks fit. A dividend or other distribution may be paid wholly or partly by the distribution of specific assets (which may consist of our shares or securities of any other entity) and our board of directors may settle all questions concerning such distribution. Without limitation, our board of directors may fix the value of such specific assets, may determine that cash payments shall be made to some shareholders in lieu of specific assets and may vest any such specific assets in a liquidating or other trust on such terms as our board of directors thinks fit. |
• | Our board of directors may deduct from any dividend or other distribution payable to any shareholder any or all monies then due from such shareholder to us. |
• | All dividends and other distributions unclaimed for three years after having been declared may be forfeited by a resolution of directors for the benefit of the Company. All unclaimed dividends and other distributions may be invested or otherwise made use of by our board of directors for the benefit of the Company pending claim or forfeiture as aforesaid. No dividend or other distribution shall bear interest against the Company. |
• | A dividend or other distribution made to a shareholder at a time when, immediately after the dividend or other distribution, the value of the Company’s assets did not exceed its liabilities and the Company was not able to pay its debts as they fell due, is subject to recovery in accordance with the provisions of the BVI Act. |
B. |
Significant Changes |
ITEM 9 |
THE OFFER AND LISTING |
A. |
Offer and Listing Details |
B. |
Plan of Distribution |
C. |
Markets |
D. |
Selling Shareholders |
E. |
Dilution |
F. |
Expenses of the Issue |
ITEM 10 |
ADDITIONAL INFORMATION |
A. |
Share Capital |
B. |
Memorandum and Articles of Association |
a) | the right to one vote at a meeting per share on all matters to be voted on by shareholders generally, including the election of directors at an annual meeting of the shareholders; |
b) | the right to an equal share in any dividend paid by the Company and payable in respect of our ordinary shares and as may be declared from time to time by our board of directors out of funds legally available for that purpose, if any; and |
c) | upon our liquidation, dissolution or winding up, the right to an equal share in the distribution of the surplus assets of the Company available to the ordinary shareholders, but subject in each case to the rights attaching to any additional class or classes of shares (including any preferred shares) that may be authorized and issued after the closing date of our initial public offering. Our ordinary shares do not confer cumulative voting rights. |
a) | the right to dividends on each Series A Preferred Share, accruing at a rate of 10.0% per annum and payable semi-annually in arrears. |
b) | the right to one vote per share on any matter on which holders of Series A Preferred Shares are entitled to vote separately as a class, whether at a meeting or by written consent; and |
c) | upon our liquidation, dissolution or winding up, a preferential right to the distribution of the surplus assets of the Company. |
a) | the right to dividends on each Series B Preferred Share, accruing at a rate of 4.0% per annum and payable quarterly in arrears; |
b) | the right to vote on an as-converted basis on all matters to be voted on by shareholders generally, including, but not limited to, the election of directors at an annual meeting of the shareholders; |
c) | the right to an equal share in any dividend paid by the Company and payable in respect of our ordinary shares and as may be declared from time to time by our board of directors out of funds legally available for that purpose, if any; and |
d) | upon our liquidation, dissolution or winding up, a preferential right to the distribution of the surplus assets of the Company. |
• | the number of shares constituting the additional class of preferred shares; |
• | the dividend and other distribution rights of the class of preferred shares and, (which may be payable in preference to, or in relation to, the dividends payable on our ordinary shares or any other class or classes of shares); |
• | whether the class of preferred shares shall have voting rights and, if so, whether they shall vote separately or together as a single class with the ordinary shares and/or any other class of shares; |
• | whether the class of preferred shares shall have conversion and/or exchange rights and privileges and, if so, the terms and conditions of such conversion and/or exchange; |
• | whether the class of preferred shares shall impose conditions and restrictions upon the business and affairs of the Company and/or any of its subsidiaries or the right to approve and/or veto certain matters and/or to appoint and/or remove one or more directors of the Company; and |
• | the rights of the preferred shares in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, including, without limitation, any liquidation preference and whether such rights shall be in preference to, or in relation to, the comparable rights of the ordinary shares or any other class or classes of shares. |
• | Our memorandum and articles of association contemplate two types of shareholders’ meetings, namely: |
○ |
an annual meeting of shareholders (each an “annual meeting”); and |
○ |
any meeting of shareholders which is not an annual meeting (each a “special meeting”). |
• | Only the board of directors may convene an annual meeting. All annual meetings shall be held at such date, time and place, either within or outside the BVI, as shall be determined from time to time by the board of directors. The business of an annual meeting shall be the election and re-election of directors for those board seats whose terms expire at such meeting and any other items of business proposed by the board of directors and/or otherwise duly proposed by eligible shareholders in accordance with the memorandum and articles of association. |
• | Special meetings may only be called: (i) by the board of directors at its own initiative; or (ii) by the board of directors upon receiving a compliant written request from a shareholder or shareholders entitled to exercise at least 30% of the voting rights in respect of the matter for which the meeting is requested. Upon receipt of a compliant requisition notice, the board of directors shall convene the requested special meeting for a date not later than 90 days after the date of receipt of the requisition notice, provided the various restrictions, conditions and provision of information and other procedural requirements set out in the memorandum and articles of association have been met by the requisitionists. A special meeting may be held at such date, time and place, within or outside the BVI, as shall be stated in the notice of the meeting. |
• | Director elections and re-elections by shareholders may occur only at annual meetings (not special meetings) and then only in respect of those board seats whose terms expire at such meeting. |
Nominations of persons for election or re-election as directors of the Company at an annual meeting may only be made by (i) the board of directors; or (ii) any shareholder (or shareholders collectively) other than any holder of Series A Preferred Shares (for so long as such holder has the right to appoint the L. Catterton Director) or Series B Preferred Shares (for so long as such holder has the right to appoint the Series B Director), holding not less than 3% of the voting rights that may be exercised at the annual meeting entitled to attend and vote at such meeting, provided the various restrictions, conditions and provision of information and other procedural requirements set out in the memorandum and articles of association have been met by the nominating shareholders. The board of directors also retains discretion to veto inappropriate candidates nominated by shareholders for election as a director in certain enumerated circumstances, including (a) where the candidate is not qualified, does not have the necessary experience, has a conflict of interest or is otherwise unsuitable or unfit for office; and (b) where an appointment may adversely affect the Company’s (and/or its subsidiaries’ respective) reputation or business; or would result in the Company not having the required number of independent directors for its audit committee; or would result in the Company losing its “foreign private issuer” status. |
