Mondee Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 15, 2023

There are 10 speakers on the call.

Operator

Good day, and welcome to the Mondi Second Quarter 2023 Earnings Conference Call. Please note this event is being recorded. I would now like to turn the conference call over to Jeff Houston, Senior Vice President. Jeff, please go ahead.

Speaker 1

Thank you, operator, and good morning, everyone. Welcome to Mondu's Q2 2023 conference call. With me today is Founder, Chairman and CEO, Prasad Gundamundala and Chief Financial Officer, Jesus Portillo, who will present our results. Also available for questions and answers is our Vice Chairman, Chief Strategy and Business Development Officer, Aristides Syntyclis and Chief Operating Officer, Jim Dullum. Before we begin, I'd like to remind everyone that this call may contain forward looking statements, including statements about revenue, growth of our business, our management and government plans and other non historical statements as further described in our press release.

Speaker 1

These forward looking statements are subject to certain risks, uncertainties and assumptions, including those related to Mondi's growth, the evolution of our industry, our product development and success, Our management performance and general economic and business conditions. We undertake no obligation to revise any statements to reflect changes that occur after this call. Descriptions of these and other risks that could cause actual results to have a material difference from these forward looking statements are discussed in our reports filed with the SEC and in our press release that was issued this morning. During the call, we also refer to non GAAP financial measures. Reconciliations of the most comparable GAAP measures Also available in the press release, which is available at investors.

Speaker 1

Mandy.com. With that, it's my pleasure to turn it over to Prasad.

Speaker 2

Thank you, Jeff. This morning, we are excited to welcome everyone to Mondi's 2nd Quarter 2023 Earnings Call to discuss our results and significant developments. We appreciate your interest whether you are a shareholder, a client, supplier, Business partners, employees, prospective shareholders or analysts. I'll begin today's call with our business highlights and strategy, And then I will turn the call over to our CFO, Jesus Portillo, for a more detailed review of our financial results and outlook. We will then conclude the session with time to answer a few questions.

Speaker 2

Starting on Slide 4, There are 3 key points to emphasize in our 2nd quarter results. 1st, Mondi is once again disrupting the travel market through AI innovation and next gen technology deployment. We are thrilled that on the 1st anniversary of our NASDAQ public listing, Mondi released the 1st fully integrated AI travel marketplace, Opening a world of new market opportunities and solidifying our status as pioneers in the travel industry. Our journey has naturally led us to this transformational intersection. In the past 12 years, We assembled the components that disrupted a significant segment of the North American travel market and created a highly successful Mondi 1.0 marketplace platform, the technology marketplace for travel experts, suppliers, Travelers and organizations.

Speaker 2

With our newly released disruptive AI platform and 1D2R RO marketplace, We are broadening our addressable customer base to include the vibrant ecosystem of travel social influencers, Freelancers and the tech savvy millennial and Gen Z travelers. Moving to Slide 5. Key elements of this transformation included a one of a kind modern tech platform, extensive world class privately negotiated content, Deployed through a powerful network of experts and travelers. This positions us to generate increasingly hyper local content For personalized experiences, as well as establishing Mondi as a technology leader when it comes to AI in travel. Coming to the second point, now that we have all of these assets in place, we are now perfectly positioned to launch a series of robust modern marketing campaigns with the help of our expanded world class marketing team.

Speaker 2

This strategic push aims to fully capitalize on our disruptive market position as we approach 2024. AI is not new to us. Wandi has been investing in AI technology for the past few years. Because of this, we are uniquely positioned to lead and bring a fully integrated advanced AI platform to the travel industry. Over the past few quarters, a favorable market window opened, Allowing us to leverage our established assets to position Mondi as a leader in the EI marketplace.

Speaker 2

These developments were: 1st, rapid popularity and proven breakthroughs in generative AI platform, Such as Chat GPT and Google Pod. Secondly, Gen Z and Millennial Travelers are Receptive to and actively seeking AI solutions for creating personalized travel experiences. Thirdly, social media influencers have become more relevant to introduce new travel experiences to their followers. With these developments, coupled with the deployment of our advanced technology, expanded global content and innovative marketing programs, We are stepping into a new realm, poised to bring travel experiences to a wider audience. As a result, We decided to accelerate our investments in deploying the technology, building the marketing programs, The content scope and curation as well as the business delivery infrastructure.

