Q3 2019 Earnings Call

Good morning, and welcome to the does pick our third quarter 2019 earnings call.

Slide presentations accompanying today's webcast and is available on the Investor Relations section of the company's website Www dot investor thought desperate guar Dot com.

There will be opportunity if you ask questions at the end of today's presentation.

This conference call is being recorded.

As a reminder, all participants will be in listen only mode. Now are there like you're trying to call over to Mr. Italian our Burke Investor Relations. Please go ahead.

Good morning, everyone else. So Fortunately I mean, that's what a discussion of our so called it doesn't sound like you decide.

In addition to reported being quite nicely on the side no quarterly U.S., so not only accepted accounting principles, we need because certain non-GAAP financial measure.

Well doing 40 NEXAFED needs our calculation.

Investors should lead the determination based Medicare and Medicaid because they know what pressing needs carefully to ensure that they understand better.

No that's probably not shown measure and embracing that sure not because he had no correlation. So it's hard work appears to GAAP financial measures and I for why that's happening inside information out.

It's probably the network formats, we might allow me to remind you that says that statements made during the course, Okay Professor Michael you called one it'll be a statement, which are based on managements current expectations I mean, I know subject to a number of free I suppose and Dave that's good color I've herbicide and lucky ready for it.

In closing doors that maybe on the company I'm sorry.

What are the school.

Between [laughter] pretty close on what seating, we don't give me theatre chains Commission and our press release.

Speaking on today's call is it's our t. older men Skulking, we'd go I don't know what have you [laughter] quarter, an update you on awareness education priority [laughter] I. That's one of the cost me how I see a coal we ask that once these skus of course, that's probably not shows and our outlook for the next Florida I stuff that we will open the call.

So your question some young please go ahead.

I think you're not talking yeah. Good morning, everyone and thank you all for joining us on today's call I'd like to provide an update on that were actually up working to companies strategic near term priorities that our positioning the company for a long time girls.

Following my comments I would tend to cause over to I bet, a bill forever, we view of our financial and operational highlights of the court, though by the way our outlook for that year.

Then we will take your questions.

We are encouraged with our third quarter performance, which reflects continued progress on the strategic any should be we'd be kind of rolling out more than two years to go.

Our third quarter financial or operational metrics, we present started with dogs in view of the current them buyer.

Do you not remains challenging by with the Basi jump sequentially for me, but you were asking them or possibly even by your money on our side we've got.

We saw a recovery you know what key metrics either Parker.

Thank you to perspective, we outperformed the industry. We gained market share we went back to positive adjusted EBITDA I see 10 out of 11 quarters since IPO operating cash flow was stronger than prior quarters.

So good purchased 39.3 million dollar of our share on we are well on our way without what key strategic you should be I've witnessed the integration of the jackets Falabella acquisition.

We are pleased with the progress we have made in our business over the last several months I'm worried our financial results for the work.

Moving on to slide four I will provide some fee based up on for the quarter.

I will go be Smith healthy and our team is executing what.

Additionally, we are gaining computing, Buffy, which we'd be said, 39% of total company transactions.

Following the recent approval of the venture before even Brasil youre seeing signs of recovery.

Construction continues to experience volatility in Argentina.

But could you just called says a lot of colored products accounted for 42% both both those successes.

These were flat when compared with the same period of the prior year, but up 20 basis points when compared to the second quarter of two cellphone like.

We continue to get better are meeting, our customers, where and how they want to book their travel.

Were investing both our customer facing Bds does interface, who improvements to a certain to accommodate and recommendations oh, probably products as well I can get back in functionality our side I'm all laid out.

These enhancements are aimed at further improving the got somebody experience.

Were also working to Greece, the frequency of interactions, we that weren't costumer through all the travel garden to foster not only cross selling opportunities, but I was at the guarantee high service levels, we will describe in more detail the you'd be bed laments of Q3, either following slides.

Our mall by up can be used to be a significant tech development, providing our customers, we've got new you're more convenient and personalized travelers shopping experience.

Reducing our direct marketing costs.