• | Written notice of any shareholder meeting shall be given to each shareholder entitled to vote at such meeting and each director not fewer than 10 nor more than 120 days before the date of the meeting. The inadvertent failure or accidental omission to give notice of a meeting to, or the non-receipt of a notice of a meeting by, any person entitled to receive notice shall not invalidate the shareholder meeting or the proceedings at that meeting. A meeting of shareholders held in contravention of such notice requirements is valid if shareholders holding at least 90% of the total voting rights on all the matters to be considered at the meeting have waived notice of the meeting and, for this purpose, the presence of a shareholder at the meeting shall be deemed to constitute waiver on his part. |
• | A shareholder may be represented at a meeting of shareholders by a proxy who may speak and vote on behalf of the shareholder. |
• | A meeting of shareholders is duly constituted and quorate if, at the commencement of the meeting, there are present in person or by proxy holders of not less than a simple majority of the votes of the shares entitled to vote on the resolutions to be considered at the meeting. If within two hours from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of shareholders, shall be dissolved; in any other case it shall stand adjourned to such other date, time and place as the chairman may determine and announce at the meeting (without the need for any further notice to shareholders). At any such adjourned meeting at which a quorum shall be present or represented, any business may be transacted that might have been transacted at the meeting as originally notified. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting. |
• | A resolution of shareholders is valid only if approved at a duly constituted and quorate meeting of shareholders by the affirmative vote of a simple majority (or such greater majority as may be specified in respect of a particular matter in the memorandum and articles of association) of the votes of those shareholders present at the meeting and entitled to vote and voting on the resolution. Shareholders are prohibited from adopting resolutions by written consent and all resolutions of the shareholders need to be adopted at a meeting of our shareholders convened in accordance with our memorandum and articles of association. |
• | In addition, in order to nominate candidates for election as a director at an annual meeting or propose topics for consideration at an annual meeting or special meeting of shareholders, shareholders must notify the Company in writing prior to the meeting at which directors are to be elected or the proposals are to be acted upon, and such notice must contain the documentation and information specified in our memorandum and articles of association. To be timely, notice with respect to an annual meeting of shareholders must be received by not later than the close of business on the 90th day, nor earlier than the close of business on the 120th day, prior to the first anniversary of the preceding year’s annual |
meeting (provided that if the Company did not have an annual meeting the preceding year not later than the close of business on June 30 of the calendar year in which the annual meeting is to be held or such other date notified to shareholders by the board of directors). In the case of any business or other matter to be considered at a special meeting of shareholders, notice of such business or other matter must be included with the original requisition notice. Various other restrictions, conditions and provision of information and other procedural requirements set out in the memorandum and articles of association shall also apply. Such advance notice requirements and other provisions may preclude or limit the ability of shareholders to nominate candidates for election as a director or propose topics for consideration at a meeting of shareholders. Furthermore, our board of directors may in certain circumstances veto candidates proposed by shareholders (as described in the fourth bullet point in this section). |
C. |
Material Contracts |
D. |
Exchange Controls |
E. |
Taxation |
• | an individual citizen or resident of the United States; |
• | a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia; |
• | an estate the income of which is subject to U.S. federal income taxation regardless of its source; or |
• | a trust if it (1) is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a United States person. |
• | a dealer in securities or currencies; |
• | a financial institution; |
• | a regulated investment company; |
• | a real estate investment trust; |
• | an insurance company; |
• | a tax-exempt organization; |
• | a person holding our ordinary shares as part of a hedging, integrated or conversion transaction, a constructive sale or a straddle; |
• | a trader in securities that has elected the mark-to-market |
• | a person liable for alternative minimum tax; |
• | a partnership or other pass-through entity for U.S. federal income tax purposes; |
• | a person required to accelerate the recognition of any item of gross income with respect to our ordinary shares as a result of such income being recognized on an applicable financial statement; |
• | a U.S. holder whose “functional currency” is not the dollar; |
• | a foreign pension fund; |
• | a “controlled foreign corporation”; |
• | a “passive foreign investment company”; or |
• | a U.S. expatriate. |
• | the gain is effectively connected with a trade or business of the non-U.S. holder in the United States (and, if required by an applicable income tax treaty, is attributable to a U.S. permanent establishment of the non-U.S. holder); |
• | the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of that disposition, and certain other conditions are met; or |
• | we are or have been a “United States real property holding corporation” for U.S. federal income tax purposes and certain other conditions are met. |
F. |
Dividends and Paying Agents |
G. |
Statement by Experts |
H. |
Documents on Display |
I. |
Subsidiary Information |
ITEM 11 |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 12 |
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES |
A. |
Debt Securities |
B. |
Warrants and Rights |
C. |
Other Securities |
D. |
American Depositary Shares |
ITEM 13 |
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
ITEM 14 |
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
A. |
Material Modifications to the Rights of Security Holders |
B. |
Material Modifications to the Rights of any Class of Registered Securities |
C. |
Withdrawal or Substitution of a Material Amount of the Assets Securing any Class of Registered Securities |
D. |
Changes in the Trustee or Paying Agents for any Registered Securities |
E. |
Use of Proceeds |
ITEM 15 |
CONTROLS AND PROCEDURES |
A. |
Disclosure Controls and Procedures |
B. |
Management’s Annual Report on Internal Control Over Financial Reporting |
(i) | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; |
(ii) | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the company; and |
(iii) | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. |
C. |
Attestation Report of the Registered Public Accounting Firm |
D. |
Changes in Internal Control Over Financial Reporting |
ITEM 16 |
[RESERVED] |
ITEM 16A. |
AUDIT COMMITTEE FINANCIAL EXPERT |
ITEM 16B. |
CODE OF ETHICS |
ITEM 16C. |
PRINCIPAL ACCOUNTANT FEES AND SERVICES |
Year Ended December 31, |
||||||||
2020 |
2019 |
|||||||
(in thousands) |
||||||||
Audit fees (audit of financial statements) (1) |
2,231 | $ | 1,261 | |||||
Tax fees (other certifications and tax advisory services) (2) |
