Image source: The Motley Fool.
Despegar.com, Corp. (DESP 0.18%)
Q2Â 2019 Earnings Call
Aug 8, 2019, 8:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good morning and welcome to the Despegar Second Quarter 2019 Earnings Call. A slide presentation is accompanying today's webcast and it's available in the investor section of the company's website www.investor.despegar.com. There will be an opportunity for you to ask questions at the end of today's presentation. [Operator Instructions]
Now I would like to turn the call over to Miss. Natalia Nirenberg, Investor Relations. Please go ahead.
Natalia Nirenberg -- Investor Relations
Good morning, everyone, and thanks for joining us today for the discussion of our second quarter 2019 results. In addition to reporting financial results in accordance with U.S. Generally Accepted Accounting Principles, we discuss certain non-GAAP financial measures and operating metrics, including foreign exchange neutral calculation. Investors should read the definitions of these measures and metrics included in our press release carefully, to ensure that they understand them. Non-GAAP financial measures and operating metrics should not be considered in isolation, a substitute for or superior to GAAP financial measures and have provided supplementary information only.
Before we begin our formal remarks, allow me to remind you that certain statements made during the course of the discussion may constitute forward-looking statements which are based on management's current expectations and belief and are subject to a number of risks and uncertainties that could cause actual results to materially differ, including substance that may be beyond the company's control. For a description of these risks, please refer to our filings with the SEC and our press release. Speaking on today's call is our CEO, Damian Scokin who will provide an overview of the second quarter and update you on our strategic priority. Alberto Lopez Gaffney, our CFO, will afterwards discuss the quarter finances and our outlook for the next quarter.
And after that, we'll open the call to your question. Damian, please go ahead.
Damian Scokin -- Chief Executive Officer
Thank you, Natalia. Good morning, everyone and thank you all for joining us. We are conducting business and it's a challenging and mixed operating environment. Argentina continues to struggle. Brazil, to a lesser extent while Mexico's economic growth is slowing. While this results in a mid single-digit contraction in the industry growth bookings in Latin America, none of this is surprising as we have been facing these conditions for about a year now. And once again performed better than the industry. During most of the recent quarter, our profitability was impacted by the macro, a shift in our marketing spend as we launch our rebranding campaign and the cessation of operations of our anchor Brazil. Nevertheless, despite all these headwinds and excluding Avianca Brazil, we gained 20 basis points of market share.
Later in the presentation, we will come back and speak more about the [indecipherable] and the Avianca Brazil situation. In the second quarter, we made good progress in our strategic objectives. At the end of the quarter, we closed on the Viajes Falabella operations in Chile, Argentina and Peru while Colombia close at the end of July. This acquisition provided us with additional access to customers in the fastest-growing regions in Latin America. Furthermore, our mobile app continues to evolve favorably, providing our customers with an even more convenient and personalized booking experience. We continue to improve functionality and usability and mobile now accounts for 38% of total transaction up 552 basis points from the same period of last year. While our net promoter score was most likely impacted, a bit by Avianca Brazil situation we still delivered solid 380 basis points increase year-over-year.
We have also advanced in our efforts to improve cash flows and capital allocation. Operating cash flow was a healthy $15.9 million in the quarter compared to $300,000 in the second quarter of 2018. In terms of capital factor, we opportunistically repurchased close to $20 million of our shares year-to-date, including $2.9 during the second quarter. In total over the past year we purchased $46 million. As we move through the quarter, we were encouraged by the trends we were seeing in the industry. With this in mind, coupled with management and the Board's view on the value of our shares, the Board has approved a new share repurchase program for a total of a $100 million that we expect to be executed promptly. Our balance sheet, liquidity and cash flow remains strong, which provides a solid foundation for future growth that will benefit our customers and shareholders alike.