We saw mobile I know what counts for 39% the focus on success up 800 basis points from the prior airport, though and 418 basis points from the same period last year.

We go see Morningstar net promoter scores at the most grade on sign of customer satisfaction anytime we do I have no 50 basis point improvement you know where net promoter score doing the work.

Overnight were up 5% year on year and up 10% ex Argentina.

Why despite lower than prior quarters, we're taking steps to get back to stronger growth levels. Our recent the agreement with heat treat each part of the CD.

Moving next.

Ashland, often saxenda and gross bookings on page five.

Before getting to be disappointed a corridor I want to mentioned that the contribution from back if I layla, including everything I can do not T lab. They do for the current quarter widely confusion from Colombia was already for the month of August and September bolstering, the Texas gross bookings rebounding.

Quarter over quarter, a new year over year.

Welcome transactions were up five person in the quarter with both add some sexism package. It's called that's another probably products each ingredient five person year over year.

We have been focusing on a standalone packages I think Easter things you can easily and that was seasonal yeah. It's kinda Leila was another step in that direction.

I've ever South of the airport that fell quarter Standalone backlogs transactions increased 26% year on year remaining our fastest growing product.

Gross bookings increased 26% when ethics and your third base.

Celleration from prior quarter.

That's report.

Wasn't bookings were up 8%, it's clearly not Indiana as reported gross bookings increased 14%.

These buttons on industry performance is reflective of all these studies, we have rolled out or where the by year, including the acquisition of P. Acnes Colombia.

Fortunately, we feel like 21% year on year increased Netflix you try to a big.

But those countries seem to be includes trunk HSBC in Airbrushing I'm product mix shift the was higher Bryce packages, partially driven by their contribution from its highlighting.

The macro environment has not improved significantly and the polygon situation has got a bit more bought up in many of the countries in which we operate I didn't do not remains challenging.

Brasil continues to slowly recover having recently Boston pension reform.

But it makes it goes economic growth. These you always.

These factors contributed to a single digit construction in the industry gross bookings across the region.

However, reflecting the success of the me should be we implemented in the second quarter. We once again performed better than the industry and gained 30 basis points marketshare excuse me not to be uncover he'll our market share grew by 10 basis points.

Moving next to basics, where I will discuss some of our recent be Smith initiatives.

Products services and take innovation remains a key part of your for us.

Try to make each step of the travel experience across all platforms, you see an enjoyable for our customers.

Our guidance already know this big Guy I know what associated brands. They go.

Beyond that they trust, our Brian to give them you know what the product quality Saturday sees an expert advice.

As shown on this slide I want to highlight some of the recent developments we have been car. We now to continue building their direct relationship data, we coupled with our customers are not told us how the first we launched our loyalty program that they got a passport 200% go by word Kroplick University.

Our most important market after having interviews and 52 week, 50% of this they are busy goes in that market on September Tonight.

This big our box board allows travelers to on board well look inside hope has another caller products, we've known air products accumulated a higher number point.

I recently travelers can continue aren't important United loyalty program, such as credit God I'm frequent Flyers in December transaction.

This big our bus sport Hospice C D or an instructor traveler explorer or go about as.

We don't seem to go about cut their body, having access to exclusive customer care plus 15 crowded planning an interesting support we are extremely excited about these new program, which seems launch how certainly accumulate do they have you done 20000 members in Brazil.

Some would be loyalty program, we are farther than that hasn't seen our value proposition and giving customers an additional incentive to purchase through this big our while driving cross selling I'm boosting customer lifetime value.

Nick I would like to briefly discuss our recent acquisition I'm two new partnerships.

Enhancing customer service, you say may you're focusing now will be.

This is not only enabled by technology, but also by working with New partners. As a result was the actions we have undertaken do we can believe Oh, Yeah, you Latin America, we got the bar lists of choice for other leading companies looking to provide I'd be sure well, that's a benefit do their own customer base.

The first initiative. This year on these funds was launched we'd have to seasonal we'd be I could tell how your line, which we have already Scott.

I don't we the longer term strategic alliances with philosophy then theater.