306 | 729 | ||||||
All other fees (advisory services) (3) |
675 | 375 | ||||||
|
|
|
|
|||||
Total |
3,212 |
$ |
2,365 |
|||||
|
|
|
|
(1) | Includes fees related to the audit of the consolidated financial statements as of December 31, 2020 and 2019 and for the years ended December 31, 2020, 2019 and 2018. |
(2) | Includes fees for permitted tax compliance and tax advisory services. |
(3) | Includes fees for permitted due diligence transactions. |
ITEM 16D. |
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES |
ITEM 16E. |
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
ITEM 16F. |
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT |
ITEM 16G. |
CORPORATE GOVERNANCE |
Requirement |
NYSE Requirement FOR US Listed Companies |
BVI Law |
Despegar Practice | |||
Independent Directors |
The board of directors is required to have a majority of independent directors. | BVI law does not require us to have a majority of independent directors. | We do not have a majority independent board of directors in accordance with NYSE independence standards | |||
Executive Sessions of Independent Directors | Independent directors of a NYSE-listed company must have meetings at which only the independent directors are present. | BVI law does not require us to hold executive sessions of the board of directors. | We do not hold independent directors’ meetings. | |||
Audit Committee | Must have an audit committee with the specific responsibilities and authority necessary to comply with SEC rules. Members must meet all of the independence requirements of the NYSE, as well as the SEC Rule 10A-3 independence requirements (subject to any available exemptions). |
BVI law does not require an independent audit committee. | Our board of directors has established an audit committee that complies with SEC Rule 10A-3 independence requirements only, and not general NYSE independence standards. | |||
Internal Audit Function | Must have an internal audit function. This function may be performed by a third party. | BVI law does not require an internal audit function. | We do not have an internal audit function. | |||
Compensation of Executive Officers | Must have a compensation committee consisting solely of independent directors. Must satisfy the additional independence requirements specific to compensation committee membership. | BVI law does not require an independent compensation committee. | The board of directors has established a nomination and compensation committee. However, its members are not all independent as determined in accordance with NYSE listing standards. |
Requirement |
NYSE Requirement FOR US Listed Companies |
BVI Law |
Despegar Practice | |||
Nomination of Directors | Must have a nominating/corporate governance committee consisting solely of independent directors. | BVI law does not require an independent nominating committee. | The board of directors has established a nomination and compensation committee. However, its members are not all independent as determined in accordance with NYSE listing standards. | |||
Corporate Governance Guidelines | Company must adopt and disclose corporate governance guidelines | BVI law does not require corporate governance guidelines. | We do not have corporate governance guidelines. | |||
Shareholder Approval of Equity Compensation Plans and Certain Other Share Issuances | Shareholders must approve all equity-compensation plans and material revisions thereto, with limited exemptions. Shareholder approval also required for certain other dilutive and related party equity issuances. | BVI law does not require shareholder approval of equity compensation plans or such other share issuances | We have not and do not intend to submit for shareholder approval any equity-compensation plans or the other dilutive and related party equity issuances covered by NYSE rules. |
ITEM 16H. |
MINE SAFETY DISCLOSURE |
ITEM 17 |
FINANCIAL STATEMENTS |
ITEM 18 |
FINANCIAL STATEMENTS |
ITEM 19 |
EXHIBITS |
31.2* | Certification by Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.3* | Certification by Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
31.4* | Certification by Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101. INS* | XBRL Instance Document | |
101. SCH* | XBRL Taxonomy Extension Schema | |
101. CAL* | XBRL Taxonomy Extension Schema Calculation Linkbase | |
101. DEF* | XBRL Taxonomy Extension Schema Definition Linkbase | |
101. LAB* | XBRL Taxonomy Extension Schema Label Linkbase |
* | Filed herewith |
# | Confidential treatment requested granted with respect to portions of this exhibit. |
*## | Portions of this exhibit have been omitted because they are both (i) not material and (ii) would likely cause competitive harm to the Company if publicly disclosed. |
DESPEGAR.COM, CORP. | ||
By: | /s/ Damián Scokin | |
Name: | Damián Scokin | |
Title: | Chief Executive Officer |
F-2 |
||||
F-4 |
||||
F-5 |
||||
F-6 |
||||
F-7 |
||||
F-8 |
||||
F-10 |
Price Waterhouse & Co. S.R.L., Bouchard 557, piso 8°, C1106ABG - Ciudad de Buenos Aires |
T: +(54.11) 4850.6000, F: +(54.11) 4850.6100, www.pwc.com/ar |
Price Waterhouse & Co. S.R.L. es una firma miembro de la red global de PricewaterhouseCoopers International Limited (PwCIL). Cada una de las firmas es una entidad legal separada que no actúa como mandataria de PwCIL ni de cualquier otra firma miembro de la red. |
/s/ PRICE WATERHOUSE & CO. S.R.L. |
/s/ Eduardo Alfredo Loiácono (Partner) |
Eduardo Alfredo Loiácono |
As of December 31, | As of December 31, | |||||||
2020 |
2019 |
|||||||
ASSETS |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
||||||||
Restricted cash |
||||||||
Trade accounts receivable, net of credit expected loss of |
||||||||
Related party receivable |
||||||||
Other assets and prepaid expenses |
||||||||
|
|
|
|
|||||
Total current assets |
$ |
$ |
||||||
|
|
|
|
|||||
Non-current assets |
||||||||
Other assets |
||||||||
Lease right-of-use |
||||||||
Property and equipment, net |
||||||||
Intangible assets, net |
||||||||
Goodwill |
||||||||
|
|
|
|
|||||
Total non-current assets |
$ |
$ |
||||||
|
|
|
|
|||||
TOTAL ASSETS |
$ |
$ |
||||||
|
|
|
|
|||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
Current liabilities |
||||||||
Accounts payable and accrued expenses |
||||||||
Travel accounts payable |
||||||||
Related party payable |
||||||||
Short-term debt |
||||||||
Deferred revenue |
||||||||
Other liabilities |
||||||||
Contingent liabilities |
||||||||
Lease liabilities |
||||||||
|
|
|
|
|||||
Total current liabilities |
$ |
$ | ||||||
|
|
|
|
|||||
Non-current liabilities |
||||||||
Other liabilities |
||||||||
Contingent liabilities |
||||||||
Long-term debt |
— | |||||||
Lease liabilities |
||||||||
Related party liability |
||||||||
|
|
|
|
|||||
Total non-current liabilities |
$ |
$ |
||||||
|
|
|
|
|||||
TOTAL LIABILITIES |
$ |
$ |
||||||
|
|
|
|
|||||
Series A non-convertible preferred shares, no par value, |
— | |||||||
Series B convertible preferred shares, no par value, |
— | |||||||
Redeemable non-controlling interest |
— | |||||||
|
|
|
|
|||||
Mezzanine Equity |
$ |
$ |
— |
|||||
|
|
|
|
|||||
SHAREHOLDERS’ EQUITY |
||||||||
Common stock (1) |
||||||||
Additional paid-in capital |
||||||||
Other reserves |
( |
) | ( |
) | ||||
Accumulated other comprehensive income |
( |
) | ||||||
Accumulated losses |
( |
) | ( |
) | ||||
Treasury Stock |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total Shareholders’ Equity |
$ |
$ |
||||||
|
|
|
|
|||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ |
$ |
||||||
|
|
|
|
(1) | Represents |
For the year ended December 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
Revenue (1) |
||||||||||||
Cost of revenue |
( |
) |
( |
) |
( |
) | ||||||
|
|
|
|
|
|
|||||||
Gross profit |
$ |
$ |
$ |
|||||||||
|
|
|
|
|
|
|||||||
Operating expenses |
||||||||||||
Selling and marketing |
( |
) |
( |
) |
( |
) | ||||||
General and administrative |
( |
) |
( |
) |
( |
) | ||||||
Technology and product development |
( |
) |
( |
) |
( |
) | ||||||
Impairment of long-lived assets and goodwill |
( |
) |
— |
( |
) | |||||||
|
|
|
