Q1 2024 Mondee Holdings Inc Earnings Call
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Speaker Change: Thank you for your patience, everyone. The Monday, Oh, well, so 'twenty 'twenty four earnings conference call will begin shortly so I'll ask the question today. Please press star one on your telephone keypad.
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Operator: The Ultimate Parody Site! Thank you for your patience, everyone. The Monday, 1st quarter 2024 earnings conference call will begin shortly. To ask a question today, please press star one on your telephone keypad. Thank you. Please note this event is being recorded. I'd now like to turn the conference call over to Jeff Houston, Senior Vice President. Jeff, please go ahead.
Speaker Change: Good day and welcome to the Monday, but what's the 'twenty 'twenty four earnings Conference call. Please note. This event is being recorded.
Speaker Change: I'd like to turn the conference call over to Jeff Houston Senior Vice President. Please go ahead.
Jeff Houston: Thank you operator, and good morning to everyone and welcome to <unk> first quarter 2024 conference call with me today is our founder Chairman and CEO Prasad gondola, and Chief Financial Officer, <unk> talked to you.
Jeff Houston: Thank you, operator. And good morning to everyone.
Jeff Houston: Welcome to Mondew's first quarter 2024 conference call. With me today is our founder, chairman, and CEO, Prasad Gundumogula, and chief financial officer, Jesus Portillo; Executive Vice Chairman, Orestes Fintiklis, and Chief Operating Officer, Jim Dullum.
Speaker Change: I can give vice chairman, Richard <unk>, and Chief operating Officer, Jim Dolan, who will present, our results will be available for questions and answers.
Jeff Houston: We'll present our results and be available for questions. Before we begin, I'd like to remind everyone that this call may contain forward-looking statements, including statements about revenue, the growth of our business, our management and governance plans, and other historical statements as further described in our press release. These forward-looking statements are subject to certain risks, uncertainties, and assumptions, including those related to Mondy's growth, the evolution of our industry, our product development success, our management performance, and general economic and business conditions.
Speaker Change: 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 governance plans and other historical statements. As further described in our press release. These forward looking statements are subject to certain risks uncertainties and assumptions, including those related to modest growth.
Speaker Change: Pollution of our industry, our product development success or 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.
Jeff Houston: 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 Securities and Exchange Commission and in our earnings press release that was issued this morning. Forward-looking statements are based on expectations that involve risks and uncertainties that could cause actual results to differ materially.
Speaker Change: In our reports filed with the Securities and Exchange Commission and in our earnings press release that was issued this morning.
Speaker Change: Looking statements are based on expectations that involve risks and uncertainties that could cause actual results to differ materially listeners are cautioned to not place undue reliance on any forward looking statements. During the call. We also refer to non-GAAP financial measures reconciliations of the most comparable GAAP measures are also available in the press release, which is available at investors.
Jeff Houston: During the call, we will also refer to non-GAAP financial measures. 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.
Speaker Change: <unk> dot com with that it's my pleasure to turn it over to preside.
Prasad Gundumogula: Thank you, Jeff. Good morning, good afternoon, and good evening, everyone.
Speaker Change: Thank you Jeff Good morning, good afternoon, and good evening, everyone and welcome to <unk> first quarter 2024 earnings call to discuss our results and significant developments.
Prasad Gundumogula: And welcome to Monday's first quarter 2024 earnings call to discuss our results and significant developments. We are pleased to have had a strong start to 2024 with a record first quarter, exceeding net revenue and adjusting a bit to market expectations. Despite some caution expressed in our latest earnings call, take rate continued to expand with a 10% increase year-over-year to 8.2% for Q1 2024. This translated into net revenue of 58 million, representing growth of 16% year-over-year. First quarter 2024, I just repeat that was 5.1 million as a result of continued marketplace expansion in product and geography.
Speaker Change: We are pleased to have had a strong start to 2024 with a record first quarter exceeding net revenue and adjusted EBITDA market expectations.
Speaker Change: Despite some caution expressed in our latest earnings call.
Speaker Change: To expand with a 10% increase you had already yet to 8.2 person.
Speaker Change: Q1, 'twenty 'twenty four.
Speaker Change: This translated into net revenue of 58 million.
Speaker Change: <unk> growth of 16% year over year plus.
Speaker Change: First quarter 'twenty to report our adjusted EBITDA was five 1 million as a result of continued marketplace expansion in product and geography.
Prasad Gundumogula: Based on these Q1 results, we are now increasing our Net Revenue Guidance for the year. To further support this growth trend, we are continuing to enhance and deploy Mondy's AI capabilities in every aspect of our business, with exciting innovations in the pipeline. As mentioned when presenting our 2023 year-end results, we remain focused on achieving the near and long-term goals of enhancing profitability, expanding our travel marketplace, and maintaining our AI technology leadership. Let me provide a bit more detail on that.
Speaker Change: Even by our innovative <unk> platform.
Speaker Change: Based on these Q1 results we are now increasing our net revenue guidance for the year.
Speaker Change: To further support this growth trend, we are continuing to enhance and deploy wireless capabilities in every aspect of our business with exciting innovations in the pipeline.
Speaker Change: As mentioned when presenting our 2023 here in Brazil, we remain focused on achieving the near and long term goals of enhancing profitability.
Speaker Change: Expanding our travel marketplace and maintaining our technology leadership.
Speaker Change: Let me provide a bit more detail on this.
Plus enhanced profitability and free cash flow.