Back to complete integration of yeah, it's how they left during the first half of next year I don't pay significant synergies from these process, which has that there will be great shopping me.

Take on last month, we announced an eight <unk> connectivity agreement, we see creep, which allows for the integration of this big GAAP guidance accommodation portfolio in Latin America, we see trips platform.

Also enables us to expand our potential customer base beyond our current geographic region, you do the fastest growing Chinese mark.

I'm, sorry last week, we announced it 10 units closely Cobranded credit agreement with I see the C. Naghshineh in five Murphy with my.

No. It brief comment about two new services.

We continue doing but enhancing the customer travel booking experience by providing different channels and opportunities to interact with this big huh.

Does that and we upgraded the technological scared of our Carlson.

The way the pre travelers stage, while reducing the cost well each interaction by bringing automation to the abroad.

We also launched bundles, which is the dynamic bonds the buckets technology that they combine sees every product that he's how big of a lot. This they are creating that personalize and complete the experience to our customers. Additionally by leveraging data insights way directing them on the west the suppliers.

Not only the work with whom we have the based commercial agreements, but those are the ones that our customer like the most we believe all these new should be lays the foundation for consistent long term growth.

I will now turn the call over 20, better don't believe Scott our financial it resets.

Thank you I mean, and good morning, everyone. Please turn to slide six for a review of all operations on a regional basis.

Overall gross bookings growth rates recovered across our key markets.

Both as reported and one on FX neutral basis.

Starting with Brazil, our largest market, we've got accounted for 39% of told US infections transactions in these markets increased 3% a reversal from their 14% year on year decline in second COVID-19, when we reduced our exposure go then cup as Jim.

Gross bookings also performed well.

Up 15% asked reported a 19% on an FX neutral basis.

Hey, Asps were up 16% on an FX neutral basis, and 11% as reported benefiting from higher domestic terrorists and sustained mix shift from domestic international travel.

No jundia transactions declined 4% year on year, mainly driven by lower international travel demand for these christianized spending remains impacted by the recessionary environment.

These however, with an improvement from the 14% drop experienced in the prior quarter, when we shifted our marketing expenditures to the rebranding campaign.

I also believe customers in Argentina advanced the purchase their summer holidays in anticipation of potential FX volatility.

The primary presidential elections last August .

FX neutral growth bookings increased 47%.

They used to be 51%.

That's reported gross bookings on a its piece however were down 11, an 8% respectively impacted by the 36% peso depreciation.

Finally try to talk from growth also stepped up in the rest of Latin America up 12% I'll pick up from an 8% increase <unk> second COVID-19.

Can you talk gross bookings performed quite well up 21% with ASP up 8%.

Reported gross bookings this quarter were up 15% with HSBC up 1%.

Now turning to the piano on slide eight.

Improved performance across key markets contributed to a pickup in the consolidated top line growth rate and revenue margin this quarter.

We accomplished this despite ongoing market contraction, which was high single digits piece quarter FX neutral revenues were up 19% year on year on up from the 5% posted in the second quarter as we continued to make progress on our growth strategy.

We also saw strong recovery in cost reported revenues, which posted a 9% year on year increase our turnaround from the decline was reported in second COVID-19.

Hi, Good performance was mainly driven by higher margin packages hotels, another trial or products, which posted revenue growth of 14% error.

Our revenue growth also improved year on year show in Madrid grow over 1% this quarter, an improvement from the 11% decline last quarter I.

That's a result.

And just hotels another follow products accounted for 61% of total revenues up from 59% in the same quarter last year 290 basis points increase.

There are factors contributed to that pickup in revenue growth.

First the initial benefits from the rebranding initiative.

New product launches implemented in second quarter 90.

Second the positive impact from the I can follow data, which has significant share of packages.

On third unless we saw possibly mix shift from domestic to higher margin international transactions.

These more than compensated for the reduction in customer fees on discount seems buckets transactions that we implemented to support market share growth lower EHR supplier volume bonuses on D. FX translation impact.

Revenue margin in turn was up 11 basis points year on year.

