Q2 2023 Mondee Holdings Inc Earnings Call
As Prasad mentioned earlier, we made the decision during the second quarter to ramp up our investment in marketing and accelerate the execution of our AI roadmap. We expect those investments to be around $20 million over the course of the year. We believe this will facilitate capturing new market share, accelerating revenue growth in 2024, and disrupting the trouble industry with our next-gen AI platform.
With all of this in mind, we are updating our 2023 adjusted dividend guidance to be in the range of $25 to $30 million.
which could represent a 250% of our 2022 adjusted EVD measure at the midpoint.
Finally, and before turning the call over to Qaasad, we would like to formally welcome Deloitte as our new Auditor Effective July 6th of 2023.
We're very excited about this partnership and the capabilities and experience that Deloitte will continue to money. Thank you and I'll go to you now, Prasad. Thank you, Jesus.
We are excited with the initial results of the investments we are making in AI technology, marketing and infrastructure to position Maundy as a driving force in the rapidly emerging world class social commerce travel.
I am especially proud of our entire team for making this happen while continuing to deliver a very strong second coating and more importantly putting us on track for an even more exciting rest of 2020 and beyond. MOND is truly transforming the travel industry with its modern tech platform, connecting airlines, hotels and...
on our investments and penetrate all market segments rapidly with our next generation AI marketplace led by the increasing travel demand for socially based collaboration and personalization of their travel experiences.
Speaker 1: Good day and welcome to the Monsey second quarter 2023 earnings conference call. Please note this event is being recorded. I would now like to turn the conference call over to Geoff Houston, Senior Vice President. Geoff please go ahead.
With our rapidly expanding and segmented distribution network and the AI-enabled drip creation, our comprehensive solution also provides suppliers with a one-stop shop to best place excess capacity.
Speaker 2: Thank you operator and good morning everyone. Welcome to Monday's second quarter, 2023 conference call. With me today is founder, chairman and CEO for Sidegund and Mudala.
Speaker 2: and Chief Financial Officer Jesus Portillo.
unlike the online broadcast distribution channels. This is further enhanced by our ability to offer not only unique, unique privately negotiated value content, but also full fintech solution and anthracis, many of which also benefit our supply partners. We are thrilled by the progress we expect to make over the next few years.
Speaker 2: who will present our results. Also available for questions and answers is our Vice Chairman, Chief Strategy and Business Development Officer, Earthy Centiculus and Chief Operating Officer, Jim Dellum.
Speaker 2: 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 our financial and financial services.
Speaker 2: and other non-historical statements as further described in our press release.
Speaker 2: These forward-looking statements are subject to certain risks, uncertainties, and assumptions, including those related to MONDAY'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 committee and in our press release that was issued this morning. During the call, we also refer to non-GAF financial measures.
to continue disrupting and serving the travel market, which is approximately 2 trillion in size.
Thanks for attending our first core learning call and we look forward to your ongoing support. Operator, we're ready for questions now. Thank you. If you would like to ask a question, you may do so by pressing start, followed by 1 on your telephone keypad. To revoke your question, please press start, followed by 2.
Speaker 2: Reconciliations of the most comparable GAAP measures are also available in the press release, which is available at investors.mondi.com. With that, it's my pleasure to turn it over to Prasad. Thank you, Jeff. This morning, we are excited to welcome everyone to MONDI's second quarter 2023 earnings call to discuss our results and significant developments. We appreciate your interest, whether you are a shareholder, a client, supplier, business partner, employee, prospective shareholders, or analyst. 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.
and when preparing for your question please ensure your phone is unmuted locally. Our first question comes from Darren Astahe from MKN. Darren your line is now open please go ahead. Hey good morning thanks for checking my questions. First one just some clarification on the commentary about the 20 million dollar investment and the
in the AI marketplace. Like, I guess you guys kind of called out a million dollars in the second quarter, so that assumes the bulk of that investment is gonna be made in the second half. 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 sort of one time in nature?
Speaker 2: for a more detailed review of our financial results and outlook. We will then conclude the session with time to answer a few questions. Starting on slide four, there are three key points to emphasize in our second quarter results.
Yes, thank you, Darren. I'll add some thoughts on… Oh, Jim, go ahead and add that.
Yes, thank you, Dan. I'll add some thoughts on... Oh, Jim, go ahead and add that.
Speaker 2: First, MOND is once again disrupting the travel market through AI innovation and next-gen technology deployment. We are thrilled that on the first anniversary of our NASDAQ public listing, MOND is now a global leader in the global market.
Yeah, I'll hey Arrestees out starting and you go. Yeah Darren. I was just going to say that look, you know, we're Whereas as we go to the market now with with this just you know, this really? industry leading AI platform
You know, 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.