Speaker 2

We believe that the symbiotic relationship between AI advancements And Mondi's leadership in air travel technology justify our intensified focus on these initiatives. Our incremental investments here will facilitate the process of engaging travelers through social media influencers, Close user groups and organizations more quickly. We fully expect our revolutionary air travel marketplace to contribute to further market share gains, Improve the rate of net revenue growth and enhance profitability in 2024 and thereafter. The third point, we continue to grow at a fast pace and perform well financially. Turning to Slide 6, We are proud of the performance of our Mondi marketplace, which has delivered explosive organic and inorganic growth as well as positive EBITDA.

Speaker 2

Culminating into yet another stellar financial results in the Q2, exemplifying our commitment to growth with innovation and excellence. In Q2 of this year, with take rate, which we define as net revenue divided by gross revenue, increasing to 8% from 7.2% in the Q2 of 2022. Net revenue of $57,000,000 was 124 percent of the Q2 of 2022. In the first half of twenty twenty three, we exceeded the net revenue guidance communicated to the investment community, and we remain on track to continue performing well. On the profitability front, we delivered an adjusted EBITDA of 4,400,000 Which is 118 percent of adjusted EBITDA in the same period last year.

Speaker 2

We achieved this result even after investing Approximately $1,000,000 of additional marketing and personal expenses in anticipation of the Mondi AI Marketplace launch. Hesus will delve deeper into financial results and specific guidance numbers shortly. But first, I would like to underscore the reasons for our enthusiastic growth outlook and additional insights on the potential of our AI travel marketplace and distribution channels. Turning back to Slide 5, our AI Travel Marketplace It's transforming the travel marketplace with a range of innovative features that will completely change how trips and personal travel experiences are conceived, planned and booked. We are enabling travel influencers, local experts And agents with unprecedented access and complete travel content in our unified marketplace as well as travel centric cutting edge technology Such as Abhi, the AI platform with conversational commerce to conveniently create and deliver personalized travel experiences.

Speaker 2

It adds the global knowledge of experts to their local expertise to be able to serve any type of customers well. For travelers, we have crafted immersive travel experiences using intuitive self-service exploration tools driven by AI. But that's not all. We have taken it a step further by connecting travelers with on demand local experts from around the world. Through our AI driven marketplace, these experts bring local knowledge and tap into global network to add a unique touch to inspire travel adventures.

Speaker 2

At the heart of our mission is bringing joy to the traveler's journey, making it personal, surprising and meaningful. We believe in curating localized experiences that matter. With the only fully integrated AI travel platform today, Our marketplace empowers travel experts and influencers to provide exactly what their clients desire, Our all in one platform offers A wide range of travel content available in about 20 languages and our customer support has been expanded With our growing always connected expert network to ensure your trip is smooth from start to finish, with assistance available via phone, Chat and e mail. Experts and travelers are able to discover the world at their fingertips with access to over 500 Airlines, 1,000,000 hotels and vacation rentals, 30,000 rental car pickup locations and now 50 cruise lines, All at negotiated rates that guarantee exceptional value. What truly sets the Mondi marketplace apart It's our groundbreaking fully integrated AI platform.

Speaker 2

Innovation is our passion, and we have harnessed the power of generative AI, Deep learning, computer vision and a recommendation engine along with conversational commerce to transform the travel booking process. Our FinTech tools provide additional choices and protection for all purchases within our marketplace, ensuring your peace of mind. Moving to Slide 7. Yesterday, we announced the acquisition of SkyPass, a leading travel marketplace, Specializing in international corporate and SMB travel, continuing our accretive and disciplined M and A strategy And adding content and distribution, which is enhancing our new marketplace. This follows our 3 acquisitions announced earlier this year That strengthened our presence in LatAm, specifically Brazil and Mexico.

Speaker 2

Going forward, we plan to continue our disciplined inorganic strategy to expand our existing operations while also exploring opportunities in other regions. We intend to leverage our platform and marketplace accretively to support sustainable growth and enhance our position as a leader in the global travel industry. On the operations front, as a part of our continuous improvement, we are introducing all our new technology internally to our support teams as well as integrating with our new operations team across all geographies to better serve all our organization customers, marketplace influencers, Experts and travelers, the ongoing enhancements of our operation and customer service elevates customer satisfaction and supports rapid growth of our business. For example, our business to enterprise, our B2E segment, performed very well through the 2nd quarter With 2 74% increase in transactions as measured in June or January, We continue to experience momentum with joint flight and hotel transactions providing us with increased confidence as we introduce new travel content and diversify revenue streams to our customers. Moving on to additional net worthy accomplishments in the quarter, back to Slide 6.