Turing to Slide 4. Over the past 15 months, we have experienced various headwinds from the more challenging macro environment to the most recent airline cessation of operations in Brazil. Through it all, we took some opportunistic actions to gain market share and better position the company for the long term. But at all times, we'll remain focused on executing on our long term strategy. We will continue to build in our customer-centric approach investing in technology and advancement of our digital platforms as this remains core to everything we do today and builds the business for the future. In the second quarter of 2019 results both from an operational and financial perspective, reflecting the company's long-term perspective to run the business. We invested in rebranding through high expenditures and shift marketing investments to our branding and changes to our website with the corresponding short term lower returns. Despite such negative impact, which was more pronounced at the beginning of the quarter, we achieve a marginally positive market share gain when adjusted for the Avianca Brasil situation. Same focus on our long-term goals has helped us deliver a healthy balance between price, volume and margin growth.
Moving next to a discussion of transactions and gross bookings on Slide 5. Before getting into the details for the quarter, I want to mention that the contribution from the Viajes Falabella was only for the month of June. The headwinds grew a bit more challenging and as you can see on this chart, total transactions were down 6% in the quarter. A number of transactions was impacted by the macro-environment, the shift in our marketing expenditure toward branding in April and the reduction of our exposure to Avianca, Brasil. The last 2 factors were onetime impact to the second quarter. And we are already seeing a recovery. After a weaker performance start to the quarter transaction stabilized in May and recover in June with the trend continuing into July. Driving a higher size and increasing share of higher-margin packages, hotels and other products with a particular focus on stand-alone packages is one of our key strategic initiatives.
As a result of this effort, in the second quarter, stand-alone package transactions increased 6% year-on-year remaining our fastest-growing product. Total packages, hotels and other travel products accounted for 40% of total transactions. This was down 200 basis points when compared to second quarter 2018 results impacted by economic conditions in Argentina, which accounts for a significant share of these product offering. This also continued to drive a shift toward lower-margin products in the country. Room nights were down 8% year-on-year and flat ex-Argentina. Room nights has been growing at about 20% ex-Argentina in prior quarters and we are taking steps to get back to stronger levels. Gross bookings increased 15% on an FX neutral basis, slightly lower price than the prior quarter.
As reported gross bookings, however, declined 6% impacted by weaker economic conditions in Argentina and to a lesser extent in Brazil. As well as the chief marketing expenditure so was the rebranding campaign. Off note, though once again, this performance was better than the high single-digit contraction experienced by the travel industry in Latin America during the quarter. Clearly in Argentina, as reported, gross bookings increased 3%. Importantly, we saw a 23% year-on-year increase in FX neutral ASP. Growth was driven by a mix shift from domestic to international travel across some key markets, reflecting more attractive customer prices. Additionally, SAPs were higher in Brazil triggered by increased air domestic tariffs, resulting from construction in capacity following Avianca, Brasil cessation of activities.
Now turning to Slide 6. We launched the new campaign at the beginning of the second quarter. This is typically not a seasonally strong travel period for us. Which may be the right time to rebrand. Before I get into the details about the campaign, I want to mention that this slide has links to a short video about our rebranding campaign, which you can also access in the Investor Relations section of our website. We encourage you to review it. Now back to that rebranding campaign, we are traditionally recognized as the OTA of choice at the moment of purchase. A perception rooted in our broad product offering, strong technological platforms, including mobile app and attractive local currency financing options. When someone went online to book a travel, we were the best place to transact. We were a company focused on travel transactions.
Now through our rebranding campaign, we are realigning the Despegar brand, the most recognizable brand in Latin America to our new strategy under way. We are ensuring that all travelers are aware of our comprehensive presence across the travel journey. A central part of the evolution under way is deepening the relationship with the customer. Our goal is to add value to the customer experience every step of the journey. As shown on this slide, our rebranding campaign is built around the customer decision journey and comprised of 6 distinct steps that follow this journey. Inspiration, purchase, free travel, add destination and book travel. Through ongoing contact, we're able to gather an enhanced view of the customer and their preferences to help us create more personalized recommendations at the inspiration stage.