Speaker 2: 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 MONDEE 1.0 marketplace platform, the technology marketplace for travel experts, suppliers, travelers and organizations. With our newly released disruptive AI platform and MONDEE 2.0 marketplace, we are broadening our addressable customer base to include the vibrant ecosystem of travel social influencers, freelancers and tech savvy millennials and Gen Z travelers.
with not just these tools to do the job better, but the marketing incentives to really get this going quickly. 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.
And so this is the time for us to go ahead and you know 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.
Speaker 2: Moving to slide five, key elements of this transformation included a one-off-a-kind modern tech platform. This is a one-off-a-kind modern tech platform.
Speaker 2: extensive world-class privately negotiated content, deployed through a powerful network of experts and travelers.
that our marketing team is managing now through the end of the year and into 2024.
Speaker 2: This positions us to generate increasingly hyper-local content.
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 24 one. 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-
Speaker 2: as well as establishing Maundy 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. This strategic push aims to fully capitalize on our disruptive market position as we approach 2024.
makes total sense to deploy additional marketing resources before a few years from now when other players may develop their own AI platforms. So this is a first mover advantage and the way to capitalizing and maximize the market share is to deploy additional resources in marketing.
Speaker 2: MONDI 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 AI marketplace. These developments were the first rapid popularity and proven breakthroughs in the generative AI platform, such as chatGPT and Google Pod.
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. We have seen this movement of social media influencers and their interest in travel accelerating in the last few quarters. We have seen this movement of social media influencers and their interest in travel accelerating
And then last but not least, in addition to the marketing campaigns you have seen, we have built a team of 14 individuals who came effectively from Amazon, from Google, from Microsoft in the last six or seven months. So this is an enhancement to our marketing team to focus on the new era experts, of social media influencers, clearances, etc. And now that we have assembled this team, we feel much more confident, but also,
Speaker 2: Secondly, Gen Z and Millennial Travelers are 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. We believe that the symbiotic relationship between AI advancements and Mondish leadership in AI driven technology.
we can quantify the types of marketing campaigns that are necessary to attract these new Iraq customers of ours. I don't know if anybody else has anything to add on this. Yes, I will add, this is Jesus, I would probably also add and quantify that we make the decision within the context of understanding our EBITDA still.
Speaker 2: JetPi are intensified focus on these initiatives. Our incremental investment fee are very facilitated. The process of engaging travelers through social media influences, close user groups, and organizations more quickly.
Speaker 2: 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.
255% of 2022 adjusted EVR, right? So, I want to be sure that we also contemplate that. And we anticipate to invest in our implementing and continuing with our...
AI roadmap 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 you know capturing our market share We will continue to invest into REI platform roadmap
Speaker 2: Turning to slide fix, we are proud of the performance of our Monday Marketplace.
Speaker 2: which has delivered explosive organic and inorganic growth as well as positive EBITDA.
Speaker 2: Culminating into yet another stellar financial result in the second quarter, exemplifying our commitment to growth with innovation and excellence.
That's all very helpful. Thank you. Just one last one for me. Is there any way to duplicate what organic revenue and EBITDA kind of growth was in the quarter? In terms of inconsistently competitive owners and companies while selling new product
Speaker 2: In Q2 of this year, the take rate, which we define as net revenue divided by gross revenue, is rising to 8% from 7.2% in the second quarter of 2022.
So, as you know, usually we integrate all of our new acquisitions to get very quickly integrated in our ecosystem and platforms. So we do not track revenues or EBITs that are coming out of new acquisitions, simply as that.
Speaker 2: Net revenue of $57 million was 124 percent of the second quarter of 22. In the first half of 2023, 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 $4.4 million, which is 118 percent of adjusted EBITDA in the same period last year. We achieved this result even after investing approximately $5.4 million in the last quarter.
Yeah, I mean, and just and just to highlight here again, this is 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, you know, our own content, the flight content, or they start selling to our own 65,000 customers, their content. Let's do it. One.
Speaker 2: $1 million of additional marketing and personal expenses in anticipation of the Maundy AI Marketplace launch. Jesus 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.
then it's very difficult, even if you keep the performance separately by company, it's very difficult to pinpoint what is organic and is not inorganic, and what is 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.
even if you keep the performance separately by company, it's very difficult to pinpoint what is organic and is not inorganic and what is 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. Thank you.
Speaker 2: on the potential of our AI Travel Marketplace and distribution channels. Turning back to slide 5, our AI Travel Marketplace is 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.
Speaker 2: We are enabling travel influencers, local experts and agents with unprecedented access and complete travel content in our unified marketplace.
Speaker 2: as well as travel centric cutting edge technology.
Speaker 2: such as Abhi, the AI platform with conversational commerce, to conveniently create and deliver personalized travel experiences.
Speaker 2: It adds a global knowledge of experts to their local expertise to be able to serve any type of customer as well.