Speaker 2

First is our addition to Russell 2,000 Index as the largest travel tech additions in 2023. It serves as a testament to Mondi's strong fundamentals and business performance, reaffirming our role as a leader in the travel technology industry. This recognition holds significant importance and is expected to support our endeavors in enhancing long term shareholder value, Raising awareness of Mondi among the investment community, bolstering stock volume and liquidity and diversifying our shareholder base. This development is expected to enhance visibility and trading liquidity, while also facilitating the entry of new institutional investors. Next, we completed a successful secondary offering for $52,500,000 welcoming an additional 43 institutional investors to our shareholder base.

Speaker 2

It was a step forward in diversifying our shareholder base and incentivizes an environment that foster investor Participation. Moreover, with management retaining over 40% ownership of shares, our interest remains truly aligned with those of our valued investors. As I mentioned earlier, we have significantly enhanced our leadership and marketing teams in the first half of twenty twenty three. Most recently, Vijay Mehta, previously a leader at Google, joined Mondi's executive team To oversee AI's strategic planning and initiatives. With a professional background of over 25 years, including a wealth of experience in the field of AI, Mital will play a crucial role in our AI marketplace.

Speaker 2

It brings a growth focused approach that emphasizes client centricity, revenue generation and results driven dealership. Furthermore, former Accenture Executive, Geetika Gupta, who led a distributed workforce of 22,000 across Geographies, including the United States, India, Singapore and Malaysia, joined Mondi as Chief People Officer, Bringing her HR transformation experience from Accenture Consulting on Fortune 100 Projects to aid in scaling Mondi's infrastructure. Under CMO, Kimber Low's leadership, the marketing team welcomed 14 new members with the focus to drive substantial growth of the company over the coming years. The team now includes online and social media experts from companies such as Google, Amazon and Microsoft, Including Rachel Van Nothwijk and Christy Burke, the marketing team has launched a set of marketing initiatives around the Mondi's fully integrated AI Genius platform to promote Mondi's now fully AI enabled marketplace to customers and prospects, including Travel Experts, Influencers, Organizations and SMEs. In addition, as we round out our infrastructure for rapid scalable growth, we continue to add key executive and subject matter experts In the AS Strategy and Roadmap Development, Vendor Relationship Management, Financial Disciplines such as SOX Compliance as well as Operational Program Management, We are now well along the path of building an all star team to take Mondi up significant levels of profitable growth.

Speaker 2

I will now pass the call over to Jesus for a review of our financial performance and outlook. Jesus?

Speaker 3

Thank you, Prasanna, and thanks again to our audience for attending. We generated strong results in the Q2 as Mandi continues to expand geographically, Leverage our enhanced technology and capitalize on the international travel market recovery. For your reference, we present a summary of our 2nd quarter results In Slide 8 of the presentation, gross revenue of $708,000,000 was 112% of Q2 of 2022, While net revenue of $56,800,000 was 124 percent of Q2 2022. Take rate continued to be in line with our expectations and closed at 8% in the Q2, a substantial increase from pre pandemic levels of 4% to 5%. It also represents a substantial increase when compared to 7.2% achieved during the Q2 of 'twenty 2.

Speaker 3

This expansion intake rate is driven mainly by the uptake of hotel content and the diversification of revenue streams like travel ancillary and fintech. We expect this very important metric to continue expanding with addition of cruises and a greater mix of hotels, events and activities. Furthermore, we're happy with the momentum of our business, with over 721,000 transactions in the Q2 of 'twenty 3, up from $550,000 in the Q2 of 2022. Turning to expenses. GAAP sales and marketing as a Percentage of gross revenue was 5.7 percent versus 5.1% in the same quarter last year.