11.2%.

Now please turn to slide nine.

Gross profit increased 9% year on year to 92 million on an FX neutral basis on 6% Hush reported.

Taking advantage of market conditions to drive further share gains.

This quarter, we continued investing lower fees and customer discounts on packages.

We also stepped up customer financing an installment plans you know just you know.

A key tool in driving conversion rates.

These together with higher interest rates resulted in higher installment plan costs.

This quarter, we also had a higher mix of transactions, where there's pick out towards the merchant of record.

Then over the airline suppliers, allowing us to offer more attractive customer financing options. As you know the merchant of record also has a negative impact on our cost of revenue.

This quarter. We are also included 2 million dollar impact in cost of revenue from Jack as part of it.

This was partly mitigated by efficiency gains infotainment combined these factors resulted not to put it on 10 basis points year on year contraction in gross margin to 67.7%.

In the near term as we invest in our business to drive future growth. We are experiencing an increase in our cost base. However, we do expect overtime to generate synergies and leverage our cost based core higher revenue.

Selling and marketing expenses, excluding me I can follow it up.

I would have been nearly 43 million, which represent an increase of 3%.

This increase was related telesales and affiliates I was partially offset by efficiencies gained in direct marketing.

On a per transaction basis, and excluding the I can falabella selling and marketing expenses were flat at $16 per transaction.

On a percentage of revenues increased.

74 basis points to 35%.

Yes, it's probably less contribution to say some marketing expenses accounted for 3.8 million, which include the operational cost open stores Intellisafe separation.

Comparable DNA expenses, excluding a one time severance charge third quarter 18.

No. So excluding jackets ballerina were up 35% year on year.

Higher costs include export REIT stocks on services in Argentina.

Introduced in January this year.

Higher depreciation or amortization, driven by a higher capitalization of our Ted on development investments on higher stock based compensation.

These were partially offset by the FX translation impact from currency depreciation in Argentina, where we have the majority of our DNA expenses.

Percentage of revenues have excluding the youngest Paula.

Comparable gionee expenses in third quarter, 19 were up 457 basis points accounting for 18% of revenue.

Technology on product development, excluding deficit of Ella.

Declined, 1%, which reflect additional cloud sourcing expenses as well as I'm, 11%, increasing headcount as we introduce new services on functionalities is to our platforms.

These increases have been largely offset by higher capitalization of these cost along to industry standards.

As a percentage of revenue on excluding deficit of 11 acknowledges I'm photos expenses declined by 20 basis points Hiponia to 13.6, reflecting higher cost dilution in the quarter.

Some of these initiatives include adding automation, you know a customer care operations, which will contribute to lower cost an enhanced customer satisfaction and we also in the final stages of developing a loyalty program.

In the original if you have to celebrate a process we expect to compete during the first half of 2020.

He is also expected to drive additional cost efficiencies.

As we have just become integration process, we are not generating synergies, but yeah I can tell us they lost cost. The construction is about five times higher than display our standalone.

As we finalize integration of the two platforms, we will be better positioned to achieve operating leverage.

Looking ahead, we remain focused on streamlining the cost structure to maximize efficiencies on execution.

Along these lines.

Last month, we downsized our cost structure as we completed the development several strategic projects, which we expect will contribute to reducing operation cost.

This measure however is anticipated dream, but fourth COVID-19 results as we ups or seven cost in the range of $2 million.

Turning to profitability on slide 10.

Reported positive adjusted EBITDA this quarter of $9.4 million more than revoking, the 7.3 million loss reported in the prior quarter, which had been impacted by specific one time internal and external events.

Comparable EBITDA, however declined 39% year on year, we the margin of 7% against 12.6 years ago.

Lower year on year profitability reflects the challenging economic environment in Argentina.

Impacted by our strategy of prioritizing topline growth together with Mako disruption in the quarter in this context, we stepped up package discounts reduce lodging on car rental fees on incurred higher installment expenses to drive demand and capture share gains.

Hi, operating costs on the FX translation, but also negatively impacted profitability during the quarter.