Speaker 2: For travelers, we have crafted immersive travel experiences using intuitive self-service exploration tools driven by AI. But that's not all.
Speaker 2: We have taken it a step further by connecting travelers with on-demand local experts from around the world.
Speaker 2: Through our AI-driven marketplace, these experts bring local knowledge and tap into global networks to add a unique touch to inspired travel adventures. At the heart of our mission is bringing joy to the traveler's journey, making it personal, surprising and meaningful.
Speaker 2: 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, saving time while creating their personal travel experiences. 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.
Speaker 2: with assistance available via phone, chat and email. Experts and travelers are able to discover the world at their fingertips with access to over 500 airlines, 1 million hotels and vacation rentals, 30,000 rental car pickup locations and now 50 cruise lines.
Speaker 2: All at negotiated rates that guarantee exceptional value.
Speaker 2: Innovation is our passion.
Speaker 2: and we have harnessed the power of generative AI, deep learning, computer vision, and the 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.
Speaker 2: to support sustainable growth and enhance our position as a leader in the global travel industry. On the operations trends, as a part of our continuous improvement, we have seen
Speaker 2: We are introducing all our new technology intimately to our support teams, as well as integrating with our new operations stream across all geographies to better serve all our organization customers. Marketplace influencers, experts and travelers.
Speaker 2: The ongoing enhancements of our operation and customer service elevates customer satisfaction and supports rapid growth of our business.
Speaker 2: For example, our Business to Enterprise or B2E segment.
Speaker 2: performed very well through second quarter with 274% increase in transactions.
Speaker 2: 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 Networthy accomplishments in the quarter, back to slide six. First is our addition to Russell 2000 Index.
Speaker 2: as the largest travel tech additions in 2023. It serves as a testament to Monday's strong fundamentals and business performance, reaffirming our role as a leader in the travel technology industry.
Speaker 2: This recognition holds significant importance and is expected to support our endeavors.
Speaker 2: in enhancing long-term shareholder value.
Speaker 2: 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.
Speaker 2: Next, we completed a successful secondary offering for $52.5 million, welcoming an additional 43 institutional investors to our shareholder base. We will step forward in diversifying our shareholder base.
Speaker 2: and incentivizes an environment that fosters investors participation. Moreover, with management retaining our 40% ownership of shares, our interests remain truly aligned with those of our valued investors.
Speaker 2: As I mentioned earlier, we have significantly enhanced our leadership and marketing teams in the first half of 2023.
Speaker 2: most recently.
Speaker 2: Vitein Mehta, previously a leader at Google, joined Monty's Executive Team to oversee AI strategic planning and initiatives. With a professional background of over 25 years, including a wealth of experience in the field of AI, Vitein will place a
Speaker 2: It will play a crucial role in our AI marketplace. It brings a growth-focused approach that emphasizes client-centricity, revenue generation, and results driven dealership.
Speaker 2: to promote MONDIs 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 AI strategy and roadmap development, vendor relationship management, financial discipline such as SOX compliance, as well as operational program management.
Speaker 2: We are now well along the path of building an all-star team to take only significant levels of profitable growth. I will now pass the call over to Jesus for a review of our financial performance and outlook. Jesus – thank you!
Speaker 3: We generated strong results in the second quarter. As Mandy 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 second quarter results in slide eight of the presentation. Rose revenue of $708 million was 112% of second quarter of 22, while net revenue of $56.8 million was 124% of second quarter 22. Tech rate continued to be in line with our expectations and closed at 8% in the second quarter, a subtraction increase from pre-pandemic levels of 4% to 5%.
Speaker 3: It also represents a substantial increase when compared to 7.2% achieved during the second quarter of 2022. This expansion in tech rate is driven mainly by the uptake of hotel content and the diversification of revenue streams like travel and thin tech.
Speaker 3: We expect this very important metric to continue expanding with the addition of cruises and a great mix of hotels, events and activities. Furthermore, what happened was the momentum of our business with over 721,000 transactions in the second quarter of 23, up from 550,000 in the second quarter of 22. Turning to expenses, GAAP sales and marketing as a percentage of gross revenue was 5.7 percent which was 5.1 in the same quarter last year.
Speaker 3: as we enhanced our marketing function and accelerated approximately $1 million of investment that was initially planned for 2024.
Speaker 3: to capitalize on our AI travel marketplace. DNA as a percentage of net revenue was 9.2%.
Speaker 3: Up from 4.4% a year ago, as we incorporated new public company expenses, I provide the infrastructure to continue supporting our exceptional growth. CTV DA was 4.4 million for the quarter, 118% over 3.8 million in Q2 of 2022.
Speaker 3: as we continue to deliver profitable growth despite the incremental marketing of one-time expenses. Note that reconciliation of tab to no tab are available in today's earnings release.