Prasad Gundumogula: First, enhance profitability and free cash flow. We remain focused on transaction volume growth, improving take rate on our way to achieving sustained double-digit levels, as well as implementing cost control measures and AI-supported ecosystem optimization. As Jesus will explain in more detail, we were free cash flow positive, which led to our cash reserves increasing by $11.4 million from the prior quarter.
Speaker Change: We remain focused on transactional volume growth improving take rate on our way to achieving sustained double digit levels.
Speaker Change: As well as implementing cost control measures.
Speaker Change: And the AD supported ecosystem optimization.
Speaker Change: Has it will explain in more detail in Levered free cash flow positive, which led to our cash results increasing by 11 $4 million from the prior quarter to quarters.
Prasad Gundumogula: Second, we are seeing good early results from expanding our travel marketplace across more geographies while broadening our productivity. With an emphasis on packages, events, and activities, we continue to achieve notable diversification in revenue. During Q1 2024, our non-air components, such as hotels and packages, expanded to 51% from 26% in Q1 2024. This diversification of our product mix supports further take rate improvement. Third, maintain technological leadership in AI. We are continuing to develop, innovate, train, and deploy new AI travel features and comprehensive end-to-end capabilities across our ecosystem.
Speaker Change: Second we are seeing good early results from expanding our travel marketplace across more geographies, while broadening our product mix.
Speaker Change: With emphasized on packages events and activities.
Speaker Change: Continue to achieve notable diversification and revenue mix.
During Q1, 'twenty 'twenty four our non air components, such as hotels and packages expanded to 51% from 26% in Q1 2023.
Speaker Change: This diversification of our product mix supports that take rate improvement.
Speaker Change: Third maintain technological leadership and yeah, we are continuing to develop innovate train and deploy newly added <unk> features and comprehensive end to end capabilities across our ecosystem.
Prasad Gundumogula: Stay tuned for more exciting and specific announcements in the second half of the year. I now turn the floor over to Jim Dullum, our Chief Operating Officer, who will discuss some business trends and Monty initiatives underpinning our results and outlook.
Speaker Change: Stay tuned for more exciting and specific announcements in the second half of the year.
Speaker Change: I'll now turn the floor to Jim Deller, <unk>, Chief operating officer, who will discuss some business trends and one of the initiatives underpinning our results and outlook Jim.
James W. S. Dullum: Thanks, Prasad. And hello, everybody.
James W. S. Dullum: Thanks, <unk> and Hello, everybody.
James W. S. Dullum: Turning to some business drivers and marketplace enhancements, Mondi remained very well positioned in the volatile and rapidly changing travel environment throughout the first quarter. We anticipate good demand growth from emerging market trends, despite post-pandemic pent-up demand peaking and some headwinds from regional armed conflict. On a macro industry note, the strong travel demand from last year continued through the first quarter of this year, with international consumption led very handily by Asia Pacific.
James W. S. Dullum: Turning to some business drivers and marketplace enhancements.
James W. S. Dullum: Monty remained very well positioned in the volatile rapidly transforming travel environment throughout the first quarter.
James W. S. Dullum: We anticipate good demand growth from the emerging market trends, despite post pandemic pent up demand, peaking and some headwinds from regional armed conflicts.
James W. S. Dullum: On a macro industry note the strong travel demand.
Last year continued through the first quarter of this year with the international consumption led very handily by Asia Pacific.
James W. S. Dullum: Mondi's strong position in international travel, which emphasizes LATAM, Asia, and the Middle East, is expected to continue benefiting us into 2024 with these macro trends. Amid this growing demand, there remain supply-side challenges for airlines, hotels, and other suppliers who are facing high-cost capital constraints for renovations and upgrades while trying to solve for labor shortages and aircraft delivery delays. As we have highlighted previously,
James W. S. Dullum: <unk> strong position in international travel, which emphasizes Latam.
James W. S. Dullum: Asia and the Middle East is expected to continue benefiting us into 2024 with these macro trends.
James W. S. Dullum: Amid this growing demand.
James W. S. Dullum: Supply side challenges for airlines hotels, and other suppliers were facing high cost capital constraints for renovations and upgrades were all trying to solve for labor shortages and aircraft delivery delays.
James W. S. Dullum: As we've highlighted previously <unk> ecosystem and business model flourishes in such conditions or volatility.
James W. S. Dullum: Bondi's ecosystem and business model flourishes in such conditions of volatility. Travelers seeking effective options for full-service support align very well with Mondy's offer. While on the supply side, these volatile conditions can create more perishable capacity, motivating suppliers and travelers to work through full-service B2B channels. These are outcomes which are all well suited to Mondy's AI-driven marketplace. Looking into the future, the macro trends, these macro trends benefit Mande; they provide benefits for Mande that are complemented by the emerging consumer trends, which are being driven by the younger traveler demographic and persona. These trends include the emergence of inspiration travel, such as entertainment, music, tourism, and hybrid work or leisure travel.
Travelers seeking effective options for full service support aligns very well with monday's offerings.
On the supply side. These volatile conditions can create more perishable capacity motivating suppliers and travelers to work through full service VW channels.
James W. S. Dullum: These are outcomes, which are all well suited to monday's AI driven marketplace.
James W. S. Dullum: Looking into the future the macro trends.
James W. S. Dullum: These macro trends benefit.
James W. S. Dullum: They provide benefits of mondi.
James W. S. Dullum: Are complemented by the emerging consumer trends, which are being driven by the younger travelers demographic and personal assets.
James W. S. Dullum: These trends include the emergence of inspiration travel such as entertainment music tourism and hybrid work or leisure travel.