|
|
|
|||||||
Total operating expenses |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | |||
|
|
|
|
|
|
|||||||
Loss from equity investments |
( |
) |
— |
— |
||||||||
Operating (loss) / income |
$ |
( |
) |
$ |
( |
) |
$ |
|||||
Financial income / (expense), net |
( |
) |
( |
) | ||||||||
|
|
|
|
|
|
|||||||
(Loss) / income before income taxes |
$ |
( |
) |
$ |
( |
) |
$ |
|||||
|
|
|
|
|
|
|||||||
Income tax benefit / (expense) |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Net (loss) / income |
$ |
( |
) |
$ |
( |
) |
$ |
|||||
|
|
|
|
|
|
|||||||
Net loss attributable to redeemable non-controlling interest |
— |
— |
||||||||||
|
|
|
|
|
|
|||||||
Net (loss) / income attributable to Despegar.com, Corp. |
$ |
( |
) |
$ |
( |
) |
$ |
|||||
|
|
|
|
|
|
(1) | Includes $ |
(Losses) / Earnings per share available to common stockholders: |
||||||||||||
Basic |
( |
) |
( |
) |
||||||||
Diluted |
( |
) |
( |
) |
||||||||
Shares used in computing (losses) / earnings per share (in thousands): |
||||||||||||
Basic |
||||||||||||
Diluted |
For the year ended December 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
Net (loss) / income |
$ |
( |
) |
$ |
( |
) |
$ |
|||||
Other comprehensive loss, net of tax |
||||||||||||
Foreign currency translation adjustment |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Comprehensive (loss) / income |
$ |
( |
) |
$ |
( |
) |
$ |
|||||
|
|
|
|
|
|
|||||||
Net loss attributable to redeemable non-controlling interest |
— | — | ||||||||||
Foreign currency translation adjustment attributable to redeemable non-controlling interest |
( |
) | — | — | ||||||||
|
|
|
|
|
|
|||||||
Comprehensive (loss) / income attributable to Despegar.com, Corp. |
$ |
( |
) |
$ |
( |
) |
$ |
|||||
|
|
|
|
|
|
Common stock | Additional paid-in capital |
Other reserves |
Accumulated other comprehensive income / (loss) |
Accumulated losses |
Treasury Stock | Total Equity | ||||||||||||||||||||||||||
Number of shares (in thousands) |
Amount | |||||||||||||||||||||||||||||||
Balance as of December 31, 2017 |
( |
) |
( |
) |
— |
|||||||||||||||||||||||||||
Change in accounting standard ASC 606 |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Balance as of December 31, 2017 Adjusted |
( |
) |
( |
) |
— |
|||||||||||||||||||||||||||
Stock-based compensation expense |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Foreign currency translation adjustment |
— | — | — | — | ( |
) | — | — | ( |
) | ||||||||||||||||||||||
Exercise of stock options |
( |
) | — | — | — | — | ||||||||||||||||||||||||||
Net income for the year |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Treasury Stock |
— | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||
Balance as of December 31, 2018 |
( |
) |
( |
) |
( |
) |
||||||||||||||||||||||||||
Stock-based compensation expense |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Foreign currency translation adjustment |
— | — | — | — | ( |
) | — | — | ( |
) | ||||||||||||||||||||||
Exercise of stock options |
( |
) | — | — | — | — | ||||||||||||||||||||||||||
Net loss for the year |
— | — | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||
Treasury Stock |
— | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||
Balance as of December 31, 2019 |
( |
) |
( |
) |
( |
) |
||||||||||||||||||||||||||
Change in accounting standard ASC 326 |
— | — | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||
Balance as of January 1, 2020 |
( |
) |
( |
) |
( |
) |
||||||||||||||||||||||||||
Stock-based compensation expense |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Foreign currency translation adjustment |
— | — | — | — | ( |
) | — | — | ( |
) | ||||||||||||||||||||||
Exercise of stock options |
( |
) | — | — | — | — | ||||||||||||||||||||||||||
Net loss for the year |
— | — | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||
Warrants, net of issuance costs |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Accretion of Series A non-convertible preferred shares |
— | — | ( |
) | — | — | — | — | ( |
) | ||||||||||||||||||||||
Accrual of cumulative dividends of Series A non-convertible preferred shares |
— | — | ( |
) | — | — | — | — | ( |
) | ||||||||||||||||||||||
Accretion of redeemable non-controlling interest |
— | — | ( |
) | — | — | — | — | ( |
) | ||||||||||||||||||||||
Payment of dividends to Series B convertible preferred shares |
— | — | ( |
) | — | — | — | — | ( |
) | ||||||||||||||||||||||
Balance as of December 31, 2020 |
( |
) |
( |
) |
( |
) |
( |
) |
||||||||||||||||||||||||
For the year ended December 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
Cash flows from operating activities: |
||||||||||||
Net (loss) / income |
$ |
( |
) |
$ |
( |
) |
$ |
|||||
Adjustments to reconcile net (loss) / income to net cash flows from operating activities: |
||||||||||||
Net loss attributable to redeemable non-controlling interest |
— |
— |
||||||||||
Unrealized foreign currency (gain) / loss |
( |
) | ||||||||||
Changes in fair value of earnout liability |
— |
— |
||||||||||
Changes in seller indemnification |
( |
) |
— |
— |
||||||||
Loss from equity investments |
— |
— |
||||||||||
Depreciation expense |
||||||||||||
Amortization expense |
||||||||||||
Disposals of property and equipment |
— |
— |
||||||||||
Write-off of leasehold improvements |
— |
— |
||||||||||
Impairment of long-lived assets and goodwill |
— |
|||||||||||
Stock-based compensation expense |
||||||||||||
Amortization of lease right-of-use |
— |
|||||||||||
Interest and penalties |
||||||||||||
Income tax (benefit) / expense |
( |
) |
( |
) |
||||||||
Allowance for credit expected losses |
||||||||||||
Provision for contingencies |
||||||||||||
Changes in assets and liabilities, net of non-cash transactions: |
||||||||||||
Decrease / (Increase) in trade accounts receivable, net of credit expected loss |
( |
) | ||||||||||
Decrease / (Increase) in related party receivable |
( |
) |
( |
) | ||||||||
Decrease / (Increase) in other assets and prepaid expenses |
( |
) | ||||||||||
(Decrease) / Increase in accounts payable and accrued expenses |
( |
) |
||||||||||
(Decrease) / Increase in travel accounts payable |
( |
) |
( |
) |
||||||||
(Decrease) / Increase in other liabilities |
( |
) |
||||||||||
Decrease in contingent liabilities |
( |
) |
( |
) |
( |
) | ||||||
(Decrease) / Increase in related party payable |
( |
) |
||||||||||
Decrease in lease liabilities |
( |
) |
( |
) |
— |
|||||||
Increase in deferred revenue |
||||||||||||
|
|
|
|
|
|
|||||||
Net cash flows (used in) / provided by operating activities |
$ |
( |
) |
$ |
$ |
( |
) | |||||
|
|
|
|
|
|
|||||||
Cash flows from investing activities: |
||||||||||||
Payments for acquired business, net of cash acquired |
( |
) |
— |
|||||||||
Acquisition of property and equipment |
( |
) |
( |
) |
( |
) | ||||||
Increase of intangible assets, including internal-use software and website development |
( |
) |
( |
) |
( |
) | ||||||
|
|
|
|
|
|
|||||||
Net cash flows used in investing activities |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | |||
|
|
|
|
|
|
|||||||
Cash flows from financing activities: |
||||||||||||
Net (decrease) / increase of short-term debt |
( |
) |
( |
) |
||||||||
Increase in long-term debt |
— |
— |
||||||||||
Decrease in long-term debt |
( |
) |
— |
— |
||||||||
Exercise of stock-based compensation |
||||||||||||
Purchase of treasury stock |
— |
( |
) |
( |
) | |||||||
Proceeds from issuance of preferred shares |
— |
— |
||||||||||
Issuance costs of preferred shares and warrants |
( |
) |
— |
— |
||||||||
Payment of dividends to Series B convertible preferred shares |
( |
) |
— |
— |
||||||||
|
|
|
|
|
|
|||||||
Net cash flows provided by / (used in) financing activities |
$ |
$ |
( |
) |
$ |
( |
) | |||||
|
|
|
|
|
|
|||||||
Effect of exchange rate changes on cash and cash equivalents |
( |
) |
( |
) | ||||||||
|
|
|
|
|
|
|||||||
Net increase / (decrease) in cash and cash equivalents |
$ |
$ |
( |
) |
$ |
( |
) | |||||
|
|
|
|
|
|
|||||||
Cash and cash equivalents and restricted cash as of beginning of the year |
$ |
$ |
$ |
|||||||||