Moving onto the balance sheet and capital items on slide 11.

Maintaining healthy financial position is one of our key strategic priorities.

Each has enabled us to invest in the business at a time when others don't have the same flexibility.

At the same time, we can enhance shareholder value.

Have you done by a share buyback program that you DC plays that we have been executing on.

Execution of the buyback underscores modes of you only depressed valuation of the this big out of shares.

We keep a strong balance sheet with unrestricted cash and cash equivalents of $300 million at the close of the third quarter.

These wells Fargo supported by strong cash flows from operations of nearly 26 million the third quarter.

Compared to an outlay of close to 27 million in the same quarter last year.

These good performance was mainly driven by a decline in the shield balanced from better collection times.

Higher too is payables due to higher sales together with a decline in other assets on prepaid expenses, reflecting lower advances to suppliers.

We made capital investments of near 6 million this quarter main software platform development.

We also purchased piano quarter million shares in third COVID-19 for a total cost of $39.3 million.

In total we repurchased three point 46 million shares during the first nine months of media.

Total cost of 42.2 million.

Summing up let's move to page 12.

Third quarter results were particularly strong in light of the macro volatility and consequent high single digit industry construction.

Although we'll thatd be close for caution in our remarks.

Performance allows us to reiterate our Q2 outlook, which pointed towards a cycle upturn.

In Q3, which was marked by our clients advanced purchases in Argentina, we managed to Opportunistically capture additional for Pwc.

FX fluctuations on market. These continuities, such as the ones taking place in Cheetah today get counterbalanced by positive signs of traction on key investments in certain areas on geographies.

These levers point us to our Q4 level of activity broadly in line with last years.

We remain focused on our long term strategy. These perspective with drives strong investment is not precluding us from capturing operational efficiencies when possible such Q4 will be marred by some restructuring charges as we like to not be operations, one resources get freed up I see initiatives are.

Deployed.

Addition, in the upcoming quarter, our take rate will be impacted by the success of the loyalty program in Brazil.

Well, we continue making progress in the integration of yeah consolidation, which synergies expected to be materially captured in second half 2020, as we merged our operations.

In summary, why do we still face external challenges during the third quarter, we continue to see plenty of opportunity for long term growth as you heard from our remarks today, we're making good progress across multiple fronts. Our teams are operating were urgency and focus on I'm grateful for their hard work commitments on support.

In conclusion, we continued to work towards executing on our long turnkey business initiatives.

We remain confident that was strategic investments are establishing a solid foundation, creating further differentiation unfussy shouldn't enough to de lever improving financial results better economic environments.

Lastly, let me remind you will be hosting our first.

Investor Day.

Our December the 10th I look forward to see what are you there a frame I know you Keith.

This concludes our prepared remarks, we will now take your questions. Operator, Please open the line for questions.

[noise] [noise] people.

[noise].

[noise].

[noise] [noise]. Please go ahead.

Hey, guys. Thanks for taking the questions I guess first.

I know last quarter as part of the rebranding and the App relaunch you guys had some conversion issues is maybe you're more habituate of customers are less familiar with the new navigation I guess I know you had some positive data points on mobile, but do you think that the customers fully attuned to the changes you made and then second.

I know that you guys just trying to pass lost some discounts operating on a package side I guess are you seem to kind of elasticities end demand.

Does it does a discount help with conversion. Thank you.

Hi, Ed This is Dan Yan.

Well part of your question.

Yes, we as a fuel I know, we track a comeback for raising our brothers on big closely and we're very happy with the evolution of the conversion rights of the third quarter. We are up in order to Odyssey main platforms.

And that make us certain that they knew rebranding effort has been successful loan widely accepted by consumers can you repeat the second portion of your question.

It it sounds like you're starting to invest a little bit in price I think you said, you're offering I think more package discounts and that was one of the margin drivers I guess does or Doesnt have you noticed that a the discounts improve conversion materially is it a competitive response.

Yeah. So yes, I ask you probably know we have been baby aggressive on price strategy over the last several quarters, we decide on our pricing tactics Ah Onez 80 basis brought up late program byproduct geography by geography.