James W. S. Dullum: These new age persona requirements and trends are a great fit with Mondy's AI platforms and expanding new age distribution channels. From an AI perspective, as we interact with these new cohorts at scale, we gain additional valuable feedback, allowing us to refine our platform, monetization, and content localization strategies. We also continue enhancing our marketplace. As Prasad described, with our continually expanding marketplace, Mondi is steadily increasing its market share within the $1 trillion-plus assisted and affiliated travel market by focusing on our added content and distribution expansion.
James W. S. Dullum: These new edge per solar requirements and trends are a great fit with <unk> AI platforms, and expanding new age distribution channels.
James W. S. Dullum: From an AI perspective, as we interact with these new cohorts at scale, we gain additional valuable feedback.
James W. S. Dullum: Wowing us to refine our platform monetization and content localization strategies.
We also continue enhancing our marketplace.
James W. S. Dullum: Prasad described.
James W. S. Dullum: With our continually expanding marketplace mondi is steadily increasing its market share within the one trillion plus.
James W. S. Dullum: <unk> and affiliated travel market.
James W. S. Dullum: By focusing on our added content and distribution expansion.
James W. S. Dullum: You may recall that just four short years ago, Mondi almost exclusively offered discounted airfare. In the first quarter of this year, air-only net revenues accounted for only 49% of total net revenue, as previously mentioned. Let's break down the non-air components a bit further.
James W. S. Dullum: You may recall that in just four short years ago Mondi almost exclusively offered discounted airfares.
James W. S. Dullum: In the first quarter of this year.
James W. S. Dullum: Only net revenues accounted for only 49% of total net revenue as previously mentioned.
James W. S. Dullum: Let's break down the non air components a bit further.
James W. S. Dullum: Packages were 28%, up 13% from Q1 23. Hotels were at 13%, up 4% from Q1 2023. Fintech was at 6%, and all other, which included SAS insurance, ground transportation, and other ancillaries, were at 5%.
James W. S. Dullum: <unk> were 28% up 13% from Q1 'twenty three.
James W. S. Dullum: Hotels were up 13% up 4% from Q1 'twenty three.
James W. S. Dullum: Fintech was 6%.
James W. S. Dullum: And all other which included SaaS insurance round transportation and other ancillary areas.
James W. S. Dullum: 5%.
James W. S. Dullum: These adjacent products and markets not only significantly expand <unk> total addressable market, but also contribute to the impressive rise in take rate.
James W. S. Dullum: These adjacent products and markets not only significantly expand Mondy's total addressable market but also contribute to the impressive rise in take rates. As we continue deploying this content with more personalized and localized experiences through our AI technology platform, Mondi will more effectively grow its distribution channels, such as the New Age distribution part. Moreover, beyond this growing expert-led distribution, we continue to see transactions and net revenue increases year over year with our enterprise and membership organizations' closed user group customers.
James W. S. Dullum: As we continue deploying this content with more personalized and localized experiences through our AI technology platform.
James W. S. Dullum: Mondi will more effectively grow its distribution channels, such as the new age distribution partners.
James W. S. Dullum: Moreover, beyond this growing expert led distribution, we continue to see transactions, our net revenue increases year over year with our enterprise and membership organizations closed user group customers.
James W. S. Dullum: This is a result of our leisure-friendly platforms, packaged offerings, and the trends in corporate travel growth, such as hybrid work-travel and cultural exploration trips. Now, turning to our end-to-end business ecosystem. During the quarter, we continued to make progress in a number of areas that benefit profitability and operating cash flow, including further automation-led optimization of pricing and transaction flows. Additional deployment of NDC connections with our airline and other distribution partners and implementing some hotel direct connections with major brands, with an immediate positive effect on our pricing and take rate on the synergies and integrations front.
James W. S. Dullum: This is a result of our bleser friendly platforms packaged offerings and the trends in corporate travel growth such as hybrid work travel and cultural exploration trips.
James W. S. Dullum: Turning to our end to end business ecosystem.
James W. S. Dullum: During the quarter, we continued to make progress in a number of areas of benefit profitably and of profitability and operating cash flow.
These included further automation of lead optimization of pricing and transaction flows.
James W. S. Dullum: Additional deployment of MDC connections with our airline and other distribution partners.
James W. S. Dullum: And implementing some hotel direct connections with major brands.
James W. S. Dullum: Immediate positive effect on our pricing and take rate.
James W. S. Dullum: On the synergies and integration front.
James W. S. Dullum: Finally, during the first quarter, we focused on achieving further synergies with our five acquisitions in 2023 through seamless integration and lucrative cross-selling opportunities. Along these lines, the integration of financial settlement processes has yielded strong early cost savings results. While the consolidation of all hotel content under one global content hub is advanced, we have also made good progress on the integration of our cross-border air content. And indicatively, on May 2nd of this year, 2024, Mondi Brazil launched flight-only distribution in the country, levering our air carrier relationships and Superior Air Content. For the balance of this year, we're focusing on realizing organic growth and synergy benefits. And now I yield the floor to Jesus, our CFO, for a review of Mondy's financial performance and outlook. Jesus?
James W. S. Dullum: Finally during the first quarter, we focused on achieving further synergies with our five acquisitions in 2023.
James W. S. Dullum: Through seamless integration and lucrative cross selling opportunities.
James W. S. Dullum: Along these lines the integration of financial settlement processes has yielded strong early cost savings results.
James W. S. Dullum: The consolidation of all hotel content under one global content hub is advancing.
James W. S. Dullum: We also made good progress on integration of our cross border Air content.
James W. S. Dullum: And in digitally on May 2nd of this year 2020 for Mondi, Brazil has launched flight only distribution in the country levering our air carrier relationships.