For many in their mid-life, holiday travel can be a significant expense and they want to make sure they get it right. In other words, the best value for their money. We're right there with them, in the inspiration stage, advising them with our unique inspirations and getaway suggestive packages. At the same time this ties with our key strategy to drive increased sales and penetration of higher margin packages. Through advanced business intelligence, we can tailor unique shopping and booking experiences while driving higher sales and customer loyalty. Through texts and emails, we stay in contact with a traveler with reminders and other suggestions prior to leaving on the trip. While at their destination, we can also push suggestions of places to visit and things to do. We follow our post-travel with service and feedback, further driving through the info we gather about the traveler and then process starts all over again as many of our customers take several trips per year. This initiative further reinforces our point of deferring versus competitor. As we look ahead, we are bringing customers to the convenience of e-commerce along with expertise and personalized service of a local travel agent.
I will now turn the call to Alberto, to take you through the financials.
Alberto Lopez Gaffney -- Chief Financial Officer
Thank you, Damian. And good morning, everyone. Please turn to Slide 7 for a review of our operations on a regional basis. We expanded ethics neutral gross bookings across our key markets, although at a lower growth rate than past quarters, given the soft economic environment mainly in Argentina and Brazil as well as the short term impact from the launch of our rebranding campaign in April. Starting with Brazil. Transaction in largest market declined 14% year-on-year as orders were also impacted by our strategy to reduce our exposure to Avianca, Bazil. By contrast, gross bookings were up 4% as reported and 13% on an FX neutral basis. Higher air domestic targets triggered by the industry capacity contraction following the cessation of operations of Avianca Brasil, together with continued mix shift from domestic to international travel, contributed to a 22% increase in reported ASPs and up 30% on FX neutral basis.
Next, Argentina. Transactions declined 14% year-on-year, mainly explained by lower international travel as the country remains affected by a difficult macro backdrop together with a temporary shift in our marketing expenditures to the rebranding campaign. On an FX neutral basis, gross bookings were up 30%, while ASPs increased 51% year-on-year relatively in line with inflation.
Reported gross margins on ASPs, however, were down, impacted by a 32% FX depreciation. Off note, Argentina is already five quarters into recession, with an aggregate dollar market contraction of 26% from second quarter 2018 until Q1 2019. This environment has a material impact on our client-based disposable income, in particular in our discretionary spending category. Finally, the rest of Latin America posted an 8% increase in transactions, with FX neutral gross bookings, up 8% and ASP flat. Reported ASPs declined 4% year-on-year, reflecting currency depreciation in the region while reported gross bookings were up 3% in the period. Transactions in Mexico declined 1% year-on-year, reflecting a softer macro, although we continued to experience positive mix shift from domestic to international and travel, while Colombia delivered a 2% increase in transactions.
Moving on to the financial results on Slide 8. FX neutral revenues were up 5% year-on-year in the quarter, despite market contraction and the impact from Avianca Brasil and rebranding Damian just described. Lower FX neutral revenue growth was also impacted by reductions in customer fees and discounting in package transactions to drive share gains in a softer demand environment and lower supply bonuses, reflecting weaker customer demand. These more than offset the overall positive year-on-year mix shift to higher margin, international from domestic travel, driven by lower air supply prices in the market. As reported revenues in turn, an 11% year-on-year decline to $114 million in second quarter 2019, reflecting VFX translation effect from currency depreciation, mainly 52% better depreciation in Argentina in the period. The share of higher margin packages, hotels and other transactions, as a percentage of revenue, were basically flat year-on-year accounting for 59% of total past reported revenues. Taken together, these factors resulted in the drying of 11% reported revenues in both the air and the packages, hotels and other travel product segments. Revenue margin in turn declined 63 basis points year-on-year to 10.2% in the second quarter.
Turning to Slide 9. Ethics neutral gross profit declined 5% year-on-year to $82 million in the quarter. In addition to the factors contributing to the weaker top line performance this quarter, gross profit was also impacted by our customer service initiative or rescheduling passengers affected by the cessation of activities by Avianca Brasil to other airlines. These resulted in a onetime charge of $1.2 million this quarter. We also saw some other puts and takes in cost of revenues. While we continue to invest any lower fees on customers which comes from packages to drive market share gains, this was partially offset by lower installment plan costs, as we reduce the availability of financing. This was partly supported by our efforts on driving efficiency gains across our call centers, which resulted in low feeling cost this quarter.