Cash and cash equivalents and restricted cash as of end of the year (1) |
$ |
$ |
$ |
(1) | See Note 8. |
|
|
For the year ended December 31, |
| |||||||||
2020 |
2019 |
2018 |
||||||||||
Supplemental cash flow information |
||||||||||||
Cash paid for income tax |
$ |
$ |
$ |
|||||||||
Interest paid |
$ |
$ |
$ |
|||||||||
Financed portion of acquisitions |
$ |
$ |
$ |
— |
1. |
Business |
2. |
Basis of consolidation and presentation |
Name of the subsidiary (in alphabetical order) |
Type |
Country of incorporation |
As of December 31, 2020 |
As of December 31, 2019 |
||||||||
% Owned |
||||||||||||
Agencia de Viajes y Turismo Falabella S.A.S. (1) |
— | % | ||||||||||
Badurey S.A. |
% | % | ||||||||||
BD Travelsolution, S. de R.L. de C.V. |
% | — | ||||||||||
BDTP Venture, Inc. |
% | — | ||||||||||
Beda Transportation, Inc. |
% | — | ||||||||||
Beda Travel & Tours, Inc. |
% | — | ||||||||||
Beda Travel, Inc. |
% | — | ||||||||||
Click Hoteles.com, LLC |
% | — | ||||||||||
Decolar.com Ltda. |
% | % | ||||||||||
Decolar.com, Inc. |
% | % | ||||||||||
Desonproc S.L. (6) |
— | % | ||||||||||
Despegar Colombia S.A.S. |
% | % | ||||||||||
Despegar Ecuador S.A. |
% | % | ||||||||||
Despegar Servicios, S.A. de C.V. (5) |
% | % | ||||||||||
Despegar.com Chile SpA |
% | % | ||||||||||
Despegar.com México S.A. de C.V. |
% | % | ||||||||||
Despegar.com Panama S.A. (6) |
— | % | ||||||||||
Despegar.com Peru S.A.C. |
% | % | ||||||||||
Despegar.com USA, Inc. |
% | % | ||||||||||
Despegar.com.ar S.A. |
% | % | ||||||||||
DFinance Holding Ltda. |
% | |||||||||||
Holidays S.A. |
% | % | ||||||||||
Jamiray International S.A. |
% | — | ||||||||||
Koin Administradora de Cartões e Meios de Pagamento S.A. |
% | — | ||||||||||
Rivamor S.A. |
% | % | ||||||||||
Satylca S.C.A. |
% | % | ||||||||||
Servicios Online 3351 de Venezuela C.A. |
% | % | ||||||||||
Servicios Online S.A.S. (1) |
— | % | ||||||||||
South Net Chile, LTDA |
% | — | ||||||||||
South Net Travel, Inc. |
% | — | ||||||||||
South Net Turismo Colombia, S.A. |
% | — | ||||||||||
South Net Turismo Perú S.R.L. |
% | — | ||||||||||
South-Net Turismo Brasil, LTDA |
% | — | ||||||||||
South-Net Turismo S.A. |
% | — | ||||||||||
Tecnobelt S.A. |
% | % | ||||||||||
Transporturist, S.A. de C.V. |
% | — | ||||||||||
Travel Reservations S.R.L. |
% | % | ||||||||||
Viaceco Travel, S.A. de C.V. (5) |
% | — | ||||||||||
Viajes Beda, S.A. de C.V. |
% | — |
Name of the subsidiary (in alphabetical order) |
Type |
Country of incorporation |
As of December 31, 2020 |
As of December 31, 2019 |
||||||||
Viajes Despegar.com O.N.L.I.N.E. S.A. |
% | % | ||||||||||
Viajes Falabella S.A. (2) |
— | % | ||||||||||
Viajes Falabella S.A.C. (3) |
— | % | ||||||||||
Viajes Falabella SpA (4) |
— | % |
(1) |
Merged with and into Despegar Colombia S.A.S. |
(2) |
Merged with and into Despegar.com.ar S.A. |
(3) |
Merged with and into Despegar.com Peru S.A.C. |
(4) |
Merged with and into Despegar.com Chile SpA. |
(5) |
Merged with and into Despegar.com México S.A. de C.V. on January 1, 2021. |
(6) |
Liquidated as of December 31, 2020. |
3. |
Summary of significant accounting policies |
Asset |
Estimated useful life (years) | |
Computer hardware |
||
Vans |
||
Office furniture and fixture |
||
Buildings |
Consideration: |
||||
Fair value of purchase price payable on |
||||
Fair value of contingent consideration payable on |
||||
|
|
|||
Total consideration as of acquisition date |
$ | |||
|
|
|||
Recognized amounts of assets acquired and liabilities assumed: |
||||
Cash and cash equivalents |
||||
Restricted cash |
||||
Trade accounts receivable, net of credit expected loss |
||||
Related party receivable |
||||
Lease right-of-use |
||||
Property and equipment, net |
||||
Intangible assets, net |
||||
Deferred tax assets |
||||
Seller indemnification |
||||
Other assets and prepaid expenses |
||||
|
|
|||
Total assets acquired |
$ | |||
|
|
|||
Accounts payable and accrued expenses |
||||
Travel accounts payable |
||||
Related party payable |
||||
Short-term and long-term debt |
||||
Lease liabilities |
||||
Contingent liabilities (1) |
||||
Deferred revenue |
||||
Taxes payable (2) |
||||
Deferred tax liabilities |
||||
Promissory notes issued (3) |
||||
Other liabilities |
||||
|
|
|||
Total liabilities assumed |
$ | |||
|
|
|||
Total net liabilities assumed |
$ | |||
|
|
|||
Goodwill |
$ | |||
|
|
(1) |
Includes $ non-income tax and $ |
(2) |
Includes a liability of $ |
(3) |
As part of the Acquisition Agreement, we legally assumed a debt that the acquired companies had with its previous shareholders. We issued |
Amount | Estimated useful life (years) |
|||||||
Trademarks |
||||||||
Domains |
||||||||
Developed technology |
||||||||
Licenses |
||||||||
Customer relationships |
||||||||
|
|
|||||||
Total intangible assets acquired |
$ | |||||||
|
|
Period from the date of acquisition to December 31, 2020 |
||||
Revenue |
$ | |||
Net loss |
$ | ( |
) |
For the years ended December 31, |
||||||||
2020 |
2019 |
|||||||
Revenue |
$ | $ | ||||||
Net loss |
$ | ( |
) | $ | ( |
) |
Consideration: |
||||
|
|
|||
Fair value of purchase price |
$ | |||
|
|
|||
|
|
|||
Redeemable non-controlling interest: |
$ | |||
|
|
|||
Recognized amounts of assets acquired and liabilities assumed: |
||||
Cash and cash equivalents |
||||
Restricted cash |
||||
Trade accounts receivable, net of credit expected loss |
||||
Lease right-of-use |
||||
Property and equipment, net |
||||
Intangible assets, net |
||||
Other assets and prepaid expenses |
||||
|
|
|||
Total assets acquired |
$ | |||
|
|
|||
Accounts payable and accrued expenses |
||||
Short-term debt |
||||
Lease liabilities |
||||
Contingent liabilities |
||||
Taxes payable |
||||
Deferred tax liabilities |
||||
Other liabilities |
||||
|
|
|||
Total liabilities assumed |
$ | |||
|
|
|||
Total net liabilities assumed |
$ | |||
|
|
|||
Goodwill |
$ | |||
|
|
Consideration: |
||||
Fair value of purchase price |
$ | |||
Recognized amounts of assets acquired and liabilities assumed: |
||||
Cash and cash equivalents |
||||
Trade accounts receivable, net of credit expected loss |
||||
Other assets and prepaid expenses |
||||
Property and equipment, net |
||||
Intangible assets, net |
||||
Total assets acquired |
$ | |||
Travel accounts payable |
||||
Other liabilities |
||||
Total liabilities assumed |
$ | |||
Total net assets acquired |
$ | |||
Goodwill |
$ | |||
Period from the date of acquisition to December 31, 2019 |
||||
Net revenue |
$ | |||
Net loss |
$ | ( |
) |
For the years ended December 31, |
||||||||
2019 |
2018 |
|||||||
Net revenue |
$ |
$ |
||||||
Net (loss) / income |
$ |
( |
) |
$ |
5. |
Redeemable non-controlling interest |
Beginning balance as of January 1, 2020 |
$ | |||
Initial fair value of redeemable non-controlling interest of acquired businesses |
||||
Comprehensive loss adjustments: |
||||
Net loss attributable to redeemable non-controlling interest |
( |
) | ||
Other comprehensive loss attributable to redeemable non-controlling interest |
||||
Additional paid-in-capital |
||||
Adjustment to redemption value |
||||
Ending balance as of December 31, 2020 |
$ | |||
6. |
Preferred Stock and Warrants |
7. |
Debt |
Book Value December 31, |
Fair Value December 31, |
|||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||
Loan with HSBC Mexico, S.A. principal amount |
— | — | ||||||||||||||
Loan with Bank Sabadell Mexico S.A. principal amount |
— | — | ||||||||||||||
Loan with Bank Sabadell Mexico S.A. principal amount |
— | — | ||||||||||||||
Loan with Banco de Crédito e Inversiones principal amount |
— | — | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Long-term debt, including current maturities |
$ | — | $ | — | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Less current maturities of long-term debt |
— | — | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Long-term debt, excluding current maturities |
$ | — | $ | — | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Short-term debt, including current maturities of long-term debt |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total short-term and long-term debt |