James W. S. Dullum: Superior Air content.
James W. S. Dullum: For the balance of this year, we're focusing on realizing organic growth.
James W. S. Dullum: And synergy benefits.
James W. S. Dullum: Florida is suits, our CFO for a review of <unk> financial performance and outlook.
James W. S. Dullum: Yes.
Jesus Portillo: Thank you, Jim, and hello everyone. As I go over our first quarter results, I would like to point out that all growth rates are on a year-over-year basis unless otherwise indicated. Let me start with our financial highlights. We continue to generate strong performance throughout this first quarter in net revenue, EBITDA, and more noteworthy free cash flow generation, which was materially positive, as I will detail. Our gross bookings were $708 million in this quarter, up 6%. This growth was driven by a 62% increase in the number of transactions, with a big share of that coming from an expansion in our short-haul international flights, which carry a lower price point per transaction.
Florida: Thank you, Jim and Hello, everyone.
As I go over our first quarter results I would like to point out that all growth rates are on a year over year basis, unless otherwise indicated.
CFO: Let me start with our financial highlights.
Jesus Portillo: Our net revenue increased 16% to reach 58 million. This growth in net revenue is the result of higher growth book, combined with our continued improvement in tech rate. Our take rate of 8.2% was ahead of our expectations for this first quarter, an increase of 10%. As with prior quarters, this improvement in the tech rate was driven mostly by the growth of higher-margin products and the diversification of revenue streams, including fintech and ancillary services.
We continue to generate strong performance throughout this first quarter around net revenue EBITDA and more noteworthy free cash flow generation.
CFO: Also materially positive as I will detail.
CFO: Our gross bookings were $708 million in this quarter up 6%.
CFO: This growth was driven by a 62% increase in the number of transactions.
CFO: With a big share of that coming from an expansion in our short holding international flights, which carry a lower price point per transaction.
CFO: Our net revenue increased 16% to $58 million.
CFO: This growth in net revenue is the result of higher gross bookings combined with our continued improvement in take rate.
Our take rate of eight 2% was ahead of our expectations for this first quarter and up 10.
CFO: <unk>.
As with prior quarters. This improvement in take rate was driven mostly by the growth of higher margin products and the diversification of revenue streams, including Fintech and ancillary services.
CFO: Turning now to expenses, our largest expense category sales and marketing was up 8% in absolute terms.
Jesus Portillo: Turning now to expenses, our largest expense category, sales and marketing, was up 8% in absolute terms. But as a percentage of net revenue, sales and marketing improved from 75 to 69%. The main drivers for this improvement continue to be AI-driven optimization of marketing credits to our B2B distribution network and reductions in performance marketing spend in our B2C business.
CFO: But as a percentage of net revenue sales and marketing improved from 75% to 69%.
CFO: The main drivers for this improvement continue to be AI, driven optimization of marketing credits towards <unk> distribution network and reductions in performance marketing spend in our <unk> business.
Jesus Portillo: Adjusted EBITDA improved by 27%, from $4 million to $5.1 million. Adjusted EBITDA margin also improved from 8% to 8.7%, as we continue to prioritize operating efficiencies and improve profitability. On a gap basis, our net loss was $19.5 million, which included $20.7 million of non-cash and or non-recurring items, such as 5.6 million of depreciation and amortization and 5.5 million of peaked interest. 5.3 million in stock-based compensation and 1.9 million in amortization of loan origination fees. 1.2 million change in the fair value of the earn out liability, and $1.2 million of acquisition and financing related costs, among others.
CFO: Adjusted EBITDA improved by 27% from 4 million to $5 1 million.
CFO: Adjusted EBITDA margin also improved from 8% to eight 7%.
CFO: So we're continuing to prototype operating efficiencies and improve profitability.
CFO: On a GAAP basis, our net loss was $19 5 million.
CFO: Which included $20 7 million of noncash or nonrecurring items.
CFO: Such as $5 6 million of depreciation and amortization.
CFO: $5 5 million of Pik interest.
CFO: $5 3 million of stock based compensation.
CFO: One 9 million amortization of loan origination fees.
CFO: One 2 million change in fair value of earn out liability.
CFO: At $1 2 million of acquisition and financing related costs among others.
CFO: Yes.
Jesus Portillo: Looking at our balance sheet, at the end of this quarter, we had $47 million in cash and cash equivalents and 166 million of total debt compared to 36 and 162 million, respectively, at the end of December 2022. The increase by $11.4 million in our cash balance, quarter over quarter, is a result of the company achieving the important milestone of being free cash flow positive for Q1 2025. Free cash flows were $13.8 million, a 25.7 million improvement from the same quarter last year.
CFO: Looking at our balance sheet at the end of this quarter, we had $47 million in cash and cash equivalents.
CFO: And $166 million of total debt.
CFO: 236, and 162 million respectively at the end of December 2023.
CFO: The increased by $11 4 million and our cash balance quarter over quarter is a result of the company achieved an important milestone of being free cash flow positive for Q1 2024.
CFO: Free cash flows were $13 8 million.
CFO: A $25 7 million improvement from the same quarter last year.
CFO: This improvement in free cash flows included certain timing related working capital and cash management initiatives.
Jesus Portillo: This improvement in free cash flows included certain timing, greater working capital, and cash management initiatives. We have advanced further on the refinance of our term loan to increase duration and improve terms. We expect these to optimize our capital structure, adding value to our shareholders. In the meantime, we have executed an amendment with our current lenders. Extending the Existing Loans Maturity to June 30, 2025. Returning now to our 2024 guidance. Based on our improved financial performance through this first quarter, we remain optimistic about this fiscal year 2024.