He not only in response to competitive moves but also in response to our in our left if you do mothers and how we should demand evolving our strategy as we've been stating that over the last for the east to continue being very aggressive on price.

No gain market share you noted products no geographies as far as these I think the meaning the profitability level that we said.

So this is not the reaction to any competitive mode, but rather an experienced strategy that we've been following over the last several quarters and and then a reflection of that hits our market share improvements.

And one final follow up if I may credit extension to consumers are you guys seeing any true changing trends from some of your partners and given kind of what interest rates have done has a cause you to to change or maybe the payment terms that you're offering. Thanks. So much.

Yes, I see you know they would have you did though some of our markets by degree nitrogen Dina caused a significant increase interface on consumer losses I'm Crazy got therefore, we adjusted our offer and that's a major headwinds add to our value proposition seems we are there most.

The company, who have the most comprehensive payments on financing offered in Latin America is buys them down to what you significant growth I, you know very big cooler context on additional days that volumes that may give you some color.

Is that we continue to grow you now where bhavan men thoughts in other geographies and where particularly happy on how volatile policy level has been performing in Brasil as you probably know where the only online company that John Sachs online. We brought it up I said now, though which is a widely used.

A means of payments in Brazil.

Great. Thanks, so much.

Thank you and the next question comes from Eric Sheridan wants to be yes.

[noise]. Thanks for taking my question, maybe two if I can you showed good progress on mobile and on selling packages can you just re frame for us what are some of the investments you're making in terms of driving greater level of penetration in both of those maybe things through like what we might see is a long term goal in terms of percentages of packages.

Sure transactions pure mobile and how that could improve the overall cost structure. It conversion on the platform longer term. Thanks, so much.

Yes, Eddie Thanks for your question and we are extremely happy I'm humbled by East performing.

As you all know the de ski not only does have a I closer relationship with big consumer, but also for developing lower cost cirrhosis of traffic.

We not only increased our.

Our he started based on the job by we're also very happy on on the mix of in trying to use of our up were seen that are going up significantly we I see in many of the success story there a lot of our responsibility for that day. They they broadband has done a great.

Jon Bock Brady now were up we're offering more features and services our traffic sourcing strategy.

The being evolving I know.

Have they need a lot of efficiencies in directing traffic dilworth, our up it's not only mall I love that if you already glucagon meeting between Opco unresponsive, our ops share within the mall by spectrum is much higher than the past. So that's another recent do we.

Significantly happy about that we in terms of long term target I've really worthwhile in the mid Thirtys as as we manage on we believe there's ample room for growth in Latin America, perhaps even more than in developed markets. You end, a higher penetration of molise, you've I teach us access bar.

And to the web services that is more than in developed markets as for Bakken de that's also we believe a strong success story.

Because that's has shown strong growth I'm still.

There's ample room for further potential growth is it doesn't represent a significant portion of the overall gross bookings of this big are we believe we've gotten even double Gordon.

Volume of packages, we sell in the next couple of years or even who get things run right does continue to trend that we've agreed Joan over the last a few quarters.

And I'm for example, weve isn't going to they they're starting to behind this accident packaging east again.

Many of these are enforce sourcing has been doing a great job Oh, so our ability to steer traffic, though was the most promotional packages and Oh Wow. Our outages. This year on the acquired traffic, though was still isn't a type of products has improved over the last I would say two quarters.

Eric I wrote it though joined here there the only thing that I would add is you within packages or so we are nicely growing and.

Packages that we actually have a co some inventory risk okay.

Yes, we believe that that's come to you still very low levels, but as you know that I've mentioned in prior calls and that has much higher attractive profitability and we continue running those those products with particularly high occupancy factors. Okay lets recall, we did last summer.

Latin American summer with 99% capacity factors, we run it some and also some packages it too from Brazil to two Telus inching towards solely to Argentina in the summer in the winter period and that had also keep and you've talked to about 90% and so I think that's not only when it.

Comes to prop inventory that is.