Speaker 3

As we enhanced our marketing function G and A as a percentage of net revenue was 9.2%, up from 4.4% a year ago Adjusted EBITDA was $4,400,000 for the quarter, 118 percent over $3,800,000 in Q2 of 2022, as we continue to deliver profitable growth despite the incremental marketing and long term expenses. Note that reconciliation of GAAP to non GAAP are available in today's earnings release. On a GAAP basis, The net loss was $14,600,000 including approximately $14,000,000 of non cash and or non recurring items, Such as $3,800,000 of depreciation and amortization, dollars 4,800,000 of stock based compensation, $2,000,000 of tax provisions $500,000 of changes in fair value of earnout and liabilities $300,000 of M and A costs, non cash financing cost of $1,500,000 And onetime marketing costs associated with our new AI platform launch of approximately $1,000,000 Comparatively, net loss was $2,100,000 in Q2 of On a non GAAP basis, adjusted net loss was $5,000,000 versus a loss of $2,900,000 last year. Looking at our balance sheet. At the end of second quarter, we had approximately $58,000,000 in cash $153,000,000 of debt Compared to $67,000,000 $150,000,000 respectively at the end of Q1 of 2023.

Speaker 3

The small decrease in cash reserves Was mainly due to acquisitions and working capital increase. Turning to our 2023 outlook and guidance. We're increasing our 2023 net revenue guidance by $5,000,000 and expect to continue delivering profitable growth. Our projections include both organic and inorganic growth from Bondi's recent acquisitions. Net revenue for the 2023 fiscal year is range between $245,000,000 $250,000,000 representing 155 percent In the Q2 to ramp up our investment in marketing and accelerate execution of our AI roadmap.

Speaker 3

We expect those investments be around $20,000,000 over the course of the year. We believe this will facilitate capturing new market share, accelerating revenue growth in 2024 Disrupting the travel industry with our Next Gen AI platform. With all of this in mind, we are updating our 2023 adjusted EBITDA guidance

Speaker 4

to be

Speaker 3

in the range of $25,000,000 to $30,000,000 which could represent a 2 50% of our 2022 adjusted EBITDA measured at the midpoint. Finally, and before turning the call over to Cesar, we We would like to formally welcome Deloitte as our new auditor effective July 6, 2023. We're very excited about this partnership and the capabilities and experience that Deloitte Thank you. And over to you now, Prasad.

Speaker 2

Thank you, Jesus. We are excited with the initial results of the investments we are making in AI Technology, Marketing and Infrastructure to position Mondi as a driving force The rapidly emerging world class social commerce travel. I'm especially proud of our entire team for making this happen While continuing to deliver a very strong fiscal quarter and more importantly, putting us on track for an even more exciting rest of 2023 and beyond. Mondi is truly transforming the travel industry with its modern tech platform, connecting airlines, hotels and vacation rentals with millions of travelers Through an expanding network of travel experts, freelancers and social media influencers, Wandi is now best poised to capitalize on our investments and penetrate All market segments rapidly with our next generation AI marketplace led by the increasing traveler demand for socially Based collaboration and personalized novel travel experiences. With our rapidly expanding and segmented distribution network and AI enabled trip creation, Our comprehensive solution also provides suppliers with a one stop shop to best place excess capacity, Unlike the online broadcast distribution channels, this is further enhanced by our ability to offer not only Unique privately negotiated value content, but also full FinTech solution and ancillary, many of which also benefit our supply partners.

Speaker 2

We are thrilled by the progress we expect to make over the next several quarters and the vast opportunity now before us With our next gen AI enabled tech platform, expanding and deepening content and substantially enhance and expanding distribution. We are uniquely positioned once again to continue disrupting and serving the travel market, which is approximately $2,000,000,000,000 in size. Thanks for attending our Q1 earnings call and we look forward to your ongoing support.

Speaker 1

Operator, we're ready for questions now.

Operator

Thank you. Our first question comes from Darren Aftahi from Roth MKM. Darren, your line is now open. Please go ahead.

Speaker 5

Hey, good morning. Thanks for taking my questions. First one, just some clarification on The commentary about the $20,000,000 investment in the AI marketplace. Like I guess you guys kind of called out $1,000,000 in the second quarter. So that assumes the bulk of that investment is going to be made in the second half.

Speaker 5

And then I'm kind of curious in the context of that number, where is that money going to besides marketing? And what is the rationale that's sort of one time in nature?

Speaker 6

Yes. Thank you, Darren. I'll add some thoughts on Jim, go ahead and I'll add.

Speaker 2

Yes.