Credit card processing fees also declined this quarter. Excluding the onetime charge related to the Avianca Brasil, cost of revenue was down 7%, as reported in absolute terms. In terms of operating costs, as discussing the protocol, we anticipated higher marketing expenses this quarter, reflecting a onetime $8.6 million expense associated with our rebranding across the region, including on online, TV, radio and print campaign. Probably the models, excluding these rebranding impacts, comparable S&M expenses, for the quarter would have decreased 3% to slightly over $42 million. On a per transaction basis, however, comparable S&M increased 3% year-on-year to 17.2, reflecting the 6% decline in transactions. G&A expenses, in turn, increased 25% year-on-year, reflecting the export rights tax on services in Argentina introduced in January this year are higher stock based compensation, as well as a neutral deal on professional fees related to the implementation of our strategic initiatives. In addition, G&A also includes $400,000 bad debt charge related to the judiciary proceedings of Avianca Brasil. Income, total comparable operating expenses were up 2% year-on-year on absolute terms. Looking ahead, we remain focused on seeking further efficiencies and leveraging our cost structure as we continue to grow the business.
Moving on to profitability on Slide 10. Performance this quarter was impacted by the mix of internal and external factors which resulted in an adjusted EBITDA loss $7.3 million. Adjusted EBITDA for second quarter '19 was penalized by the three onetime items I just discussed, which totaled $10.2 million in the quarter. Comparable Adjusted EBITDA, excluding these three onetime items, would have been possibly $2.9 million in second quarter, 19, down 76% year-on-year. Lower profitability this quarter reflects a diverse market in Argentina and to a lesser extent in Brazil, as well as a temporary switch in marketing expenditures to the rebranding efforts. Softer demand resulted in lower supply volumes, which, together with a reduction in customer fees and price discounting packages to support top line growth, also contributed to this performance.
Now a brief comment about Avianca Brasil on our exposure to the airline. Avianca Brasil had been subject to a judicial recovery proceeding since December 2019. With this time, we can proactively work to reduce our exposure with the majority of people secured with our Brazil and non-financial institution. As of June 30, 2019, the outstanding exposure amounted to $8.3 million. With respect to the unsecured exposure, we have reflected our charge of $1.6 million on the PNL. A potential of the guaranteed portion of exposure would amount to an additional $8.6 million.
Moving on to the balance sheet and cash flow items on Slide 11. Given the challenging macro environment we have been operating in, a solid financial position has been a competitive advantage. These have enabled us to opportunistically pursue strategies, including an acquisition that will enhance our long term competitive position. Our balance sheet is healthy with unrestricted cash and cash equivalents of June 30, 2019 totally recounted on $22 million. They got generated cash flow from operations of $15.9 million in the second quarter, as compared to $300,000 in the same quarter last year. It was made due to an increase in to his payables due to higher average payment date, in comparison with second quarter '18. Together we have decreased in other assets on prepaid expenses, partially offset by a higher credit card receivable balance. During the quarter, we also made capital investments of nearly $17 million. And we mainly applied to technology hardware, office expansion and included the first installment of $4.5 million net of cash acquired in connection with the Paladin acquisition.
Summing up, let's move to Page 12. While our second quarter results continue to reflect that trend we have seen over the past year, we believe that the quarter represented a low point for the company. Others supporting these or improving trends we saw late May, which have continued into July. We are cautiously optimistic that we will see a sequential improvement in the third quarter, keeping in mind; there are still some uncertainties ahead of us, most notably, the upcoming presidential election in Argentina and the world environment still weaker than last year.
The amount mentioned at the beginning of his presentation, even in these challenging times, were your main focus on executing on our long term strategy. In the short term, however, in a lower revenue base, there was an impact to our margins. By staying focused on making the necessary investments for the long term, we are well positioned to perform the competition when the macro environment improves. Additionally, we have the right strategy and the right team in place to generate consistent profitable growth and deliver value to our shareholders over the long run. Lastly, I would like to mention that we're planning for our first analyst, Investor Day. We will host this meeting in New York City before year's end. Be on the lookout for more information over the coming weeks. This concludes our prepared remarks. We will now take your questions. Operator, please open the line for questions.