$ | $ | ||||||||||||||
|
|
|
|
|
|
|
|
As of December 31, 2020 |
As of December 31, 2019 |
|||||||
Balance, beginning of year |
$ | $ | ||||||
Acquisitions |
— | |||||||
Borrowings obtained |
— | |||||||
Payment of borrowings |
( |
) | — | |||||
Accrued interest |
— | |||||||
Interest paid |
( |
) | — | |||||
Foreign currency translation adjustment |
— | |||||||
Short-term loans, net |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Balance, end of year |
$ | $ | ||||||
|
|
|
|
Loan |
Issuance date |
Maturity date |
Currency | Principal amount in original currency |
Principal amount in U.S. dollars |
Interest rate | Interest payment |
|||||||||||||
HSBC Mexico, S.A. |
(1) + |
|||||||||||||||||||
Bank Sabadell Mexico S.A. |
(1) + |
|||||||||||||||||||
Bank Sabadell Mexico S.A. |
(1) + |
|||||||||||||||||||
Banco de Crédito e Inversiones |
(1) |
TIIE represents an interbank interest rate in Mexico. As of December 31, 2020, interest rates for HSBC Mexico, S.A. loan, Bank Sabadell I loan and Bank Sabadell II loan were |
8. |
Cash and cash equivalents and restricted cash |
As of December 31, 2020 |
As of December 31, 2019 |
|||||||
Cash on hand |
||||||||
Bank deposits |
||||||||
Time deposits |
||||||||
Money market funds |
||||||||
|
|
|
|
|||||
$ |
$ |
|||||||
|
|
|
|
As of December 31, 2020 |
As of December 31, 2019 |
As of December 31, 2018 |
||||||||||
As included in our consolidated balance sheets: |
||||||||||||
Cash and cash equivalents |
||||||||||||
Restricted cash |
||||||||||||
|
|
|
|
|
|
|||||||
Total cash and cash equivalents and restricted cash as shown in our consolidated statements of cash flows: |
$ | $ | $ | |||||||||
|
|
|
|
|
|
9. |
Measurement of credit losses on financial instruments |
As of January 1, 2020 | ||||||||||||
As reported under previous GAAP |
Impact of ASC 326 adoption |
As reported under ASC 326 |
||||||||||
Allowance for credit expected losses: |
As of December 31, 2020 |
As of December 31, 2019 |
|||||||
Balance, beginning of year |
$ | $ | ||||||
Impact of adoption of ASC 326 |
— | |||||||
Provisions |
||||||||
Recoveries and write-off |
( |
) | ( |
) | ||||
Foreign currency translation adjustment |
( |
) | ||||||
|
|
|
|
|||||
Balance, end of year |
$ | $ | ||||||
|
|
|
|
10. |
Other assets and prepaid expenses |
As of December 31, 2020 |
As of December 31, 2019 |
|||||||
Tax credits |
||||||||
Prepaid expenses and advance to suppliers |
||||||||
Prepaid advertising |
||||||||
Others |
||||||||
|
|
|
|
|||||
$ | $ | |||||||
|
|
|
|
As of December 31, 2020 |
As of December 31, 2019 |
|||||||
Deferred tax assets |
||||||||
Seller indemnification |
— | |||||||
|
|
|
|
|||||
$ | $ | |||||||
|
|
|
|
11. |
Property and equipment, net |
As of December 31, 2020 |
As of December 31, 2019 |
|||||||
Computer hardware and software |
||||||||
Office furniture and fixtures |
||||||||
Buildings |
||||||||
Vans |
— | |||||||
Land |
||||||||
|
|
|
|
|||||
Total property and equipment |
$ | $ | ||||||
|
|
|
|
|||||
Accumulated depreciation (1) |
( |
) | ( |
) | ||||
Impairment charge |
( |
) | — | |||||
|
|
|
|
|||||
Total property and equipment, net |
$ | $ | ||||||
|
|
|
|
(1) |
Accumulated depreciation as of December 31, 2020 comprised of $ |
As of December 31, 2020 |
As of December 31, 2019 |
|||||||
Balance, beginning of year |
$ | $ | ||||||
Additions |
||||||||
Disposals |
— | ( |
) | |||||
Write-off of leasehold improvements |
( |
) | — | |||||
Acquisitions (1) |
||||||||
Depreciation |
( |
) | ( |
) | ||||
Impairment charge |
( |
) | — | |||||
Foreign currency translation adjustment |
||||||||
|
|
|
|
|||||
Balance, end of year |
$ | $ | ||||||
|
|
|
|
(1) |
Acquired property and equipment was comprised mainly of computer hardware and software, office furniture and fixtures and a fleet of dedicated vans. |
For the year ended December 31, 2020 |
For the year ended December 31, 2019 |
For the year ended December 31, 2018 |
||||||||||
Technology and product development |
||||||||||||
General and administrative |
||||||||||||
Selling and marketing |
— | — | ||||||||||
|
|
|
|
|
|
|||||||
Total depreciation expense |
$ | $ | $ | |||||||||
|
|
|
|
|
|
12. |
Intangible assets, net |
As of December 31, 2020 |
As of December 31, 2019 |
|||||||
Indefinite-lived intangible assets: |
||||||||
Trademarks and domains |
||||||||
Definite-lived intangible assets: |
||||||||
Trademarks and domains |
— | |||||||
Developed technology |
||||||||
Licenses |
||||||||
Customer relationships |
||||||||
|
|
|
|
|||||
Total intangible assets |
$ | $ | ||||||
|
|
|
|
|||||
Accumulated amortization (1) |
( |
) | ( |
) | ||||
Impairment charge |
( |
) | — | |||||
|
|
|
|
|||||
Total intangible assets, net |
$ | $ | ||||||
|
|
|
|
(1) |
Accumulated amortization as of December 31, 2020 comprised of $ |
As of December 31, 2020 |
As of December 31, 2019 |
|||||||
Balance, beginning of year |
$ | $ | ||||||
Additions |
||||||||
Acquisitions (1) |
||||||||
Amortization |
( |
) | ( |
) | ||||
Impairment charge |
( |
) | — | |||||
Foreign currency translation adjustment |
( |
) | ||||||
|
|
|
|
|||||
Balance, end of year |
$ | $ | ||||||
|
|
|
|
(1) |
Acquired intangible assets was comprised mainly of customer relationships, trademarks and developed technology. |
For the year ended December 31, 2020 |
For the year ended December 31, 2019 |
For the year ended December 31, 2018 |
||||||||||
Technology and product development |
||||||||||||
General and administrative |
||||||||||||
Selling and marketing |
— | |||||||||||
|
|
|
|
|
|
|||||||
Total amortization expense |
$ | $ | $ | |||||||||
|
|
|
|
|
|
Year |
Amount | |||
2021 |
||||
2022 |
||||
2023 |
||||
2024 |
||||
2025 |
||||
2026 and thereafter |
||||
|
|
|||
Total |
$ | |||
|
|
13. |
Goodwill |
As of December 31, 2020 |
As of December 31, 2019 |
|||||||
Goodwill |
$ | $ | ||||||
|
|
|
|
Air |
Packages, Hotels and Other Travel Products |
Total |
||||||||||
Balance as of January 1, 2019 |
$ | $ | — | $ | ||||||||
Additions |
||||||||||||
Foreign currency translation adjustment |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Balance as of December 31, 2019 |
$ | $ | $ | |||||||||
Additions |
||||||||||||
Impairment charge |
( |
) | — | ( |
) | |||||||
Foreign currency translation adjustment |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Balance as of December 31, 2020 |
$ | $ | $ | |||||||||
|
|
|
|
|
|
14. |
Accounts payable and accrued expenses |
As of December 31, 2020 |
As of December 31, 2019 |
|||||||
Marketing suppliers |
||||||||
Unbilled suppliers |
||||||||
Other suppliers |
||||||||
|
|
|
|
|||||
$ | $ | |||||||
|
|
|
|
15. |
Travel accounts payable |
As of December 31, 2020 |
As of December 31, 2019 |
|||||||
Hotels and other travel service suppliers (1) |
||||||||
Cancelled reservations pending payment to travelers |
— | |||||||
Airlines |
||||||||
|
|
|
|
|||||
$ | $ | |||||||
|
|
|
|
(1) |
Includes $ |
16. |
Other liabilities |
As of December 31, 2020 |
As of December 31, 2019 |
|||||||
Taxes payable |
||||||||
Salaries payable |
||||||||
Seller financing Viajes Falabella (1) |
||||||||
Other |
||||||||
|
|
|
|
|||||
$ | $ | |||||||
|
|
|
|
As of December 31, 2020 |
As of December 31, 2019 |
|||||||
Seller financing Viajes Falabella |
— | |||||||
Taxes payable |
||||||||
Deferred tax liabilities |
— | |||||||
Purchase price payable for Best Day Group (2) |
— | |||||||
Accrued earnout liability (3) |
— | |||||||
Promissory notes issued (4) |
— | |||||||
Equity method investments |
— | |||||||
Other |
— | |||||||
|
|
|
|
|||||
$ | $ | |||||||
|
|
|
|
(1) |
As of December 31, 2020, this amount corresponds to the last installment due June 2021. |
(2) |
We will pay the purchase price on October 1, 2023. See Note 4 for details. |
(3) |
Under the terms of the acquisition of the Best Day Group, we may be required to pay an earnout amount up to a maximum of $ |
(4) |
Under the terms of the acquisition of the Best Day Group, we legally assumed a debt that Best Day Group had with their prior shareholders. We issued four promissory notes for an aggregate nominal amount of $ |
17. |