Speaker 7

Orestes, I'll start and then you go. Yes, Darren, I was just going to say that look, we're As we go to the market now with this just this really industry leading AI platform, We're going to be rebranding, so there is a one time investment in branding. There are a number of Very significant marketing programs that we will launch that will bring in substantial numbers of travel influencers And obviously behind Travel Influencers are all of their followers. And then obviously going through our Travel experts, our agents providing them with not just these tools to do the job better, but the marketing I mean this is a market window that is substantial. We are the only ones that we believe properly positioned to Take advantage of it, given our excellent tech platform.

Speaker 7

And so this is the time for us to Go ahead and accelerate our investments to go in and really get significant penetration. So those are the characters of the types of things we're going to be doing, and we've put together a full budget for this that our marketing team is Managing now through the end of the year and into 2024.

Speaker 6

Thank you, Jim. And just to add a few more thoughts there. I mean the launch of the new marketplace was always a 2023 project, but the addition of the AI was always more of a 20 4.1. And Thanks to the advancements of our own tech team, we have created what we believe to be the most powerful and the only fully integrated AI travel Platform out there, so being a first mover and having this advantage, it makes total sense to deploy additional marketing resources Before a few years from now when other players may develop their own AI platforms, right? So this is At First Mover Advantage and the way to capitalize and maximize the market share is to deploy additional resources in marketing.

Speaker 6

Another element here is, as Jim mentioned, there is a clear window of opportunity. We have seen not only in the U. S, but also geographically parts of Asia, Latin America, Europe, where we are expanding now, we have seen this movement of social media influencers and their interest in travel accelerating in the last few quarters. And then last but not least, in addition to the marketing campaign, as you have seen, we have built a team of 14 individuals Who came effectively from Amazon, from Google, from Microsoft in the last 6 or 7 months. So this It's an enhancement to our marketing team to focus on the new era experts of social media influencers, freelancers, etcetera.

Speaker 6

And now that we have assembled this team, we feel much more confident, but also we can quantify the types Of marketing campaigns that are necessary to attract these new IRAD customers of ours. I don't know if anybody else has anything to add on this.

Speaker 3

Yes. I will add, this is Jesus, Laren. I would probably also add and point out the fact that we made the decision Within the context of understanding our EBITDA, still at 255% of 2022 adjusted EBITDA, right? So I want to be sure that we all also contemplate that.

Speaker 2

And we anticipate to invest In our in implementing and continuing with our AI road map, which is important, we are an innovation led company, And we continue to do that while we are reaping the benefits from the financially and or capturing our market share. We will continue to invest into REI Platform roadmap.

Speaker 5

That's all very helpful. Thank you. Just one last one for me. Is there any way to de duplicate what organic revenue and EBITDA What kind of growth was in the quarter? Thank you.

Speaker 3

So as you know, I mean, usually, we integrate all of our new acquisitions, get very quickly integrated in our So we do not track revenues or EBITDA coming out of new acquisitions as simply as that.

Speaker 6

Yes. I mean, and just to highlight here, again, this is Orestis, our strategy when it comes to acquisitions is that we are buying components That we are adding into our own marketplace, right? So say we buy a company that is giving us hotel content in Latin America And then we start selling to their customers and then they our own content, the flight content or they start selling to our own 65,000 customers, their content, then it's very difficult even if you keep the performance separately by company, it's very difficult to pinpoint What is organic and what inorganic? And this is precisely because we're not necessarily buying companies, but we're buying components that we plug into one single and unified marketplace.

Speaker 4

Great. Thank you.

Operator

Thanks, Darren. Our next question comes from Nick Jones from JMP Securities. Nick, your line is now open. Please go ahead.

Speaker 8

Great. Thanks for taking the questions. I guess just kind of following up on the updated full year guidance. It looks like probably half of the revenue increase is coming from the SkyPass acquisition. And then With this kind of incremental investment in the back half, it doesn't seem like you're expecting any kind of return on that investment this year.

Speaker 8

So I guess can you help contextualize kind of how we should think about the time to return on investment of this incremental kind of second half investment Around the marketplace and the AI product?

Speaker 3

Yes. Hi, Nick. Thank you for your question. So Yes. Obviously, SkyPass will contribute slightly to that, but will not be will not represent 100% of the increase of the guidance that we're providing on revenue.

Speaker 7

Yes. Nick, it's Jim. I'll also just add that bear in mind, when we acquire a Company like that, right? We're bringing in an excellent management team, understands their market well, have tuned their operation to that market. Now there are great synergies to be had from all of this, right?