CFO: We have advanced farther on the refinance of our term loan to increase duration and improved terms.
CFO: We expect these to optimize our capital structure, adding value to our shareholders.
CFO: In the meantime, we have executed an amendment with our current lenders.
CFO: Tending the existing loans maturity to June 32025.
CFO: Turning now towards 2020 forward guidance.
CFO: Based on our improved financial performance. During this first quarter, we remain optimistic about this fiscal year 2024.
Jesus Portillo: And now, I forecast our net revenue to be between $250 million and $260 million, representing an increase of 14% versus 2023 net revenues measured at the midpoint. We reiterate our adjusted EBITDA guidance of $30 million to $35 million, representing an increase of 67% versus 2023 adjusted EBITDA measured at the midpoint. With all of this, let me now turn it back to Jeff for Q&A. Jeff?
CFO: And now forecast, our net revenue to be between $250 million and $260 million, representing an increase of 14% versus 2023 net revenues.
CFO: At the midpoint.
CFO: We reiterate our adjusted EBITDA guidance of 30 million to $35 million for.
CFO: Representing an increase of 67% versus 2023, adjusted EBITDA measured at the midpoint.
With all this let me now turn it back to Jeff for Q&A Jess.
Jeff Houston: Hey, thanks Jesus. Operator, we are ready for questions now.
Jeff Houston: Hey, Thanks, Hey, Zeus operator, we are ready for questions now.
Operator: Thank you Jeff. If you'd like to ask a question, please press star 4x1 on your telephone keypad now. To change your mind, please press star four by two. When preparing to ask your question, please ensure your device is unmuted locally. That's star one to ask a question. Our first question today comes from Nick Jones from JMT. Please go ahead.
Jeff Houston: Thank you Jack if you'd like to ask the question.
Jeff Houston: Followed by one on your China. Thank you Pat now thank.
Jeff Houston: Thank you change your mind, Please press star followed by Chi.
Speaker Change: When compared to ask a question. Please ensure your device is unmated lately.
Speaker Change: Thats Star one to ask a question.
Speaker Change: Our first question today comes from Nick change from Jay and he please go ahead.
Nick: Hi, good morning, Thanks for taking my questions.
Nicholas Freeman Jones: Hi, good morning. Thanks for taking the questions. I have two.
Nick: <unk>.
Nicholas Freeman Jones: You know, I think last quarter, you spoke to revenue per transaction coming down, you know, just by kind of transaction lines up on kind of increased short-haul flight. How should we think about the dynamic? You guys drive really great transaction growth. You know, what's the trajectory of revenue per transaction? And how should we think about that traffic? And then I've
Nick: I think last quarter, you spoke to revenue per Tran transaction coming down despite kind of transaction lines up on kind of increase short haul flights.
Speaker Change: Should we think about the dynamic that you guys drive really great kind of transaction growth.
Speaker Change: What's the trajectory of revenue per transaction and how should we think about that traffic and then I have a second question.
Speaker Change: Yeah, Hey, Nick it's Jim.
James W. S. Dullum: Hey Nick, it's Jim. Thanks for the question. Yeah, first of all, there is somewhat of a continuation of that, right? We had, we've had continued good growth and those international short-haul flights, which do bring revenue per transaction down. A couple other factors as well. The hotel-only transactions and even some of the packages have a higher take rate but are also lower priced per transaction. So with that lower price per transaction, that will also lower that metric.
Thanks for the question.
Jim: Yes, it's fair.
Jim: First of all there is somewhat of a continuation of that right. We had we've had continued good growth.
Jim: And those international short haul flights, which do bring revenue per transaction down.
Jim: A couple of other factors as well.
Jim: The the.
Hotel all the transactions.
Jim: And even some of the packages have a higher take rate, but are also lower price per transaction. So.
Jim: That lower price per transaction that will also blend down.
James W. S. Dullum: And then the third component of it is that there has overall been some moderation. If you look at some of the IATA numbers that were recently published as an example, you'll see a general moderation in flight pricing across most markets and most of those we serve. So we've had sort of that trifecta that has caused the average transaction rate to come down, albeit at a higher take rate because of the blend that we talked about during the announcement.
Jim: <unk>.
Jim: That metric.
Jim: And then the other.
Jim: Third component of it is there is overall been some moderation if you look at some of the IATA numbers that were recently published as an example, you'll see a general moderation in flight pricing.
Jim: Across most markets in most regions, particularly those we serve so we've had sort of that trifecta that has caused the average.
Jim: Transaction rate to come down, albeit at a higher take rate.
Jim: Because of the blend that we talked about during the.
Jim: During the announcements.
Speaker Change: Great and then yeah.
Prasad Gundumogula: You know, Avi's been out for a while. You guys are, you know, focused on a lot of AI and kind of product enhancement. Can you speak to the engagement, the impact it's having on the business now that it's been out for a little bit? And is there any way you can kind of quantify the impact, either on the top line or margins?
Speaker Change: <unk>, obviously been out for a while you guys are focused on a lot of AI and kind of product enhancements across the platform.
Speaker Change: Can you speak to the engagement.
Speaker Change: Impact, it's having on the business that has been out for a little bit now and is there any way you can kind of quantify the impact either on top line or margin.
Prasad Gundumogula: It's too early to do that, but we had a great experience with Abby in the marketplace today. The good engagement and good learnings and changes that we are making. So we are in the process of releasing our next version, the second half, with all the great feedback that we received from our customers and marketplace. At the same time, we are using the AI platform with ABI to connect to the external world, and while we are working on this, transforming the industry with these disruptive technologies, we are also working on a project called Infinity internally to focus and deploy AI platforms within our current departments, things such as sales and marketing, contact center, and everything to achieve cost savings and revenue uptake.