Derivative financial instruments |
Local currency |
Notional amount |
Type |
Maturity |
Fair value |
||||||||||
2020 |
||||||||||||||
Brazilian reais | $ | |||||||||||||
Mexican pesos | $ | |||||||||||||
Mexican pesos | $ | |||||||||||||
Mexican pesos | $ | |||||||||||||
Mexican pesos | $ | |||||||||||||
Mexican pesos | $ | |||||||||||||
Mexican pesos | $ |
|
|
Local currency |
|
|
Notional amount |
|
|
Type |
|
Maturity |
|
|
Fair value |
|
2019 |
||||||||||||||
Argentinian pesos | $ | ( |
) | |||||||||||
Chile pesos | $ | ( |
) | |||||||||||
Colombian pesos | $ | ( |
) | |||||||||||
Argentinian pesos | $ | |||||||||||||
Mexican pesos | $ |
18. |
Restructuring and related reorganization charges |
Employee severance and benefits |
Other | Total | ||||||||||
Accrued liability as of January 1, 2020 |
$ | $ | $ | |||||||||
Charges |
||||||||||||
Payments |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Accrued liability as of December 31, 2020 |
$ | $ | $ | |||||||||
|
|
|
|
|
|
19. |
Income taxes |
Year ended December 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
U.S. |
( |
) | ||||||||||
Foreign |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Total |
$ | ( |
) | $ | ( |
) | $ | |||||
|
|
|
|
|
|
Year ended December 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
Current income tax expense: |
||||||||||||
U.S. Federal |
( |
) | ||||||||||
Foreign |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Total current income tax expense |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Deferred income tax expense: |
||||||||||||
U.S. Federal |
— | — | ||||||||||
Foreign |
||||||||||||
|
|
|
|
|
|
|||||||
Total deferred income tax expense |
||||||||||||
|
|
|
|
|
|
|||||||
Income tax benefit / (expense) |
$ | $ | $ | ( |
) | |||||||
|
|
|
|
|
|
As of December 31, 2020 |
As of December 31, 2019 |
|||||||
Non-current deferred tax assets |
||||||||
|
|
|
|
|||||
Total deferred tax assets |
||||||||
|
|
|
|
|||||
Less valuation allowance |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Net deferred tax assets |
||||||||
|
|
|
|
|||||
Non-current tax liabilities |
( |
) | — | |||||
|
|
|
|
|||||
Total deferred tax liabilities |
( |
) | — | |||||
|
|
|
|
|||||
Total deferred tax |
$ | $ | ||||||
|
|
|
|
As of December 31, 2020 |
As of December 31, 2019 |
|||||||
Tax loss carryforwards |
||||||||
Allowance for credit expected losses |
||||||||
Royalties |
||||||||
Provisions and other assets |
||||||||
Property and equipment |
( |
) | ||||||
Intangible assets |
( |
) | — | |||||
Others |
( |
) | ||||||
|
|
|
|
|||||
Total deferred tax assets, net before valuation allowance |
$ | $ | ||||||
|
|
|
|
|||||
Less valuation allowance |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total deferred tax assets, net after valuation allowance |
$ | $ | ||||||
|
|
|
|
As of December 31, 2020 | ||||||||
Expiration date |
U.S. | Foreign | ||||||
Expires 2021 |
||||||||
Expires 2022 |
||||||||
Expires 2023 |
||||||||
Expires 2024 and thereafter |
||||||||
Without expiration dates |
||||||||
|
|
|
|
|||||
Total NOLs (1) |
$ | $ | ||||||
|
|
|
|
(1) |
A partial valuation allowance is booked as of December 31, 2020 in order to reserve $ |
Country |
NOL gross amount |
Expiration terms | ||||
Brazil |
||||||
Mexico |
| |||||
Argentina |
| |||||
Colombia |
| |||||
Others |
||||||
|
|
|||||
Total NOLs |
$ | |||||
|
|
Valuation allowance |
||||
Balance as of January 1, 2018 |
$ | |||
Increases |
||||
Decreases |
( |
) | ||
|
|
|||
Balance as of December 31, 2018 |
$ | |||
|
|
|||
Increases |
||||
Decreases |
( |
) | ||
|
|
|||
Balance as of December 31, 2019 |
$ | |||
|
|
|||
Increases |
||||
Decreases |
( |
) | ||
|
|
|||
Balance as of December 31, 2020 |
$ | |||
|
|
Year ended December 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
Net (loss) / income before income tax |
$ | ( |
) | $ | ( |
) | $ | |||||
Weighted average income tax rate (3) |
% | % | % | |||||||||
|
|
|
|
|
|
|||||||
Income tax (benefit) / expense at weighted average income tax rate |
$ | ( |
) | $ | ( |
) | $ | |||||
Permanent differences: |
||||||||||||
Non-taxable income (1) |
( |
) | ( |
) | ||||||||
Foreign non-creditable withholding tax (2) |
||||||||||||
Non-deductible expenses |
||||||||||||
Currency translation adjustment |
||||||||||||
Tax credits recovery |
( |
) | — |
|||||||||
Others |
||||||||||||
Provisions and contingencies |
— |
— |
||||||||||
True up |
( |
) | ||||||||||
Change in valuation allowance |
( |
) | ( |
) | ( |
) | ||||||
Change in tax rate |
— |
|||||||||||
|
|
|
|
|
|
|||||||
Income tax (benefit) / expense |
$ | ( |
) | $ | ( |
) | $ | |||||
|
|
|
|
|
|
(1) |
Includes tax (benefits) / losses generated by operations located in the Uruguayan “Free Trade Zone”. |
(2) |
Includes foreign withholding taxes on royalties and services. |
(3) |
We use a weighted average rate for the income tax reconciliation, since the majority of our operations are outside the U.S. The calculation is performed based on an average between the enacted tax rates of the foreign jurisdictions. |
Year ended December 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
Balance, beginning of year |
||||||||||||
Increases to tax positions related to current year |
||||||||||||
Increases to tax positions related to prior years (1) |
||||||||||||
Decreases to tax positions related to prior years |
||||||||||||
Reductions due to lapsed statute of limitations |
||||||||||||
Settlements during current year |
||||||||||||
Interest and penalties |
||||||||||||
|
|
|
|
|
|
|||||||
Balance, end of year |
$ | $ | $ | |||||||||
|
|
|
|
|
|
(1) |
Corresponds to uncertain tax positions recognized as part of the acquisition of the Best Day Group. See Note 4. |
20. |
Segment information |
Year ended December 31, 2020 |
||||||||||||||||
Air |
Packages, Hotels and Other travel products |
Unallocated |
Total Consolidated |
|||||||||||||
Revenue |
$ | $ | $ | — | $ | |||||||||||
Adjusted EBITDA |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||
Depreciation and amortization |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Stock-based compensation expense |
— | — | ( |
) | ( |
) | ||||||||||
Impairment charges |
— | — | ( |
) | ( |
) | ||||||||||
Restructuring charges |
— | — | ( |
) | ( |
) | ||||||||||
Acquisition transaction costs |
— | — | ( |
) | ( |
) | ||||||||||
Operating loss |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||
Financial income, net |
— | — | — | |||||||||||||
Loss before income tax |
— | — | — | $ |
( |
) | ||||||||||
Income tax benefit |
— | — | — | |||||||||||||
Net loss for the year |
— | — | — | $ |
( |
) | ||||||||||
Net loss attributable to redeemable non-controlling interest |
— | — | — | |||||||||||||
Net loss attributable to Despegar.com, Corp. |
— | — | — | $ |
( |
) | ||||||||||
Year ended December 31, 2019 |
||||||||||||||||
Air |
Packages, Hotels and other travel products |
Unallocated |
Total Consolidated |
|||||||||||||
Revenue |
$ | $ | $ | — | $ | |||||||||||
Adjusted EBITDA |
$ |
$ |
$ |
( |
) |
$ |
||||||||||
Depreciation and amortization |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Stock-based compensation expense |
— | — | ( |
) | ( |
) | ||||||||||
Impairment charges |
— | — | — | — | ||||||||||||
Restructuring charges |
— | — | — | — | ||||||||||||
Acquisition transaction costs |
— | — | ( |
) | ( |
) | ||||||||||
Operating (loss) / income |
$ |
( |
) |
$ |
$ |
( |
) |
$ |
( |
) | ||||||
Financial expense, net |
— | — | — | ( |
) | |||||||||||
Loss before income tax |
— | — | — | $ |
( |
) | ||||||||||
Income tax benefit |
— | — | — | |||||||||||||
Net loss for the year |
— | — | — | $ |
( |
) | ||||||||||
Year ended December 31, 2018 |
||||||||||||||||
Air |
Packages, Hotels and other travel products |
Unallocated |
Total Consolidated |
|||||||||||||
Revenue |
$ |
$ |
$ |
— |
$ |
|||||||||||
Adjusted EBITDA |
$ |
$ |
$ |
$ |
||||||||||||
Depreciation and amortization |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
Stock-based compensation expense |
— |
— |
( |
) |
( |
) | ||||||||||
Impairment charges |
— |
— |
( |
) |
( |
) | ||||||||||
Restructuring charges |