Speaker 7

We bring these businesses in. We're able to bring them provide them with technology They didn't have before, which then allows them to take that out to their customer base. But what we have learned over the Several years that we've been doing acquisitions successfully and accretively is that you want to do it in a very organized, disciplined and planned way. So usually, we'll look at this and say, while there are immediate synergies to be had, We're going to work off of more like, say, a 2 to 3 quarter plan to get these things fully integrated, get the synergies So that you don't press too hard. So I think, yes, it's somewhat additive for whatever period of months, But you just have to make sure you'd be a little, let's say, conservative in how you look at the future results And not just try to add them all in and throw the synergies on top day 1.

Speaker 7

So we're generally a little more conservative having done this so successfully time and again over the last several years. And remember,

Speaker 6

as we

Speaker 2

integrate Companies to our platform, it creates change, and change always brings its own challenges. And it takes a few months or a few quarters to settle that out and to get a good ramp In those companies. So our focus is on integration of these companies and not to expect We'll use growth our synergies immediately, but to help us to fill in the components into our And while we're focusing organically taking those components and to produce the results. And hence that the increase in our guidance comes from our overall vision to continue with it While the recent acquisition adds some contribution to those results in the next 4 months.

Speaker 6

And Prasad, just to answer directly the second part of Nick's question. I mean, the first part is it has been answered sufficiently that SkyPass is adding a few million out of those 5, right? You can do the back of development. So which means that we are only adding about 3,000,000 or so from the new marketplace, Which to your point, Nick, yes, we anticipate most of the fruit of this incremental of this $20,000,000 incremental investment to come into 2024. And this is because we are targeting new era audiences.

Speaker 6

There is a lot of learning in the process even when we sign up the social media influencers. So basically, we are conservatively assuming that most of the incremental revenue will come in 2024 With only a small part coming in 2023. Now it may end up being that we get more in 2023, but again, it's much more I mean, from the new marketplace, But it's much better to be conservative and also to remind you that this is our Q4 that we are reporting as a publicly listed company. And in the net revenue segment, we have been beating and raising every single quarter since we went public, right? So There is an element to that as well.

Speaker 8

Great. Thanks for taking the questions.

Operator

Thanks, Nick. Our next question comes from Brett Knoblauch from Cantor Fitzgerald. Brett, your line is now open. Please go ahead.

Speaker 4

Thank you and thanks for taking my questions. I guess the first one, if I look at maybe just revenue by geography, revenue in the U. S. Is Down 15% year over year. So it looks like most of growth came from international and specifically Brazil, Which I guess I believe is coming from the Orchard acquisition.

Speaker 4

Because I guess

Speaker 2

A, can you just talk

Speaker 4

to me about why U. S. Revenues were down 15% year over year. And B, I guess if you're not tracking organic or inorganic growth Acquisitions you made, what criteria are you using to evaluate if that acquisition was successful or not? And how should we gauge if those acquisitions are successful or not?

Speaker 6

Yes. Let me give you a few thoughts. I mean, in the first part is that when we show the Talked about the different geographies, everything is relative as well, right? So if we get more revenues from a certain geography, The percentage of revenues that comes from the U. S.

Speaker 6

Or another geography reduces, right? So that's the first point. The second point with regard to the success of acquisitions, as you know, most of the all of these acquisitions, a substantial part Of the consideration is linked to future performance metrics in the form of earnouts, Right. So you will be seeing most of which start to be triggered a year ahead of after the acquisition itself. So One measure of the success of this acquisition will be whether those targets are made and the earn outs are paid, right?

Speaker 6

And number 3, And most importantly, for us, when we are acquiring companies, like I said before, we are acquiring contracts effectively and customers. So in the contract sense, we are evaluating comparing those contracts and whenever one of the targets that we acquired in a certain Hotel or Mercedes Benz airline that have a better contract, then we incorporate that in our own unified content hub. So basically, from our perspective, The success is number 1 in the ability to diversify and enrich and improve the content of the entire platform And number 2, to keep adding new customers and new travel experts in geographies where it would have been very difficult to acquire them organically, Such as the U. S. And Canada.

Speaker 6

I don't know, Jim or Prasad, if you have any other thoughts.