Speaker Change: It's too early to do that.
Speaker Change: And we.
Speaker Change: We have had great experience with abbvie in the marketplace today.
Speaker Change: Good engagement and good learnings and changes that we're making so we are in the process of.
Speaker Change: Releasing our next version in the second half with all the great feedback that we received from our customers and marketplace.
Speaker Change: At the same time, we are using the <unk> platform at the IV to the external world.
Speaker Change: And we would welcome this transforming the industry with disruptive technologies, but we're also working on.
Speaker Change: And on a project called Infinity internally to focus and deploy EIA platforms.
Speaker Change: Our current departments.
Speaker Change: And.
Speaker Change: Things, such as sales and marketing contacts and inevitably.
Speaker Change: Two.
Speaker Change: Achieve.
Speaker Change: And our cost savings and revenue I think.
Prasad Gundumogula: So we expect that to be positively impacting our financials sometime in the second half of the year. So at this point in time, we are focusing on, you know, deploying and focusing on making this system better and great. And then we, you know, we expect to see the results and some good metrics being published at that point in time.
So we expect that to be positively impacting our.
Speaker Change: Our financials sometime in second quarter second half of the year.
Speaker Change: So at this point of time, we are focusing on deploying and focusing on making this.
Speaker Change: Our system better than grid.
Speaker Change: And then we.
Speaker Change: We expect to see that as adults and some good metrics been published at that point.
Prasad Gundumogula: Just adding to that, you know, if you want some metrics, you know, and part of what Prasad was referring to. A big part of our improvement in our sales and marketing ratio is actually driven by these internal AI solutions.
Speaker Change: Just adding to that.
Speaker Change: And also some metrics there.
Speaker Change: Part of what I was referring to.
Speaker Change: At <unk>.
Speaker Change: Part of our.
Speaker Change: Improvement in our sales and marketing ratio, it's actually driven by these internal AI solutions.
Speaker Change: Yes, so that's Australia that redeployed and as we continue to deploy it in other areas. So we already see that.
Prasad Gundumogula: Yeah, so that's the first area that we deployed, and as we continue to deploy in other areas, we already see a reduction in marketing expenses through, you know, proper marketing, and pricing information being offered by our AI platform.
Speaker Change: The addiction and marketing expense through an appropriate marketing.
Speaker Change: <unk>.
Speaker Change: Information being offered about AI platform.
Nicholas Freeman Jones: Great, thanks for taking the questions.
Speaker Change: Alright, thanks for taking my questions.
Darren Paul Aftahi: Thank you. The next question is from Darren Aftahi from Ross MKM. Please go ahead.
Speaker Change: The next question is from Darren <unk> from Roth.
Darren: Please go ahead.
Darren: Yes, good morning.
Darren Paul Aftahi: Yeah, good morning. Could I follow up on the question on you're commenting on about AI and performance marketing? I'm just kind of curious how you're using , , , , , , , , , , , , , , Second, your comments about short haul flights and kind of the delta between transactions and Bookings. I'm curious as you look into 2Q almost halfway over. How long is the short haul kind of impact going to be with your business? Is this kind of a terminal thing?
Darren: Could I follow up on a question on.
Darren: You were commenting on about AI performance marketing I'm, just kind of curious how you're using machine.
Darren: Machine learning in your performance marketing objectives, and just kind of what youre target payback periods are for those.
And then.
Darren: Second.
Darren: Your comments about short haul flights and kind of the delta between transactions and.
Darren: Bookings I'm curious as you look into <unk> almost halfway over.
Darren: How long is the short haul kind of impact it would be with your business is kind of a terminal thing.
Darren Paul Aftahi: And then lastly, maybe for Jesus, a really nice cash flow from operations number. I appreciate there are some working capital nuances. It's a pretty big delta from what you reported with EBITDA. So how do we think about normalizing cash flow from operations going forward? Thanks.
And then lastly, maybe.
Speaker Change: Maybe for Jesus.
Speaker Change: Really nice cash flow from ops number I appreciate there's some working capital nuances, it's a pretty big Delta from what you're reporting with EBITDA. So kind of how do we think about normalization of kind of cash flow from ops going forward. Thanks.
Speaker Change: So as far as the EIA involvement in marketing campaigns and effect of that on the sales and marketing. So we are using this for two major areas. One is first the revenue management optimization using ml.
James W. S. Dullum: So, as far as AI involvement in marketing campaigns and the effect of that on sales and marketing, we are using this for two major areas.
James W. S. Dullum: One is for revenue management optimization using ML. We are having a great, you know, information being fed into the platform, which is helping us to set the right prices at the right times and as well as for promotions. So, the pricing and the rating algorithms are being fine-tuned with AI that helps us to set proper revenue management, you know, levels for our sales and marketing for both B2B and B2E businesses.
Speaker Change: We are having a great.
Speaker Change: Information being feed it into the platform, which is helping us to set the right prizes at the right times and as well as the promotions.
Speaker Change: So the pricing and the rating algorithms are being fine tuned with the EIA that helps us to set appropriate revenue management.
Speaker Change: Levels.
Speaker Change: But our.
Speaker Change: Sales and marketing and <unk> businesses.
James W. S. Dullum: And we also placed our AI platform, which is connected with our marketing platforms or marketing tools, that helps us to analyze the performance of these campaigns and how and what corrections should be made in real time through our AI platform being in the middle.