Questions and Answers:
Operator
Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Eric Sheridan of UBS. Please go ahead.
Eric Sheridan -- UBS -- Analyst
Thanks so much for taking the question. Can we'll get a little more granularity on what you're doing in the most place in terms of taking market share of your competitors and how that's taking hold against the broader macro environment? Just to get a little more granularity on the organic actions of the company that's resulting in that market share gains. Thanks so much everyone.
Damian Scokin -- Chief Executive Officer
Can you repeat the question? This is Damian. I had a hard time listening, there was some noise.
Eric Sheridan -- UBS -- Analyst
Yes. Sorry. I'm just curious about the competitive dynamic you're taking share. What are the big organic actions you're taking that are allowing you to be a share taker in this environment? While the macro environment continues to be a little bit of a headwind, I'm just curious about some of the more overt actions you're taking to take share?
Damian Scokin -- Chief Executive Officer
Thanks for the question. We'll be better served by a director we take from the more granular pack because pricing strategies we are following. We've been very aggressive on pricing, that you can see from the erosion that they got to product enhancements and their product offerings will have a lot of some complete new light applied by what we call a compliance with our short term offering. We believe those, although successfully taking it, would impact on the market, we are gaining share in all markets. Mostly on a people shifting, the continued shifting on offline to online, so what we see that the sector -- we are gaining share from this model. My mom pops [Phonetic] offline agency that the very thing that we what in the by. That answers your question?
Eric Sheridan -- UBS -- Analyst
That's perfect, thanks, guys.
Operator
Our next question comes from Edward Edward Yruma of KeyBanc Capital Markets. Please go ahead.
Edward Yruma -- KeyBanc Capital Markets -- Analyst
Good morning. A couple of quick ones for me, first, it's nice to hear the positive commentary about the trend starting to change. Are you seeing that exhibited? And top of the final behavior is the consumers starting to do more research on potential trips and how does that inform how you think about how a trajectory should be in the next couple of quarters? And then two, some listeners, maybe we're less familiar with the air situation Brazil with the bankruptcy of Avianca, are you seeing competitors offer capacity or do you think that there's been some demand destruction? Thank you.
Damian Scokin -- Chief Executive Officer
Thanks, this is Damian again. In terms of the consumer behavior, yes, we are seeing some better performers booked to look if you want. People are willing to spend more. We're starting to see increase in ASPs particularly in the Argentina. So, we're positive on the rebound of those two largest markets for this day on. We're also seeing positive trends in Mexico. Our conversion rates in the upper part of the [indecipherable] it has increased over the last two miles. I would say the trend is positive. We've made GAAPS confident and optimistic for the next few months. As far as the air situation in Brazil, what we saw happening obviously is the capacity constraint and a significant increase in domestic prices, which we believe will last for a while. And that has two immediate impacts where Brazil, while on the other on the other hand, proper traveling, somehow squeezing out [indecipherable] travel because there's no more seats available, they get squeezed on the higher prices.
Edward Yruma -- KeyBanc Capital Markets -- Analyst
Great. Maybe one other quick follow up. I know part of the thought process here is that over time, prolonged periods of macro weakness would drive consolidation or disappearance of a lot of the mom-and-pop physical travel agencies. Have you seen that process happen, given some of the macro challenges and some of your key markets? Thank you.
Javier Kelly Grinner -- Investors Relations
Hi, Javier here taking your question. Yes, that is a trend that we were starting to see. As you might recall on prior conversations with this topic, usually when we come back from disruption, it takes time for people. Actually they are actually potentially thinking about [indecipherable]. Okay, I am not -- near-term impact of change in the prices, dictations of a potential term. So, it does take time for people actually to come to terms with the new evaluation paradigm. It's one that respect to start to accelerate. Then comes less capitalized or weaker capitalized, smaller players, mom-and-pop, that are actually getting out of business. There's one market that actually goes at the very top of that trend is that could be Argentina, given that the dynamics of the business are weaker in the other geographies today. And so, yes, that's a trend that we're starting to see and interaction reinforces our ability in the future to continue gaining market share.