Speaker 7

No, I think you hit it Correctly, right. At the beginning there, Aristides. I think, Brett, it's you're looking at a mix issue, right? I mean, there are relative growth Across all of the platforms and all of the geographic platforms, it's just that if some of the areas are growing faster, The relative percentage of one geography over another is going to moderate somewhat. So I think that's that may be what you're seeing.

Speaker 4

So if revenue in the U. S. Is down 15%, should I assume that less people are traveling in the U. S. And more of your transactions are No international transaction in the quarter?

Speaker 2

I mean, we don't see that it's 15% down as Jim and Erastis mentioned. It is the market share of that segment is on the market, that U. S. Market is down by 15%, but not the actual year numbers is down. However, the other markets are Going fastly.

Speaker 2

And by the way, for us, the international is a sweet market, and we see that as an Improvement there is what we wanted to anticipate and what we are working for to create a good value for our customers and historically, Which we have a good share, market share in those segments. And also, currency and territory.

Speaker 4

And I guess

Speaker 3

if I could

Speaker 4

Got it. And then maybe just one last question. The second quarter from a seasonality perspective has historically been your largest quarter for the year. But I guess your guidance implies we're going to see a relatively stronger back half of the year relative to the first half of the year, at least on a net revenue basis. I guess any puts or takes as to why it's going to be different from a seasonality perspective this year relative to the previous 2 years?

Speaker 6

Yes. I mean, let me give you a few pointers there. Okay. Jim, go ahead and then I'll

Speaker 7

I was just going to say part of that, Brett, is again with some of these International acquisitions, that will change a little bit the seasonality, because there are There are different seasonalities in different parts of the world, if you think about it. You even have different weather patterns, as an example. So given that, what we will see is a little shift in the seasonality. But then the other part the second part of it is So with the with what we've just introduced, the new technologies, the new markets that we're opening up, our seasonal pattern It's probably going to be off a little bit simply because we will overwhelm that seasonal pattern with The organic growth of the business in all of these different market segments that previously we really weren't playing in very strongly.

Speaker 6

The other

Speaker 2

two factors that impact The seasonality is the prices in the second quarter, the price of this The airline tickets or the transactional cost, okay, is very high. And people have usually When the prices are high, they look for alternative options and look for the other quarters to travel. And we see the trend based on this Shopping request what we are receiving from the future periods. So this is supported and which we believe that We want to continue in the future period and may increase the transaction count there. And the second aspect is the recovery.

Speaker 2

So remember that we are only recovering of 88%, 12% of our in the pre pandemic levels. And as The international markets are opening and that more and more travel is coming. So it is changing these dynamics So it's not a linear thing or to follow the historical trends, but also we have to factor in all these important Changes and the trends into consideration and which we believe that the second and third and fourth quarter would be better than second And thirdly, we are a growing business. So we are not thinking about ourselves as just following the trend of last year and doing that. It's about how we take the market share.

Speaker 2

The market may be having the same seasonality effect, but we plan to pay more market share Okay. From other players and that will increase our numbers. That may be different from the previous quarters. Over to you, Aristis.

Speaker 6

Yes. And one last point, I mean, I think, perhaps, Arunjit covered all the points, but one last point is that if you look at the last 12 years of our history, Q2 is not our strongest quarter. I mean Q2 in 2022 was a very strong quarter, particularly because you had Omicron in Q1. So a lot of the travel that was going to happen in Q1 happened in Q2, right? So you have that element of the equation for 2022 in particular.

Speaker 6

But as far as Mondi is concerned, traditionally, our strongest quarters were towards the end of the year, specifically Q4. And to that, you have to add all the elements that Jim mentioned, the changing seasonality in geographies we have added, the growth that Prasad mentioned. So if you add all these 3, 4 variables, we are very confident that Q3 and Q4, which will be much stronger than Q2, which itself It's an exceptional quarter, so.

Speaker 4

Understood. Thank you guys. I really appreciate it. Congrats on the quarter.

Speaker 6

Thanks,

Operator

Brett. Our next question is from Mike Brondahl from Northland Securities. Mike, your line is now open. Please go ahead.

Speaker 9

Hey, thanks guys. Just a couple more questions on the $20,000,000 investment. How would you describe the mix Between peer or direct marketing and personnel cost? And then secondly, would you say the marketing dollars are more targeted At influencers or agents and I'm just trying to understand In the marketing, what will the hook be for each one?