Speaker 3: On a cut basis, the net loss was $14.6 million, including approximately $14 million of non-cash and or no recurring items.
<unk> and May increase the transaction comp that and the second aspect is that activity. So remember that we are only going up 88 bed central Florida, and the pre pandemic levels.
And as the international markets that are opening.
And that more and more time is coming.
It is changing these dynamics, Dave so it's not a linear thing odd can follow the historical trends, but also you have to factor in all of 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.
Our first quarter.
And thirdly, yes.
And growing.
The growing business.
We are not thinking about this following the trend up last year in doing that.
It's about how we take the market share the market maybe.
Having the same seasonality effect, but we plan to take more market share.
From the other plants and that will increase on members.
May be different from the previous quarters.
Or do you <unk>.
Yeah, and one last point I mean, I think price LNG 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.
222 was a very strong quarter, particularly because youll have only grown in Q1. So a lot of travel that was going to happen in Q1 happened in Q2 right. So you have that element of the equation for 2022 in particular.
As far as demand is concerned traditionally.
Our our strongest quarters worse towards the end of the yes, specifically Q4.
And to that you have two other elements that Jim mentioned.
Ranging seasonality and geographically we have added the growth.
As I've mentioned on so if you add all these three or four variables.
We're very confident about Q3, and Q4, which will be much stronger than Q2, which itself.
He's an exceptional courses so.
Understood. Thank you guys really appreciate it congrats on the quarter.
Thanks, Pat as a reminder, if you'd like to ask a question you may do so by pressing star followed by one on your telephone keypad.
Our next question is from Mike Grondahl of Northland Security Mike. Your line is now at 10. Please go ahead.
Hey, Thanks, guys just a couple more questions on the on the $20 million investment.
How would you describe the myth.
Between.
Peer direct marketing.
And personnel cost.
And then secondly.
Would you say the marketing dollars are more targeted.
Yes influencers.
For Aegean.
And I'm just trying to understand in the marketing what will the hook b.
For each one.
So.
Hey, Mike, It's Jim I'll start.
So 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 as the most significant buying population and travel.
Tech savvy people to begin with right and they are looking for they are the ones that are most embraced all of the generative AI features that have come out anywhere.
In any industry vertical so.
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 hyper local et cetera. So when you. When you think about that the hook here is just going to.
B.
It's more than just the new toy. This since this is truly the new way of as an individual building my experiences right as an expert.
Our channel to market.
<unk> seen that happening most effectively and most efficiently. So our book is not just at the end traveler. Its all the way through the chain here to include the service support because this is the unique thing about our platform as it gets fully deployed end to end so thats primarily on the hook side.
In terms of that the way we are thinking of the investment.
That will 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 way as well as continued enhancement in deployment of the AI capabilities within our platform. So it's generally in that in that range.
Okay.
And just so I got it right.
Right.
Sure go ahead.
So just a little bit more color, Mike. So you made a call at that hour.
Before we're focusing our marketing mostly on credit. So I will go through a time of an expert and tell them look we'll give you a thousand dollar credit and you can.
Used it on the first step of transactions that Youll make right. So now like I mentioned, we are targeting the new era of experts, we just more freelancers and social media Influencers and the way that these.
These new customers are making money is theyre, making 1% of bulk transactions of their followers, but they booked through our platform and then for the private the private I guess, a $10 set that's what I'd say about so we need to educate the market before to know how would you know if you had an influence there how would you know about this platform.
How would you know about the 10th of our credits. So now we have two different types of campaigns.
We got a more performance marketing as opposed to credit right.
So this basically explains also why we'd build.
In additional to our existing marketing team.
<unk> 14 individuals with experience.
In this new era.
Expert and customer.
Got it and then.
One more.
If you look at the overall transaction.
And take rate.
In the second quarter.
Is there anything to call out there like air travel was better or worse hotels cruises.
Ancillary.
Any kind of detailed commentary on that underlying performance, if you will whether it's transactions or take rate.
I think Mike in one of them and maintains to point out is that as we continue expanding on our wholesale offering.
But take rate is going to continue to improve.
Understood.
As you referred to second quarter. It is clearly the main driver for that improvement in that take rate.
Okay.
Okay.
Yeah.
Okay.
Thank you that concludes the Q&A for today I'd like to turn the call back over to Jeff Houston Senior Vice President Jeff. Please go ahead.
Sure. Thank you and thanks to all who tuned in for our second quarter 2023 earnings call whether it was here on the live call replay or reading the transcript.
Really appreciate your interest in <unk> and welcome the opportunity to further connect with you.
If you have any questions or would like to learn more about <unk>. Please don't hesitate to schedule a call with US you can get more information at our IR site, which is investors that Monte dot com or send an email to IR at <unk> Dot com.
Thank you.
This concludes today's call. Thank you for your participation you may now disconnect your lines.
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