Edward Yruma -- KeyBanc Capital Markets -- Analyst
Great. Thanks, guys.
Operator
Our next question comes from Brian Nowak of Morgan Stanley, please go ahead.
Brian Nowak -- Morgan Stanley -- Analyst
Thanks to taking my questions, I've two, the first one just wanted to ask for a few more specifics on what changes are you making from a branding perspective and the remarketing initiative. I know you have had leading brands position for quite a while. So what are one or two biggest changes that you're making? Maybe talk a little bit to what you're seeing on the competitive front in some of the big markets. And then the second one on Slide 6, like the color scheme at the bottom, you talk about the developing a loyalty program, can you just, come in the future, maybe talk to us a little bit how we should think about the financial impact of a loyalty program to come over time. Thanks.
Damian Scokin -- Chief Executive Officer
Okay, Brian. Hi, this is Damian. On the branding, yes we decided to take the next step on Despegar brand. Based on extensive market research we've been conducting, overall I would say the last two years, we got in our brand. And those results show that although being the strongest travel brand in Latin America, we had significant opportunity to evolve from a transaction price oriented perception of our traditional brand and brands that, do not only provide them, but also provide a more comprehensive assistance and more a wider variety of products for the travel needs of different segments. So two main objectives, to make the brand evolve out of a transactional significant to a more comprehensive set of products and also a more comprehensive run within the travel experience of our consumers. That's totally in line, as you can see, with all the additions regarding our value proposition and our product offering. So far, results are very good in terms of the perception that we see that our consumers got of our new branding. On the competitive brands, second part of your question. Basically, we see the same strength we've been discussing in the past. Competition being strong in a tight contracting market with local players less able to spend in marketing and cutting aggressively on prices. And the global competitors, with the same intensity levels in terms of marketing spend. I would say that there are no big news on the competitive front. As per the loyalty program, last piece of your question, we expect to launch the program I would say within the next 6 months. We are moving ahead with our partners both in Brazil and Argentina, which will be the first markets where we launch the program. And the program we have a positive cash impact on the company and has very attractive not only cash but also profitability expectations for us. We will not disclose the specifics, but what I can tell you that is if we hit our targets in terms of members on take up penetration, that will be a significant boost to our cash flows in the near-term. And also, we thought funding pension, this loyalty program as a way -- as a component of this new value proposition that will help us increase our repeat rate of our customers. And in the long run, reduce our marketing spend.
Alberto Lopez Gaffney -- Chief Financial Officer
But from that perspective, the actual P&L or like a financial statement impact on the program this year will be negligible given the timing that [indecipherable] just made reference to, OK. We're excited but we definitely don't want -- we are reacting to your question. We don't want to get ahead of ourselves. Okay. The day will come in due time and we're excited with the product. We're excited with the impact on how will that continue. We need a strategy or actually carry more of a relationship. And tighten relationship with our client base from our transactional one. But again, the impact in 2019 will be inevitable.
Brian Nowak -- Morgan Stanley -- Analyst
Okay, thanks, guys.
Damian Scokin -- Chief Executive Officer
You're welcome.
Operator
[Operator Instructions] Our next question comes from Kevin Kopelman of Cowen. Please go ahead.
Unidentified Participant
Hi, this is Emily on for Kevin. Thanks for taking my question. I just wanted to follow up on an earlier question about your market share. It looks like in Q2, you said it was stable year-over-year after gaining share over the last few quarters. And you noted fewer discounts in packaged transactions. I was wondering if there were other factors that impacted that or if you could give us any more color. Thanks.
