Executive Summary

Q3 2023 delivered strong operational momentum: Net Revenue of $54.5M (+35% YoY), Adjusted EBITDA of $5.5M (+54% YoY), Take Rate of 9.1% (highest in normal market conditions), and adjusted operating cash flow of $6.4M after LBF transition costs .
Mix shift toward higher-margin non-air content and fintech/ancillary monetization drove margin expansion; management expects take rate to reach double digits as cruises and additional non-air content scale .
Guidance rebased to exclude LBF on a pro forma basis: FY23 Net Revenue ~$210M and Adjusted EBITDA ~$25M; revenue appears lower vs prior guide due to pro forma basis, while EBITDA is maintained .
Strategic catalysts: Purplegrids AI acquisition to accelerate end-to-end AI integration, transformative rebranding around Abhi, and an expanded $40M share repurchase authorization; addition to S&P Total Market Index enhances visibility and liquidity .

What Went Well and What Went Wrong

What Went Well

Record take rate (9.1%) and highest quarterly Adjusted EBITDA in company history; management highlighted “record Take Rate, Adjusted EBITDA and cash flow” driven by expanded content hub and monetization tools .
Accelerating AI strategy with the acquisition of Purplegrids to embed AI across front-, middle-, and back-office; “We are now creating a next-gen AI platform and finalizing clear monetization plans for AI” .
Strength in international leisure travel, including recovery in China (back to 90% of 2019 levels YTD) and resilient LATAM; agile model expected to navigate macro/geopolitical pressures (Ukraine/Middle East) effectively .

What Went Wrong

GAAP net loss of $(20.1)M, impacted by $15.4M of non-cash/non-recurring items including ~$9.3M related to LBF divestiture, $3.0M stock-based comp, and $2.5M intangible amortization .
QoQ softness in gross bookings and net revenue reflecting lower airfares and normalization post the post-pandemic boom; ARPT pressure from air offset only partially by hotels/ancillaries .
FY revenue guidance appears reduced vs prior communication due to retroactive pro forma exclusion of LBF; management clarified the adjustment is mathematical rather than directional, but optics could weigh on sentiment .

Financial Results

Metric	Q1 2023	Q2 2023	Q3 2023
Net Revenue ($USD Millions)	$49.929	$56.771	$54.532
GAAP EPS ($)	$(0.18)	$(0.22)	$(0.29)
Adjusted EPS ($)	$(0.09)	$(0.09)	$(0.10)
Adjusted EBITDA ($USD Millions)	$4.157	$4.438	$5.501
Adjusted EBITDA Margin (%)	8.3%	7.8%	10.1%
Transactions (#)	665,173	721,464	695,694
Gross Bookings ($USD Millions)	$668.079	$679.244	$597.451
Take Rate (%)	7.5%	8.4%	9.1%
Net Revenue YoY Growth (%)	28%	24%	35%
Net Revenue QoQ Growth (%)	46%	14%	(4%)

Notes:

Management disclosed modified definitions for certain non-GAAP metrics in 2023; where discrepancies exist, latest-period definitions are used .

KPIs and Operating Metrics:

KPI	Q1 2023	Q2 2023	Q3 2023
Air vs Non-Air Mix (%)	Not disclosed	Not disclosed	Air ~75–80%; Non-air ~20–25%
Fintech/Ancillary Attachment Rate (%)	15–18%	Not disclosed	~15%

Estimate Comparison (S&P Global):

Metric	Q3 2023 Consensus
Revenue ($USD Millions)	Unavailable via S&P Global*
EPS ($)	Unavailable via S&P Global*

*Values retrieved from S&P Global. Consensus for MOND was unavailable due to mapping limitations in SPGI datasets.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Revenue ($USD Millions)	FY 2023	$245–$250M	~$210M (pro forma excl. LBF)	Rebased to exclude LBF; apparent reduction vs prior guide
Adjusted EBITDA ($USD Millions)	FY 2023	$25–$30M	~$25M (pro forma excl. LBF)	Maintained at midpoint; pro forma basis
Take Rate (%)	FY 2023/Forward	Not guided	Expected to reach double digits over time	Positive trajectory
Share Repurchase	Ongoing	$30M authorization	Expanded to $40M authorization	Increased capital return

