Breaking Down Despegar.com, Corp. (DESP) Financial Health: Key Insights for Investors

If you were tracking Despegar.com, Corp. (DESP) this year, you already know the big story: its financial health was so compelling that it was taken private by Prosus, delisting on May 15, 2025, for a final cash price of $19.50 per share. That deal didn't happen in a vacuum; it was a clear validation of the company's trajectory, which analysts projected to hit a full-year 2025 revenue of over $943.41 million, a solid 10.83% jump from the prior year. Honestly, seeing earnings per share (EPS) forecast to reach $1.31 for 2025, a 34.28% increase, is a defintely strong signal of operational efficiency and market dominance in Latin America's online travel agency (OTA) space. Now that the stock is off the public market, the real question for investors and strategists is what this robust financial breakdown tells us about the underlying Latin American travel market and the valuation of its competitors.

Revenue Analysis

The core takeaway for Despegar.com, Corp. (DESP) is that while the top-line growth looks steady, the real story is a strategic pivot toward higher-margin products, even as currency volatility continues to mask the underlying strength. Analysts project the company's total revenue for the 2025 fiscal year to reach approximately $851.21 million, representing a solid 9.97% year-over-year (YoY) increase from the prior year's $774.06 million.

This growth is defintely driven by a shift in the primary revenue streams, which are split across the overarching Travel Business and the smaller, but fast-growing, Financial Services Business. The Travel Business itself is segmented into Air, and Packages, Hotels and Other Travel Products. We are seeing a concerted effort to push the latter, which carries a higher take rate (the percentage of total transaction value kept as revenue) than simple flight sales.

Here's the quick math on where the revenue composition is focused, based on the latest available product-level data, which sets the stage for the 2025 forecast:

The most important trend here is the deliberate move into higher-margin products. Travel Package sales, for example, increased their contribution by 457 basis points (bps) year-over-year to hit 36.1% of Gross Bookings in the fourth quarter of 2024. That's a massive jump toward profitability. Also, the Financial Services segment, which includes loan origination and the Koin online payment platform, is a key piece of the long-term strategy to capture value beyond the initial booking.

What this estimate hides is the significant impact of foreign exchange (FX) risk, which is a constant in the Latin American market. In 4Q24, for instance, the as-reported revenue growth of 8.7% was dramatically lower than the 44% growth achieved on an FX-neutral basis (meaning, adjusting for currency fluctuations). You need to watch that FX-neutral number-it tells you the true health of the underlying business demand.

Finally, a major structural change in 2025 impacts future revenue analysis: Prosus, a leading global technology company, completed its acquisition of Despegar.com, Corp. on May 15, 2025, which resulted in the company's delisting from the NYSE. This acquisition, approved by shareholders on March 4, 2025, positions Despegar to leverage Prosus's network and balance sheet, but it means public segment reporting will likely change or cease, making detailed analysis like this challenging going forward. You can read more about this shift in our full post: Breaking Down Despegar.com, Corp. (DESP) Financial Health: Key Insights for Investors.

Profitability Metrics

You want to know if Despegar.com, Corp. (DESP) is actually making money, and the answer is yes, but the story is in the margins and how they're improving. The company successfully executed a pivot, driving its core profitability metrics sharply higher through the end of the 2024 fiscal year, which gives us a solid baseline for 2025.

For the full 2024 fiscal year, Despegar.com, Corp. reported total revenue of $774.1 million, a 10% increase year-over-year. The real insight, though, is how much of that revenue flowed down to profit. Here's the quick math on the key margins:

• Gross Profit Margin: 73.1%
• Operating Margin (EBIT): 16.07%
• Net Profit Margin: 3.61%

This means that out of every dollar in revenue, $0.73 was left after the cost of goods sold (COGS) to cover operations, and ultimatly $0.036 was left as net income. That's a defintely solid performance for an online travel agency (OTA) navigating Latin American currency volatility.

Looking at the trend, Despegar.com, Corp.'s profitability has been on a strong upward trajectory, which is what you want to see. The Gross Profit Margin peaked at 73.1% in 2024, up significantly from a five-year low of 23.0% in 2020. This massive recovery shows the business model is resilient and scaling well post-pandemic. More impressively, the full-year 2024 Net Income rose to $27.9 million, a 13.9% increase from the previous year. The Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) also surged by 52% year-over-year to $175.2 million, indicating a major improvement in core operational cash flow.

When you stack Despegar.com, Corp. against its peers in the online travel sector, its operational efficiency stands out. The 73.1% Gross Profit Margin is substantially higher than some competitors like MakeMyTrip Limited at 57.1%. This higher margin is a direct result of management's focus on operational efficiencies and a strategic shift in product mix. They've been pushing higher-margin Travel Package sales, which increased their share of Gross Bookings by 457 basis points (bps) in the fourth quarter of 2024 to 36.1%. That's smart capital allocation.