Speaker Change: And as we also now placed.
Speaker Change: Yes platform, which is connected with our.
Speaker Change: Marketing marketing platforms, our marketing tools that helps us to analyze the performance of these campaigns and how and what correction to be made real time.
Speaker Change: Through our a M P.
That from being in the middle.
Speaker Change: Yes.
James W. S. Dullum: Hi Darren, it's Jim.
James W. S. Dullum: Yeah, Darren.
Speaker Change: Yes Darren.
Speaker Change: Jim on the.
Speaker Change: Your second question.
Speaker Change: The impact of short haul flights.
Jim: You will see you'll continue to see actually on all three fronts that we mentioned that are part of that dynamic between.
Jim: Reducing average average ticket price youll see that dynamic continue for a little while if you think about it right, what's driving a lot of that short haul traffic.
James W. S. Dullum: On your second question about the impact of short-haul flights, you will see that you'll continue to see on all three fronts that we mentioned that are part of that dynamic between the reducing average ticket price. You'll see that dynamic continue for a little while. If you think about it, what's driving a lot of that short-haul traffic, it's a lot of the Asia-Pacific recovery. And think about when that kind of started and picked up steam and so forth.
Jim: A lot of the Asia Pacific recovery.
Jim: And think about when that kind of started and picked up steam and so forth and we started to see the effect of it.
James W. S. Dullum: And we started to see the effect of it. That's going to be toward the back half of the year, when the comparisons are more normalized. But right now, we're still looking at that. There being a comparatively higher rate of those short-haul flights impacting our ATPs, our average transaction price. And Darren, I'll...
It's going to be towards the back half of the year.
Jim: The comparisons were more normalized but right now we're still.
Jim: We're still looking at.
Jim: Yes.
Jim: <unk> being a comparatively higher.
Jim: Rates of those short haul flights impacting our hour.
Our average transaction prices.
Jesus Portillo: So yes, I mean, as you pointed out, obviously, the first quarter, our free cash flow was very positive. We were working on different factors during this quarter, and we anticipated collections of our receivables. We also improved certain supplier payment terms, as well as picked up a bigger part of our interest, and that contributed enormously. We don't expect every quarter to remain the same. We expect some fluctuations in how the free cash flow is going to behave, but overall, we maintain our expectation to provide positive free cash flow for the full 2020.
Jesus Portillo: And Darren, I'll address your question. Good morning, and thank you so much for your question.
Jim: And then Darrin.
Speaker Change: The rest of your question good morning, and thank you. So much for the question. So yes, I mean as you pointed out obviously first quarter, our free cash flow was very positive we were working.
Darrin: Different factors within this quarter by one anticipated collections of our receivables. We also improved certain supplier payment terms as well as we also picked a bigger part of our interest and that contributed enormously. We don't expect every quarter to remain the same we expect some fluctuations in how the free cash flow is going to behave but overall we've.
Darrin: Maintain our expectation to provide positive free cash flow for the full 2024.
Speaker Change: Great. Thank you.
Speaker Change: Thank you.
Michael John Grondahl: Thank you. As a reminder, if you'd like to ask a question, please press star 4x1 on your telephone keypad now. The next question is from Mike Grondahl from Northland Securities. Please go ahead.
Thank you.
Speaker Change: Reminder, if you'd like to ask a question. Please press star followed by one on your tower. Thank you Pat now.
The next question is from Mike Grondahl Northland Securities. Please go ahead.
Michael John Grondahl: Hey guys, any regions to call out for travel, you know, above plan or below plan? Like, where are you kind of seeing the strength and what's not?
Michael John Grondahl: Hey, guys.
Michael John Grondahl: Regions to call out for travel.
Michael John Grondahl: Above plan or below plan like where are you kind of seeing the strength in what softer.
Michael John Grondahl: Okay.
James W. S. Dullum: Hey, Mike, it's Jim. Well, you mentioned a little bit ago that there is obviously good strength in the whole Asia Pacific market, and that is continuing. And as I just mentioned, you should see that comparatively continue for the time being this year. We've also seen a very good pickup in Latin America. That market has remained pretty robust and is expected to do so. The markets where there's actually been an interesting bifurcation of both positive uplift somewhere and then some pressure in other places are the Middle East, because there's a lot of conflict in that area of the world that causes a bit of disruption in travel.
Jim: Hey, Mike It's Jim.
Mike: You mentioned, a little bit ago, obviously.
Mike: Good strengths in the whole Asia Pacific market and that is continuing and is again just mentioned you should see that comparatively continue for the time being this year.
Jim: We've also seen very good pickup in Latin America.
Jim: That market has remained pretty robust.
Jim: We expect it to do so the markets, where it's actually been interesting bifurcation of both positive uplift somewhere and then some pressure in all the places the middle East because there've been some there's a lot of that conflict in that area of the world.
James W. S. Dullum: But there are still segments of that market that are very strong, and the outlook is very good for those. I can't think of any market where we're really seeing a lot of softening of any kind. The general trends are certainly up, and we expect that to remain for the remainder of the year.
Jim: Causes a bit of disruption in travel so but.
Jim: There are still segments of that market that are very strong and the outlook is very good for those.
Jim: <unk>.
Jim: I can't think of any markets, where we're really seeing.
Jim: Lot of.
Jim: Softening of anytime.
Jim: The general trends are certainly up and we expect that to remain for the remainder of the year.
Michael John Grondahl: Got it. Um, second question, just, you know, non-air or non-flight?
Speaker Change: Got it.
Speaker Change: Second question just.
Speaker Change: Non air.