Growing nicely, but from a very small base, but also packages the whole thing that progress has been noteworthy.

Okay. Thank you and the next question comes from Brian Nowak with Morgan Stanley .

Great. Thanks for taking my question I have to the first one understanding Google is always a dynamic animal your your sales and marketing trends that you're sales Maria for transaction in the quarter X Falabella was really strong at flat, where there were there any changes or adjustments that the team had to make from an S. C O resi.

Perspective in the quarter to kind of keep it flat I know, there's always sort of Illinois as to what's going on the Google ecosystem matures your or whatever you are that flavor.

And then the second one I'm on the I'm the loyalty program honoring 20000 sign ups in a month is is a pretty good number be curious to hear you are you seeing new people and new customers come to the platform or is it mostly sort of your existing base and how should we think about sort of sizing the the take rate impact as we go into Four Q2 020 from that.

Good.

Let me take they Brian is I mean, I, let me take their first.

Oh the question, yes, we we are facing the same challenges or other colleagues have referred to recently and a a few booties might be a lengthy globally. He said evolving gastonia and so we are in reaction to that.

Our marketing team has been extremely effective in a leading we then you if you show challenges that the global policy a dollar last in terms of a day how they these plays a wish ads on the our team has been extremely effective in increasing our.

Other source yourself I'm pay Tropic battery grade direct and our effective effectiveness of our email I'm bullish certification will have CV, if you've got to be grown we know that we operate in a baby dynamic environment at every quarter. Both these new challenges ahead of us and I'm really happy with how the team reacted to these.

And also we are happy because I think that disability too.

Relying more on either non base RC self traffic you said a reflection of the strength of the branding that the m- keep in mind that more than 50% of our traffic Easter egg coming from the traction of a that our brand generates.

And I will leave or thought about the second part of your question.

Sure, Brian and I.

No no to address your question on on take rate and I mean, you get your outlook on that.

And what we what we what we stated is number one as well when the cycle et cetera.

It's very promising where we are we reiterated that Q2 was more at the bottom of the cycle. I think you do you see pro forma was was particularly good and if you actually look at it take rate what has been the performance.

You and who is 2019 and we were actually up 60 point, the 60 basis points. It take rate loss be savvy 18, Okay that was the case in 2000 in first quarter. There what the gazing is second quarter as well and we actually thought a particularly strong it.

Great. If these Q3, even between what was it takes it in Q3 18 by 10 basis points.

As we look into Q4, Okay. I think one thing is that we mentioned that a on the opening remarks is that we thought very successfully launched the loyalty program in Brazil.

As you well know based on.

Yeah, the accounting for the loyalty program. Okay. If we expect 2000, it's a loyalty deferred revenues.

In the ballpark of around $2 million. It falls in Q in Q4 on that already heats, you'll take rate in approximately 20 basis points or slightly slightly higher and well and so we believe that including including that in that impact.

From loyalty I think we should be it better than what we actually achieved in Q1 in Q2 that we actually saw those 60 basis points and lost because the last year. Okay, Q3, again was particularly strong Pos in some geographies, we actually saw particular in Argentina, we saw.

Please advance is advancing some purchases and we weren't able to multifamily adjust our pricing as you pointed out we do get elasticities. It went out one point on a weekly basis, we'll look at our transaction volume on gross bookings on a daily one and so we that's part of the revenue management team under.

That allows us to capture are very attractive and take rate in Q3. So hopefully with this I gave you a beat up our it even though we do not as you know we do not provide specific guidance certainly these ball at times times in the region. It I think it married to provide some additional color on Q4.

Great. Thanks, guys.

Thank you and the next question comes from a rig on its current was he told.

Hi, good morning, well actually.

Yes, I answered my question I wish I was wondering if you're seeing it.

Okay, and you kind of shorts and positive impact on the money Argentina.

Restrictions to access the FX market.

And then and I went through noise you could give us.

How much was the impact from right now yes.

Revenue on Sandra.

Well deal.

Got it though here good morning, Thanks for your question and with regards to.