The company's focus on cost management is clear. A new 10-year lodging outsourcing agreement with Expedia Group, starting in January 2025, is expected to further boost profitability by streamlining inventory and reducing overhead. This strategic move, along with the high Adjusted EBITDA margin of 23.3% in 4Q24, suggests that the company's operating leverage-the ability to grow profit faster than revenue-is firmly in place. This is how you translate revenue growth into real investor value. You can read more about the full financial picture in Breaking Down Despegar.com, Corp. (DESP) Financial Health: Key Insights for Investors.

Finance: Track the impact of the Expedia deal on Gross Margin in the upcoming 1Q25 earnings report.

Debt vs. Equity Structure

You need to know how Despegar.com, Corp. (DESP) funds its growth, and the answer for 2025 is simple: the company's financial structure was completely redefined by an all-cash acquisition. Before that pivotal event, the company operated with a manageable debt load but faced the complexity of negative shareholder equity, a common but tricky situation in the online travel agency (OTA) space.

Looking at the company's most recent quarter before the acquisition, the overall debt level was low. Total debt stood at approximately $50.529 million, a figure that shows Despegar.com, Corp. wasn't heavily reliant on traditional bank loans or bonds for its day-to-day operations. Here's the quick math on the breakdown:

• Short-term Debt and Other Financial Liabilities: $49.625 million
• Long-term Debt and Other Financial Liabilities: $0.904 million

That long-term debt number is defintely small, less than a million dollars, which means the company had minimal long-term capital commitments to service. Most of the debt was short-term, which is typical in a business model with high working capital needs.

The Debt-to-Equity (D/E) ratio is where the story gets interesting. Despegar.com, Corp.'s reported D/E ratio was around 1.40, or 140.22%. A ratio between 1.0 and 1.5 is often considered healthy for a growing company, showing a good balance between lender and owner financing. But what this estimate hides is that the company was carrying a Common Equity deficit of approximately -$94.41 million as of the end of 2024. This negative equity isn't a sign of imminent collapse, but it's a structural feature of many OTAs, including a peer like Booking Holdings, which also reported a negative D/E ratio of -3.7. It happens because the core business involves collecting customer cash (deferred revenue) before the service is delivered, creating a large liability that can push shareholder equity into the negative.

The biggest news impacting the capital structure in 2025 was the acquisition. On May 15, 2025, Prosus completed its all-cash acquisition of Despegar.com, Corp. for $19.50 per share. This move effectively replaced the public equity funding with private capital and a new corporate parent, Prosus N.V.. This type of transaction is the ultimate form of equity funding, providing a clean exit for public shareholders and immediately simplifying the company's financial reporting and funding strategy under a much larger, global technology entity. This is why, for the near-term, the balance between debt and equity is now managed internally by the new owner, rather than through public market debt issuances or equity funding rounds. For a deeper look at the players involved, you can read Exploring Despegar.com, Corp. (DESP) Investor Profile: Who's Buying and Why?

Liquidity and Solvency

You're looking at Despegar.com, Corp. (DESP) and wondering if the company has enough short-term cash to cover its bills. The direct takeaway is that while the company's cash flow from operations is strong, its current and quick ratios signal a technical liquidity deficit, which is a common but manageable structure for an online travel agency (OTA).

Assessing Despegar.com, Corp.'s Liquidity

The standard measures of short-term financial health-the Current Ratio and Quick Ratio-show that Despegar.com, Corp. has less than one dollar of liquid assets for every dollar of current liabilities. Specifically, the Current Ratio, which measures total current assets against total current liabilities, stands at 0.85 on a trailing twelve-month (TTM) basis. This means that, technically, the company would struggle to cover all its short-term debt if it came due immediately.

The Quick Ratio (or acid-test ratio), which strips out less-liquid assets like inventory, is even tighter at 0.76. This is a red flag in a traditional business, but for an OTA, it often reflects a negative working capital cycle where customer cash is collected well before the company pays its suppliers (airlines and hotels). Still, you defintely need to watch this.

Here's the quick math on the short-term position, based on the most recent data:

• Current Ratio (TTM): 0.85
• Quick Ratio (TTM): 0.76
• Working Capital (TTM): -$108.19 million

This negative working capital of -$108.19 million is a structural trend for Despegar.com, Corp., but it's important to remember that this can be a sign of business efficiency, not distress, as long as cash flow remains positive.

Cash Flow Statements Overview

The cash flow statement provides a much clearer picture of the company's actual financial momentum. The good news is that the company is generating substantial cash from its core business operations.