Speaker Change: There are none.
Speaker Change: Flight.
James W. S. Dullum: Net revenues, you know, went from 26% to 51%. Were you guys surprised by such a large increase? Or is that kind of, you know, fully part of the 24 plan?
Speaker Change: Net revenues went from 26% to 51%.
Speaker Change: Were you guys surprised by such a large increase.
Speaker Change: Or is that kind of fully part of the 24 plan.
James W. S. Dullum: Yeah, I mean, it was a little bit ahead of what we expected, which is also why our take rate in this quarter was also, you know, ahead of that expectation. And when you look at our, every time that we talk about our future, we always say, you know, we expect error to be around 50%. So we have already achieved that, a little bit ahead of our expectations, a little bit better than we thought.
Speaker Change: Yes.
Speaker Change: You also little bit ahead of what we expected which is also why our take rate in this quarter was also ahead of that expectation.
Speaker Change: And when you look at our all every time that we talk about our future. We always say, we expect <unk> to be around 50%. So we already achieved that delivered ahead of our expectations a little bit better than we thought.
James W. S. Dullum: Got it. And what's your outlook for air, kind of in terms of net revenue? You know, as you look out a year or two, do you see that growing or just kind of continuing on the same trend?
Speaker Change: Got it and what's kind of your outlook for air.
Speaker Change: Kind of in terms of net revenue.
Speaker Change: As you look out a year or two do you see that growing or just kind of kind of continuing on the same trend.
James W. S. Dullum: We, you know, right now we continue with that same perspective of around 50% of our business being in air. So we're investing, as we say, we're pushing forward and strong in our short-haul international flights, so there will be a component that will be categorized as air. And we continue to push in hotels, packages, and cruise lines, as you know.
Speaker Change: Right now we continue with that same perspective of around 50% of our business being in the air.
Speaker Change: Yeah.
Speaker Change: So we're investing as we say, we're pushing forward and strong in our.
Speaker Change: Sure whole international flight, so there will be a component that will be categorized as Eric.
Speaker Change: And we continue to pushing at hotels and packages and cruise lines as you know.
James W. S. Dullum: And, Mike, may I add one more point there? As we are giving our customers the package option, right? Many of them are choosing to book their flight and the hotel through a package, right? So basically, some of what was classified before as air now goes inside the package component, which is positive because we are giving another option to our customers and also for us because this is a higher-take-rate business.
Speaker Change: And Mike maybe you can.
Mike: Can I add one more point that I would give.
Mike: To our customer the package off Sean right many of them are <unk>.
Mike: <unk> zinc to book their flight and the potential of a package right. So.
Mike: So basically some of the what was classified before and now goes inside that.
Mike: Package component, we just positive because we're giving them an option to our customers and also for us because this is a higher take rate.
Mike: The same transactions through a package.
James W. S. Dullum: got it, got it, that's fair and and I guess the reason I was asking is because it would be interesting. That 28% that's in packages. You know, it really increased, you know, putting that in the non-air category. If you just look at what net revenues would have been from AIR a year ago to this quarter without considering that package revenue, you know, it's kind of a steep drop. So what you're just saying is part of that package could really be characterized as air, and then we wouldn't have seen such a large
Speaker Change: Got it got it that's fair and I guess the reason I was asking is.
Speaker Change: It would be interesting.
Speaker Change: That 28% that's and packages.
Speaker Change: It really increased.
Speaker Change: Putting that in the non air category.
If you just look at what net revenues would have been from air.
Speaker Change: Year ago to this quarter without considering that package revenue, it's kind of a steep drop so what youre, saying is part of that package is kind of really could be.
Speaker Change: Characterized as air and then we would have seen such a large drop.
James W. S. Dullum: Yeah, I mean, that's the reason. Yeah, that's it. That's one of the reasons. Also, as we continue expanding in other more lucrative businesses, we've been very critical of the profitability of some of our customers, and we've been reducing some of those as well. So we prefer to continue growing in the most lucrative and profitable way possible. Fair enough.
Speaker Change: Yes.
Speaker Change: That's the reason.
Speaker Change: That's it.
Speaker Change: It's one of the reasons.
Michael John Grondahl: Fair enough. Okay. Thank you.
Speaker Change: Also as we continue expanding in other more lucrative businesses. We've been also be critical.
Speaker Change: The profitability of some of our customers and we've been producing some of those as well so.
Speaker Change: We prefer to continue growing in the most lucrative and profitable way possible.
Speaker Change: Fair enough okay. Thank you.
Speaker Change: Yeah.
Speaker Change: We have no further questions so I'd like to hand it back.
Speaker Change: Great.
Speaker Change: Great.
Jeff Houston: Thank you, we have no further questions, so I'd like to hand you over to Jeff to conclude.
Speaker Change: Thank you operator, and thanks to everyone, who tuned in for our first quarter of 2024 earnings call whether it was live a replay of the transcript. 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 give more information on our IR site, which is investors that <unk> dot com or send an E mail.
Jeff Houston: Hey, thank you, operator. And thanks to everyone who tuned in for our first quarter 2024 earnings call, whether it was the live replay or the transcript. 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 on our IR site, which is investors.mondi.com, or send an email to ir at mondi.com. Thank you.
Al to IR at <unk> Dot com. Thank you.
Speaker Change: Yeah.
Operator: Thank you, everyone. This does conclude today's call. You may now disconnect your lines and enjoy the rest of your day. Thank you.
Speaker Change: Thank you everyone. This does conclude today's call you may now disconnect your lines and enjoy the rest of your day. Thank you.
Speaker Change: [music].