To add to their to that breakdown of salary lot, we tried to be particularly.

Upgrades on our statements as we actually analyze their cost structure from say, some marketing gionee and tech and content just to a soda.

Investors on the analyst community would actually have a very good read about on holiday there for the cost structure of the company and the potential for clarity leverage into future what's actually performing.

The idea would be that he actually going forth. Okay. I think you do gradual use these bay in order to forecast.

Our model there. So I think we would rather just given that we have I think we believe me up that we share a lot of information where the markets I think we would fall short rodeo on on actually looking at the specific contribution for Jack as part of it and what I think that overall in just in in relative terms or not.

To get into specific numbers, you see a company that has an attractive take rate maybe I could follow.

As you know like to 30, 230% to 65% approximately Oh there were all gross bookings have you ever funnel that most packages that was one of the key reasons, we actually it drove our decision to acquire such a great platform.

However, the tundra side on Dot is clearly that you actually have a much heavier.

Cost structure on that is it going through the whole integration of yeah couple of in other we're making multiyear progress on respect to capture in the second probably here. They ran about Seanergy somebody's front. It is segment our view that the online business is by far the best operating model as we start capturing Holden.

They are breaking lever so that when it comes to.

Through two to two yards and phenomena and would you. Please would you. Please remind me of the first part of the question because started saying that it's already addressed it based on that yeah response to Brian or.

Anything specific I'd like to talk to me to address.

Yeah, I mean first part of your questions for.

Sure. If you if you relate to that.

Okay, So throbbing packages in Argentina.

Restrictions you actually see effects market, then that's what's driving that short term positive impact there.

In your opinion.

I think that yeah, I'm, sorry, I noted called you also asked about capital controls et cetera, now and so first and foremost on governor controls I think it's important that important to highlight as you mentioned the topic as a whole well for the doesn't communities and stand up today just begun.

Jason no restrictions whatsoever to access the FX market and so far all then and communications by the Central Bank.

Okay.

I'll actually anything you have and give up incentive to traveling because he has yet to your credit card you can actually do or your purchases and that's one way to access the dollar market is by buying goods and services. So from that perspective thing we we feel.

We feel okay.

Certainly the name when it comes to Argentina on buying patterns in Argentina. It clearly, we we see in the region by but do you guys didn't have some market. This continually these deals election. It has been a its continuity and I think Argentina, so very hobbies on on looking at what would be the quotation for.

Yesterday, just having the future on how they can actually exercise.

Should increase.

Purchasing power.

Today, the name of the game or what I would say that is equal at PDP.

It's very hard it even though we do our knowledge dot and in particular in the month in October of there was some advanced purchases.

I live is we also found that during the month following there they all the selection.

But I think it's I think maybe.

Yeah, I'm tempted to say maybe too soon to tell okay, why will be a consumer behavior in Q4 on Q1 and next year and I think that's that's pretty much overview I think thats very hard to predict we actually see I well I don't think that distraught the strength of Q3.

Well just based on an advanced purchase by Argentina, I think we're all the company had a very strong performance. Despite an industry again in Q3 the industry constructed household.

Okay. Thank you.

Thank you and once again, please press star and then one if you would like to ask your question.

And the next question comes from Kevin Kopelman, with Cowen and company.

Hi, Thanks for taking my question is Emily on for Kevin.

I think a lot of my questions have been answered, but could you give us more color on this your inventory sharing agreement that you entered into it seems trip.

Yes, a basically and they agreement allows this forgot to both the audience. He just got to learn all of our.

Inventory.

We are gradually be online us do I understand the online the only travel agency in Latin America offering that detainees market. These will be dropped a lot of because obviously, we have to translate all our inventory into mandarine by the were extremely excited about that pertains.

All of these a agreement.

Thank you.

Thank you.

At this time I would like to return to Florida me on spoken for any closing comments.

[noise] [noise]. Thank you operator, and Ah thanks to everyone for joining the call today as you felt if you have any further questions. Please do not hesitate to reach a glass we'd be happy to follow up. Thank you very much I'm looking forward to see again in our next call take care.

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