In the TTM period, Despegar.com, Corp.'s Cash From Operating Activities was a robust $66.11 million. This positive operating cash flow is the engine that funds the company's growth and offsets the technical working capital deficit. For more on the company's long-term strategy, check out the Mission Statement, Vision, & Core Values of Despegar.com, Corp. (DESP).

The other two cash flow segments show a predictable deployment of capital:

The Investing Cash Flow of -$36.22 million indicates the company is spending money on its future, which is healthy. The Financing Cash Flow is a small outflow of -$6.73 million, which is not a major concern. The management has also been actively implementing working capital strategies to reduce factoring expenses, which temporarily lowered the total cash position to $213 million as of March 31, 2024, but is a long-term move to improve capital efficiency.

Liquidity Concerns and Strengths

The primary strength is the consistent, positive cash flow from operations, which provides a natural hedge against the low Current and Quick Ratios. The company's total cash and cash equivalents were around $222.79 million at the end of 2024, providing a significant buffer. The main liquidity concern is simply the reliance on this negative working capital cycle; any major disruption to customer bookings or a sudden demand for supplier payments could quickly expose the technical deficit.

Action: Finance should continue to monitor the daily cash conversion cycle (CCC) closely to ensure the positive operating cash flow trend remains stable, especially against the backdrop of the 0.85 Current Ratio.

Valuation Analysis

You're looking at Despegar.com, Corp. (DESP) after a fantastic run, wondering if there's any steam left in the stock. The quick answer is that while the market has rewarded its recent growth, Wall Street's consensus suggests the stock is currently priced a little too optimistically. The average analyst price target sits at $17.20, which is a -11.79% downside from the recent closing price of $19.46 as of May 2025.

To be fair, the stock has been a winner. Over the last 12 months, Despegar.com, Corp. (DESP) shares have surged by over +56.94%, significantly outperforming the broader S&P 500 Index. This kind of momentum is powerful, but a value investor has to look past the chart and into the core valuation metrics to see if the price is defintely supported by the fundamentals.

Is Despegar.com, Corp. (DESP) Overvalued or Undervalued?

The valuation picture for Despegar.com, Corp. (DESP) is mixed, leaning toward overvalued compared to its own near-term earnings potential, but reasonably priced based on cash flow. Here's the quick math on the key multiples for the 2025 fiscal year:

• Price-to-Earnings (P/E): The trailing P/E is 18.2, and the forward P/E is about 19.60. This is a decent multiple for a growth company, but it means you're paying nearly 20 times expected earnings for the next year.
• Enterprise Value-to-EBITDA (EV/EBITDA): This multiple, which accounts for debt and cash, is a more palatable 9.03. For a travel tech company, this suggests the business is generating solid operating cash flow relative to its total value.
• Price-to-Book (P/B): The P/B ratio is extremely high at 34.21. What this estimate hides is that the company's value is mostly in its brand, technology, and customer base, not in physical assets, which is common for online travel agencies. Still, this is a very high number that signals a premium valuation.

The consensus rating from five analysts is a 'Hold.' This isn't a ringing endorsement, but it's not a panic button either. They see the growth, but they also see the price already reflecting that growth. The stock's strong performance over the last year means it has already captured much of the good news. Also, a quick note on income-Despegar.com does not currently pay a dividend, so you won't get any income from this stock.

Here is a summary of the key valuation metrics:

The market is clearly betting on continued, high-velocity growth in Latin American travel. The EV/EBITDA of 9.03 is the metric that gives me the most comfort, but the analyst target of $17.20 is a near-term risk. If you are a long-term investor, you need to believe Despegar.com, Corp. (DESP) can significantly beat that consensus earnings forecast of $0.95 to justify the current price. You can dive deeper into the operational risks and opportunities in the full post: Breaking Down Despegar.com, Corp. (DESP) Financial Health: Key Insights for Investors.

Risk Factors

You're looking at Despegar.com, Corp. (DESP) right now, but the biggest near-term risk isn't an operational one-it's the completion of the merger. The company is in a transition phase, and the primary risk is the deal falling apart, which would immediately expose shareholders to the volatile Latin American travel market again.

The shareholders already approved the definitive merger agreement with Prosus on March 4, 2025, for an all-cash transaction of $19.50 per share. But the deal closing is still contingent on getting regulatory clearances, specifically in Brazil and Mexico. If those clearances don't materialize, the stock price will defintely drop from the acquisition price, and you'll be back to valuing a standalone OTA (Online Travel Agency) in a tough environment.

External Market Volatility and Competition

The core business of Despegar.com, Corp. (DESP) is fundamentally exposed to the economic health of Latin America. This means foreign exchange (FX) risk is an ever-present, massive external headwind. For instance, in the fourth quarter of 2024, Gross Bookings saw a 1% year-over-year decrease on an as-reported basis, primarily due to FX headwinds. However, on an FX-neutral basis, Gross Bookings actually soared by 38%. That's the disconnect you have to manage.