Damian Scokin -- Chief Executive Officer
Hi Emily, Alberto here. So I need to address your question. I think that over the different factors that affected what we believe is a low point on our trajectory, we are particularly optimistic as we move forward. And you -- we discussed in Avianca Brazil. Okay. We discussed the rebranding exercise. The rebranding exercise, to put it in context, we actually allocated or reallocated a material portion of our branding -- of our marketing budget toward branding and that has an immediate effect of actually decreasing the return on investment of that marketing that lower return investment drive lower traffic and as such that actually impacted our performance, particularly in the month of April. Average in May, we actually saw that improving and that trend continued in June and into July. So particularly as you think about the market share gains, OK, which have been gaining systematically close to 100 basis points a share over the past several quarters. So a one way to think about it is with the rebranding it's a bit of a reset button, OK, for the company. We feel we were able to gain a 20 basis points market share. Okay. Adjusting for the impact in Brazil. And so I think that is how we like to put in context, OK, A lower gain in share in this quarter take in consideration, OK, and particularly, the situation in Brazil with Avianca and most importantly, the resulting exercise with the initial lower return on our marketing spend.
Unidentified Participant
Very helpful. Thank you.
Operator
[Operator Instructions] Our next question comes from Alejandro Lavin of Citigroup. Please go ahead.
Damian Scokin -- Chief Executive Officer
Hi, good morning. Thanks for taking my question. I have a couple of questions. But first, is a quick one on buybacks. What is the average -- the weighted average price of your buyback program year to date. And the second question would be I'm just trying to get a better gauge on what is the improvement from May to July. So maybe if you could maybe discuss one a couple of KPI at the end of July or maybe EBITDA margin at the end of July, to see how much improvement was there in the second quarter. Thank you.
Alberto Lopez Gaffney -- Chief Financial Officer
Alejandro, Alberto will be taking your questions here with regards to the share buyback. As you recall we did execute one close to $26 million shares -- $26 million buybacks during 2018, particularly in the third quarter. And then the average purchase price of those shares was 16 and change, OK, like 1630 approximately. Then we purchased shares shy of $3 million during Q2, and we continued buying -- in buying back shares up until today. In order to make the most of the depressed valuations and particularly taking into consideration, how management believes things about the increasing values of its shares -- of the company shares sorry. The current price in these -- in the low 13. Okay, and we will in discuss the specifics as we participate in the next 20, OK. But actually, we have been buying in between a $14 and $13 per share. And all in all, as you think about the last 12 months share repurchase program, we have security close to $46 million.
With regard to the second part of your question. Importantly there in Q2 was a from a quarter perspective, although we just mentioned it to planning on concurrent question, the Q2, you saw a deep investment in their rebranding and it started in the very last days of March, and that actually decreased our return on investment and we actually saw a profit coming down as expected given the change in marketing mix. And as you look into on a qualitative perspective, as you look into a traffic conversion in ASPs coming up, etc. and the continued penetration of purchases we actually see a very -- a quite positive trend in the second part of May, June and into July. And we are now necessarily describing in particular KPIs on a monthly basis. Okay. But that trend makes up in leaving aside any volatility in the market as you might have seen recently with the effects in the emerging markets. And it makes us still feel confident of the strength of the second half, and particularly the strength of the business in the medium-long run.
Alejandro Lavin -- Citigroup -- Analyst
Okay, Understood, Albert. Thank you.
Operator
[Operator Instructions] As we have no further questions, I'd like to turn the conference back over to Damian Scokin for any closing remarks.
Damian Scokin -- Chief Executive Officer
Thank you, operator. I would like just to thank all of you for joining the call today. As usual, if you have any further questions, please do not hesitate to reach to us and we'll be happy to follow up. Thanks very much. And we are all looking forward to seeing you again in our next call bye.
Operator
[Operator Closing Remarks]
Duration: 48 minutes
Call participants:
Natalia Nirenberg -- Investor Relations
Damian Scokin -- Chief Executive Officer
Alberto Lopez Gaffney -- Chief Financial Officer
Javier Kelly Grinner -- Investors Relations
Eric Sheridan -- UBS -- Analyst
Edward Yruma -- KeyBanc Capital Markets -- Analyst
Brian Nowak -- Morgan Stanley -- Analyst
Unidentified Participant
Alejandro Lavin -- Citigroup -- Analyst