Management clarified the revenue guidance change reflects retroactive pro forma exclusion of LBF since 1/1/2023; the directional outlook remains intact, with EBITDA maintained .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2023)	Previous Mentions (Q2 2023)	Current Period (Q3 2023)	Trend
AI/Technology Initiatives	Building integrated AI marketplace; Abhi launch planning	Launched fully integrated AI marketplace; accelerated ~$20M investment; rebranding plan	Acquired Purplegrids; accelerating AI across full stack; monetization plans progressing	Accelerating
Macro & Geopolitics	International travel recovering to ~82% of 2019; tailwinds vs domestic	Seasonality shift with international expansion; cautious on U.S. softness	China ~90% of 2019 YTD; LATAM resilient; Ukraine/Middle East impact monitored; agile model to offset	Mixed but resilient
Product Performance & Mix	Growing hotels and ancillaries; take rate up on diversified streams	Take rate up to ~8%; hotel growth; cruises added to content	Take rate 9.1%; non-air content expansion; cruises/activities expected growth in late 2024	Improving mix
Distribution: Influencers/Experts	Launched influencer network; B2E wins	Targeting social influencers; $20M marketing/personnel to scale	A few thousand new-era experts signed; refining monetization before full spend	Building
Cost Optimization/Divestitures	Debt facility increase; acquisitions accretive	Integration discipline; seasonality shift from international acquisitions	Divested LBF to boost profitability; transition costs ~$7.4M; pro forma disclosures	Focused profitability
Capital Allocation/Indices	—	Russell 2000 addition; secondary offering expanded holders	S&P TMI addition; $40M buyback authorization	Visibility up

Management Commentary

“We are thrilled by an extraordinary quarter with record Take Rate, Adjusted EBITDA and cash flow… profitability was further boosted by divesting LBF US, an underperforming, non-core B2C air business unit” – Prasad Gundumogula, CEO .
“We achieved a record Take Rate of 9.1%… decisive margin expansion initiatives culminated in Adjusted EBITDA increase of over 50%… intensifying business optimization and cost control measures” – Jesus Portillo, CFO .
“Abhi… is the only fully integrated solution on the market… we are now creating a next-gen AI platform and finalizing clear monetization plans for AI… strengthened with the acquisition of Purplegrids” – Orestes Fintiklis, Executive Vice Chairman .
“With more than 80% of our business related to international leisure travel… Latin American market remains very resilient… agile business model is resilient during such periods” – James W. Dullum, COO .

Q&A Highlights

Mix post-LBF: Air remains ~75–80% of mix; non-air 20–25%; management still expects increased take rates as non-air scales .
Operating leverage and growth: Pro forma framework provided via 10-Q; organic growth ~18% for 9M23; leverage expected to improve with efficiency initiatives .
Fintech/Ancillary attachment: ~15% attach rate overall, with higher rates in certain segments; initiative continues to scale .
Guidance optics: FY23 guidance rebased to exclude LBF from Jan 1; mathematically aligns with prior direction; EBITDA ~$25M maintained .
Purplegrids economics: Near-term revenue/EBITDA impact immaterial; strategic to embed AI across business; replaces consulting fees with payroll, improving cost efficiency .

Estimates Context

Wall Street consensus (S&P Global) for Q3 2023 Revenue and EPS was unavailable due to missing SPGI mapping for MOND; thus beats/misses vs consensus cannot be assessed. Values retrieved from S&P Global.*
Implications: Analysts should update models to management’s pro forma basis (excluding LBF) and incorporate higher take-rate trajectory, mixed airfare dynamics, and scaling non-air content; EBITDA maintained at ~$25M indicates margin resilience despite revenue rebasing .

*Values retrieved from S&P Global.

Key Takeaways for Investors

Margin expansion story: Take rate reached 9.1% and is expected to enter double digits with growth in hotels, cruises, and fintech/ancillaries; this is a central driver of EBITDA and cash generation .
Pro forma reset clarifies path: FY23 guidance reset to exclude LBF removes drag on EBITDA, maintains ~$25M Adjusted EBITDA, and improves long-term profitability optics despite lower reported revenue base .
AI execution catalyst: Purplegrids acquisition accelerates full-stack AI integration (front-to-back office) with monetization plans underway; watch for Q4 updates and early 2024 KPIs .
International exposure mitigates macro: Strength in China recovery and LATAM resilience offset softer North America/Europe and geopolitical headwinds; agile distribution supports demand shifts .
Capital return and index inclusion: $40M buyback authorization and S&P TMI inclusion enhance investor visibility and potential trading liquidity; modest buyback activity thus far (<$1M) suggests runway .
Watch ARPT/airfare dynamics: Lower airfares pressure ARPT; mix shift to hotels/non-air should offset; monitor transactions and take rate trajectory for confirmation .
Near-term focus: Continued integration synergies from 2023 acquisitions, cost controls, and influencer distribution monetization refinements should underpin Q4 profitability and 2024 growth .

Appendix: Additional Data

Non-GAAP adjustments: Q3 net loss included $15.4M in non-cash/non-recurring items (LBF divestiture ~$9.3M, SBC ~$3.0M, amortization ~$2.5M), underscoring difference between GAAP and Adjusted EBITDA trends .
Cash/debt: Cash & equivalents ~$48–$50M around Q3; total debt ~$155M; cash decline driven by Skypass acquisition and LBF transition costs .
Operating cash flow: After adjusting for ~$7.4M LBF transition outflows, Q3 operating cash flow was +$6.4M vs $(1.0)M in Q3 2022 .

Citations:

Mondee Holdings, Inc. (MOND)·Q3 2023 Earnings Summary