Plus, the competition is brutal. They're the market leader, but they still face off against global players like Booking.com and Expedia, plus local rivals. The fight for market share means sustained, high selling and marketing expenditures, which rose by 13.8% in fiscal year 2024 compared to 2023. You have to spend money to make money in this space.

Here's a quick look at the financial context for the risks, based on the most recent full-year data from 2024:

Operational, Legal, and Strategic Risks

Beyond the macro issues, the company is dealing with specific operational and legal challenges. Most notably, investigations were initiated in Brazil in February 2025 by major airlines concerning alleged fare fraud. This creates a significant legal and reputational risk in one of their most crucial markets. Any adverse finding could severely damage supplier relationships and increase regulatory scrutiny.

Still, Despegar.com, Corp. (DESP) has clear mitigation strategies in motion. They're not sitting still. Their focus is on operational efficiency and strategic diversification:

• Diversifying Revenue: The B2B segment is growing, representing approximately 19% of total operations, which helps buffer the B2C volatility.
• Strategic Sourcing: They secured a new 10-year lodging outsourcing agreement with Expedia, which started on January 1, 2025, and a partnership with HBX Group in early 2025. This enhances inventory flexibility.
• Efficiency and Tech: The launch of Sofia, their AI travel assistant, is a direct move to lower customer service costs and improve personalization, which drove the Adjusted EBITDA increase to $175.2 million in 2024.

The bottom line is that while the underlying business shows strong FX-neutral growth and improved profitability, the investment decision currently hinges on the merger closing. For a deeper dive into the company's performance metrics, you can check out Breaking Down Despegar.com, Corp. (DESP) Financial Health: Key Insights for Investors.

Growth Opportunities

The most important factor for Despegar.com, Corp. (DESP)'s future is its acquisition by Prosus, which was completed on May 15, 2025, for $19.50 per share in cash, valuing the company at approximately $1.7 billion. The company is no longer publicly traded, but its growth trajectory is now accelerated by Prosus's deep pockets and global technology ecosystem, especially in areas like Artificial Intelligence (AI) and fintech.

Before the acquisition, analysts projected Despegar.com, Corp. would achieve revenue of approximately $851.21 million for the 2025 fiscal year, representing a growth of nearly 10% over the prior year's $774.06 million. More strikingly, the consensus Earnings Per Share (EPS) estimate for FY2025 was a significant jump to $0.97. That's a powerful shift toward profitability, defintely helped by operational efficiencies.

Strategic Initiatives and Partnerships

The company's near-term growth is mapped to three clear, actionable areas: B2B expansion, AI-driven product innovation, and strategic inventory partnerships. Prosus's expertise will now amplify these initiatives.

• B2B Segment Growth: The business-to-business segment is a core focus, having already grown to represent about 19% of total operations, driven by strengthening relationships with travel agencies and the corporate market.
• AI Product Innovation: The launch of SOFIA, an AI-powered travel assistant, is a key product innovation. This generative AI tool is expected to redefine the customer experience and help penetrate new B2B and international markets.
• Inventory Expansion: A strategic partnership with HBX Group in January 2025 is bringing European and North American non-air inventory onto Despegar.com, Corp.'s platform, expanding options for both B2C and B2B customers. This follows the 10-year lodging outsourcing deal with Expedia, which started on January 1, 2025, to boost sourcing flexibility and profitability.

Competitive Advantages in Latin America

Despegar.com, Corp. holds a strong competitive advantage in the Latin American market-it is the region's leading online travel agency (OTA). This market leadership is critical because the region is an emerging economy with a growing middle class, which creates a multi-year tailwind for travel demand. You can read more about the company's core principles here: Mission Statement, Vision, & Core Values of Despegar.com, Corp. (DESP).

Here's the quick math on their market positioning: their focus on lucrative travel packages (air plus lodging deals) is working. Travel Package sales grew by 457 basis points year-over-year in the fourth quarter of 2024, now making up 36.1% of Gross Bookings. This mix shift boosts their take rates (the percentage of the transaction value they keep). Plus, they have a solid customer base, with their loyalty program growing over 51%, a clear sign of user commitment.

What this estimate hides is the potential for Prosus to integrate Despegar.com, Corp. with other assets like iFood and their fintech capabilities to create a seamless digital lifestyle ecosystem, unlocking entirely new revenue streams beyond traditional travel. So, while the financial numbers are strong, the strategic upside under new ownership is even more compelling.

Next Step: Review the public statements from Prosus's CEO, Fabricio Bloisi, regarding the integration plan to gauge the timeline for leveraging their AI and fintech resources within Despegar.com, Corp.'s operations.