Speaker 7

So I'll hey, Mike, it's Jim. I'll start. So I'll let the last Part first. I mean, look, the hook here is if you think about the whole millennial Gen Z, The whole millennial Gen Z buying population, which is now the most significant buying population in travel, I mean these are tech savvy people to begin with, right? And they are looking for they are the ones that have most embraced All of the generative AI features that have come out anywhere in any industry vertical.

Speaker 7

So the hook here is You have I mean, this is not just AI supporting a little bit of shopping. This is AI supporting the entire experience creation, The entire ability to go hyperlocal, etcetera. So when you think about that, The hook here is just going to be it's more than just a new toy. This is truly the new way of As an individual building my experiences, right, as an expert or a channel to market of facilitating that happening Most effectively, most efficiently. So our hook is not just at the end traveler, it's all the way through the chain here To include the service support because this is I mean the unique thing about our platform is it is fully deployed end to end.

Speaker 7

So that's primarily on the Hook side. In terms of the way we're thinking of the investment that we'll continue to make here, About 50% of it will be in the marketing programs and then the other 50% is going to be in Personnel as well as continued enhancement and deployment of the AI capabilities within our platform. So it's generally in that range.

Speaker 6

And just a little bit more color, right?

Speaker 9

Sure. Go ahead.

Speaker 6

So just a little bit more color, Mike. So you may recall that our I mean, Forward, we're focusing our marketing mostly on credits, right? We would go to travel experts and tell them, look, we give you a $1,000 credit and you Use it on the first thirty transactions that you make, right? So now like you rightly mentioned, we are targeting The New Era Experts, which is more freelancers and social media influencers. And the way that these new customers are making money EASE, they are making 1% of all transactions of their followers that they book through our platform.

Speaker 6

And then for the traveler, the traveler gets a $10 credit, etcetera, etcetera. So we need to educate the market for us to know how would you know if you're an influencer, how would you know about this platform? If you are an traveler, How would you know about the $10 credit? So now we have to do different types of campaigns, which are more performance marketing as opposed to credits, Right. So this basically explains also why we built an additional team to our existing marketing team with 14 individuals with

Speaker 9

Got it. And then one more. If you look at the overall transactions And take rate in the second quarter, is there anything to call out there like air travel was Better or worse, hotels, cruises, the ancillaries, just any kind of Detailed commentary on that underlying performance, if you will, whether it's transactions or take rate?

Speaker 3

I think, Mike, one of the main things to point out is that as we continue expanding on our hotel offering, That take rate is going to continue to improve. And that's probably, as you referred to, 2nd quarter is probably our main driver

Operator

Thank you. That concludes the Q and A for today. I'd like to turn the call back over to Jeff Houston, Senior Vice President. Jeff, please go ahead.

Speaker 1

Sure. Thank you and thanks to all who tuned in for our Q2 2023 earnings call, whether it was here on the live call, the replay or reading the transcript. We really appreciate your interest in Mondi and welcome the opportunity to further connect with you. If you have any questions or would like to learn more about Mondi, please don't hesitate to schedule a call with us. You can get more information at our IR site, which is investors.

Speaker 1

Mandy.com or send an email to irmondy.com. Thank you.

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Key Takeaways

  • Mondi launched the first fully integrated AI travel marketplace, combining generative AI, hyperlocal content and world-class supplier deals to engage travel experts, social media influencers and tech-savvy millennials/Gen Z.
  • In Q2 2023, Mondi delivered net revenue of $57 million (up 24% YoY) with a take rate rising to 8% and adjusted EBITDA of $4.4 million (up 18%) despite $1 million of pre-launch marketing spend.
  • The company raised its 2023 guidance, now targeting $245–$250 million of net revenue (155% growth) and $25–$30 million of adjusted EBITDA, reflecting both organic momentum and contributions from recent acquisitions.
  • Mondi plans to invest an incremental $20 million in H2 2023 on AI technology, marketing, content curation and infrastructure to maximize its first-mover advantage and accelerate market penetration, with most returns expected in 2024.
  • Continuing its disciplined M&A strategy, Mondi acquired SkyPass and three Latin American travel platforms to enhance content and distribution, and strengthened its leadership and marketing teams with AI and social commerce experts from Google, Amazon and Accenture.
AI Generated. May Contain Errors.
Earnings Conference Call
Mondee Q2 2023
00:00 / 00:00