— |
— |
— |
|||||||||||||
Acquisition transaction costs |
— |
— |
— |
— |
||||||||||||
Operating income / (loss) |
$ |
$ |
$ |
( |
) |
$ |
||||||||||
Financial expense, net |
— |
— |
— |
( |
) | |||||||||||
Income before income tax |
— |
— |
— |
$ |
||||||||||||
Income tax expense |
— |
— |
— |
( |
) | |||||||||||
Net income for the year |
— |
— |
— |
$ |
||||||||||||
Year ended December 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
Business Model: |
||||||||||||
Prepay/Merchant Model |
||||||||||||
Pay-at-Destination/Agency |
||||||||||||
Others (1) |
||||||||||||
Total Revenue |
$ |
$ |
$ |
|||||||||
Revenue Type: |
||||||||||||
Commissions and service fees |
||||||||||||
Incentive fees |
||||||||||||
Advertising |
||||||||||||
Others (2) |
||||||||||||
Total Revenue |
$ |
$ |
$ |
|||||||||
Country: |
||||||||||||
Argentina |
||||||||||||
Brazil |
||||||||||||
Uruguay |
||||||||||||
Mexico |
||||||||||||
Other countries (3) |
||||||||||||
Total Revenue |
$ |
$ |
$ |
|||||||||
(1) | Others includes incentive fees, advertising, breakage, loyalty and interest revenue. |
(2) | Others includes breakage, loyalty, destination services and interest revenue. |
(3) | Other countries include Chile, Peru, Colombia, Ecuador and United States. |
As of December 31, 2020 |
As of December 31, 2019 |
|||||||
Goodwill: |
||||||||
Argentina |
||||||||
Brazil |
||||||||
Mexico |
||||||||
Uruguay |
||||||||
Other countries (1) |
||||||||
$ |
$ |
|||||||
Intangible assets: |
||||||||
Argentina |
||||||||
Uruguay |
||||||||
Mexico |
— | |||||||
Other countries (2) |
||||||||
$ |
$ |
|||||||
As of December 31, 2020 |
As of December 31, 2019 |
|||||||
Property and equipment: |
||||||||
Argentina |
||||||||
Brazil |
||||||||
Mexico |
— | |||||||
Uruguay |
||||||||
United States |
||||||||
Other countries (3) |
||||||||
$ |
$ |
|||||||
(1) | Other countries include Chile, Peru and Colombia |
(2) | Other countries include Chile, Peru, Colombia, Brazil and United States. |
(3) | Other countries include Chile, Peru, Colombia and Ecuador. |
21. |
Commitments and contingencies |
22. |
Related party transactions |
23. |
Fair value measurements |
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
Assets |
||||||||||||||||
Cash equivalents |
||||||||||||||||
Money market funds |
— | — | ||||||||||||||
Time deposits |
— | — | ||||||||||||||
Derivatives |
||||||||||||||||
Foreign currency forwards |
— | — | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total assets at fair value |
$ | $ | $ | — | $ | |||||||||||
Liabilities |
||||||||||||||||
Accrued earnout liability |
— | — | ( |
) | ( |
) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total liabilities at fair value |
$ | — | $ | — | $ | ( |
) | $ | ( |
) |
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
Assets |
||||||||||||||||
Cash equivalents |
||||||||||||||||
Money market funds |
— | — | ||||||||||||||
Time deposits |
— | — | ||||||||||||||
Derivatives |
||||||||||||||||
Foreign currency forwards |
— | — | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total assets at fair value |
$ | $ | $ | — | $ | |||||||||||
Liabilities |
||||||||||||||||
Derivatives |
||||||||||||||||
Foreign currency forwards |
— | ( |
) | — | ( |
) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total liabilities at fair value |
$ | — | $ | ( |
) | $ | — | $ | ( |
) |
24. |
Earnings per share |
Year ended December 31, |
||||||||
2020 |
2019 |
|||||||
Basic and diluted earnings per share |
||||||||
Net loss for the year |
( |
) | ( |
) | ||||
Less: Net loss for the year attributable to redeemable non-controlling interest |
— | |||||||
|
|
|
|
|||||
Net loss for the year attributable to Despegar.com, Corp. |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Accretion of redeemable non-controlling interest to redemption value |
( |
) | — | |||||
Accretion of redeemable Series A preferred stock to redemption value |
( |
) | — | |||||
Accrued dividends of redeemable Series A preferred stock |
( |
) | — | |||||
Dividends of redeemable Series B preferred stock |
( |
) | — | |||||
|
|
|
|
|||||
Net loss for the year attributable to Despegar.com, Corp. common shareholders |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Numerator of basic and diluted earnings per share |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Weighted average common shares outstanding—basic and diluted |
||||||||
Denominator of basic and diluted earnings per share |
||||||||
|
|
|
|
|||||
Basic and diluted earnings per share |
( |
) | ( |
) |
25. |
Shareholders’ equity and mezzanine equity |
Year ended December 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
Number of shares repurchased |
||||||||||||
Average price per share |
||||||||||||
|
|
|
|
|
|
|||||||
Total cost of repurchases (1) |
26. |
Financial income / (expense), net |
Year ended December 31, |
||||||||||||
2020 |
2019 |
2018 |
||||||||||
Foreign exchange gains / (losses) |
( |
) | ( |
) | ||||||||
Gains / (losses) on derivative financial instruments |
||||||||||||
Interest income |
||||||||||||
Interest expense |
( |
) | ( |
) | ( |
) | ||||||
Factoring expense |
( |
) | ( |
) | ( |
) | ||||||
Bank expenses |
( |
) | ( |
) | ( |
) | ||||||
Others |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
Total financial income / (expense), net |
$ | $ | ( |
) | $ | ( |
) | |||||
|
|
|
|
|
|
27. |
Stock-based compensation |
RSUs |
Weighted average grant-date fair value |
|||||||
Balance as of January 1, 2018 |
$ | |||||||
Granted |
$ | |||||||
Vested (1) |
( |
) | $ | |||||
|
|
|
|
|||||
Balance as of December 31, 2018 |
$ | |||||||
Granted |
$ | |||||||
Vested |
( |
) | $ | |||||
Cancelled |
( |
) | $ | |||||
|
|
|
|
|||||
Balance as of December 31, 2019 |
$ | |||||||
Granted |
$ | |||||||
Vested |
( |
) | $ | |||||
Cancelled |
( |
) | $ | |||||
|
|
|
|
|||||
Balance as of December 31, 2020 |
$ |
Options |
Weighted average exercise price |
Remaining contractual life (in years) |
Aggregate intrinsic value |
|||||||||||||
Balance as of January 1, 2018 |
$ | — | — | |||||||||||||
Granted |
$ | — | — | |||||||||||||
Exercised |
( |
) | $ | — | — | |||||||||||
Forfeited / Cancelled |
( |
) | $ | — | — | |||||||||||
Balance as of December 31, 2018 |
$ | — | — | |||||||||||||
Granted |
$ | — | — | |||||||||||||
Exercised |
( |
) | $ | — | — | |||||||||||
Forfeited / Cancelled |
( |
) | $ | — | — | |||||||||||
Balance as of December 31, 2019 |
$ | — | — | |||||||||||||
Exercised |
( |
) | $ | — | — | |||||||||||
Forfeited / Cancelled |
( |
) | $ | — | — | |||||||||||
Balance as of December 31, 2020 |
$ | $ | ||||||||||||||
Exercisable as of December 31, 2020 |
$ | $ | ||||||||||||||
Vested and expected to vest after December 31, 2020 |
$ | $ |
2020 |
2019 |
2018 |
||||||||||
Risk-free interest rate |
% | % | ||||||||||
Expected volatility |
% | % | ||||||||||
Expected life (in years) |
— | |||||||||||
Weighted-average estimated fair value of options granted during the year |
28. |
Leases |
Year ended December 31, 2020 |
Year ended December 31, 2019 |
|||||||
Cash paid for amounts included in the measurement of lease liabilities: |
||||||||
Operating cash flows for operating lease payments |
$ | $ |
As of December 31, 2020 |
||||
2021 |
||||
2022 |
||||
2023 |
||||
2024 |
||||
2025 |
||||
2026 and thereafter |
||||
Total remaining lease payments |
$ | |||
Less imputed interest |
( |
) | ||
Total operating lease liabilities: |
$ | |||
Current operating lease liability |
||||
Non-current operating lease liability |
$ |
As of December 31, 2020 |
||||
Operating lease right-of-use |
$ | |||
Current lease liabilities |
||||
Non-current lease liabilities |
||||
Total operating lease liabilities |
$ | |||
Balance, beginning of year |
Charges to earnings |
Charges to other accounts |
Deductions |
Balance, end of year |
||||||||||||||||
2018 |
||||||||||||||||||||
Allowance for credit expected losses |
( |
) | ( |
) | ||||||||||||||||
2019 |
||||||||||||||||||||
Allowance for credit expected losses |
( |
) | ( |
) | ||||||||||||||||
2020 |
||||||||||||||||||||
Allowance for credit expected losses |
( |
) |