Thanks for everybody for being here. I'm Nick Jones, Internet Analyst here at Citizens. I'm really excited to have Mondee here. We have COO Jim Dullum here, and we're going to dive into the business here. So, thanks. Let me say a few things first. Mondee is reporting the fourth quarter results next Thursday, the 14th. So we're going to steer clear of kind of specific financial results on the quarter. The company's Safe Harbor statement is available on its website at investors.mondee.com. So Jim, thanks for being here.
Thanks, Nick.
Let's just, maybe to kick things off, you spent most of your career in travel technology. Can you tell us a bit about your background and how did you end up in Mondee?
Sure. Yeah, I started in this industry many decades ago. Started a few companies. I sold a few of them. Sold one to EDS, which we then sold to Hewlett Packard. I ran the travel transportation group there. It was about a $1.5 billion a year business with about $150 million a year profit, 34,000 people globally. When I retired, my wife claims that's the one thing I am most unsuccessful at is retirement. I went into basically a little private equity business with a few partners. I joined Prasad, who is our founder and chairman and CEO at Mondee. I joined him in 2012, shortly after he'd started the company on the advisory board. I then came on as COO in 2021, early 2021, when we were trying to get ready to take the company public.
So I've been there for a while, and I'm part of an exceptional management team at Mondee. You have our visionary leader, Prasad, who has—this is really his third enterprise. He's done a few other little things, but he started one company that he sold to Mercedes-Benz. He started another that he sold to Lowe's. And then in 2011, he founded Mondee. Along with him, we have people like Orestes Fintiklis, who is our Vice Chairman. Orestes is one of the biggest Marriott franchisees in sort of Central America, etc. I could go through the list. It's available out there. But suffice it to say, we have a well-heeled in both transportation and technology management team in Mondee.
Great. So maybe Mondee is relatively new for investors. For those who are unfamiliar with the story, can you give a little bit of a background about its history? Where does it fit within online travel ecosystem? And how has the company evolved to what it is today?
Sure. The best thing I could do is, first of all, just describe Mondee to those of you who don't know what it is. I mean, this is a high-growth AI tech company, for all intents and purposes. We specialize in serving up personalized experiences that are expert-supported in their curation. We do that for really the modern travel consumer. That's the business when you get right down to it. We began over 13 years ago, and we started by connecting travelers with travel professionals. That business grew at a 40% CAGR organically up until the pandemic. Today, we've evolved into an AI platform offering end-to-end travel experiences. We're catering to the travel experts, the consumers, and the businesses. That's what we've become. During the pandemic, just to round out the history, we broadened the business. We took on additional content.
Up to that point, we were all air. Then we took on additional content, starting with hotels and cars. We then added additional beyond that. Since then, we've added cruises. We've added events and activities, etc. We've added a lot of Fintech services and ancillaries to our product mix. And we'll talk about how that affects the economics of the business going forward. But again, today, we've become this fully enabled AI tech company with a fully AI-enabled modern mobile platform. And we provide a broadening consumer base now, really curated value-based content that comes off of our negotiated supplier rates, etc.
How would you describe what may be the issues or pain points Mondee aims to kind of resolve within the industry? What makes Mondee unique compared to competing companies in kind of the B2B2C space?
Yeah. It's important we are in the B2B2C space, not just the B2C space. As we'll talk, we don't compete directly with OTAs. That's not our business. We are not an OTA. We focus on, of the $2 trillion travel market, we focus on the $1 trillion segment that is actually slightly bigger than that. It's the slightly biggest piece of the market and is fastest growing, by the way, to most people's surprises. But we focus on that assisted and affiliated travel market where people need or are looking for help for a whole variety of reasons in their daily lives, in their travel, whether it's for personal, business, etc. That's where we focus. By doing that, we work through what we call closed user groups. We work through experts.
We work through what were travel agents but have now become work-from-home gig workers, etc. We work through those folks to provide to their consumer set, to their user groups. We provide them a technology platform. So we give them efficiency. We provide them negotiated content. So we give them value-based content to sell. We provide them all of the AI enablement in a platform that gives them curation capability that is extensive. And then for the suppliers, we provide them a somewhat opaque channel to distribute their highly perishable inventory. Again, most people don't realize because we all sit on airplanes or get to hotels that are full, right? But believe it or not, even during the best of times, you will see 20% or 30% of airline inventory will perish. It will go fallow.
You will see as much, if not more, of hotel beds that just don't get used. So they always have perishable inventory that they're trying to get rid of. And remember this: an airline seat or hotel room, it's not sold just yesterday or the day before. I mean, airlines start selling the seats on a 300-seat aircraft, as an example, at least a year before. So they're always working against a yield curve. What do I estimate the demand to be by the time that flight departs a year from now or that hotel bed gets used or not used a year from now? So we work with them. And we're a big part of being a tech-enabled business with our tech platform. We're wired into most of these guys directly into their yield management systems. So we're working actively with them. And we're getting discounted.
We negotiate discounted rates on the inventory. We help them deploy their perishable inventory. That's why we always have very good deals in our platform. We're helping them solve the issue of perishable inventory. We're giving them a management tool, and a yield management tool they don't have. The reason we don't compete with OTAs, as I said before, is this: OTAs and any other direct-to-consumer, generally online publishing of the standard rates, right? I mean, an airline, as an example, or hotel company is not going to put a discounted rate out in a public channel like an OTA because it's simply going to dilute their own yield on their own website, which they don't want to do. With us, it's a more opaque channel. It's not available to the entire market so they can manage the yield more effectively.
So it helps (back to your question and problems) it helps the airlines, and the other suppliers with their perishable inventory. We're helping the intermediaries with a platform that is, we believe, the leading platform in the industry today, fully AI-enabled, mobile-based, etc. And we're helping the consumer with an easy way to curate and get high-value personalized experiences as they go forward. That's the nature of the problems we're dealing with.
Yeah, I know it's really helpful to kind of contextualize the opportunity here. You've mentioned AI. You've mentioned technology. I want to definitely touch on AI and what Mondee is doing. But maybe first, Mondee's consolidated kind of various offerings into a single platform. Can you kind of speak to this effort? What have the early adoption trends looked like? How's progress comparing to kind of what your expectations were?
Yeah. Yeah. Let's just talk about what's the benefit of going to a single platform, right? You go to a single platform. It really allows for your consumer or your customer, in this case, experts and/or consumers, to have a much more streamlined access to one of the broadest arrays of content that's out there, right? So by pulling all the different components, by pulling all the different platforms together, we now have one engine, fully AI-enabled all the way across, that is providing complete and pretty ubiquitous access to all of the content that's out there, both our negotiated rates and pretty much anything else that's available anywhere that they can use to help curate and package.
By doing that, you also, now you have it in one place, you're able to take and use the AI engines to help drive a more efficient and effective curation, a more sticky experience, both for our customer, the expert, as well as for the consumer. So we're providing that in this unified platform. As we've put it out, we've been rolling out and deploying it. I mean, we're seeing the benefits, right? We're seeing the benefit from our customer, and they're seeing the efficiencies. It's allowing them to grow their businesses faster. We've actually been able to implement into that unified platform, we've been able to implement a full suite of marketing tools for them to use to go out and promote their own businesses more effectively. So it's been working very well. It's been taken up by our distribution network, which is huge and growing.
We have over 65,000 agents and experts on our platform today. And that number, we expect to continue to grow rapidly. So we've helped them with that, with the platform. They're enjoying it. We're seeing the consumer adoption come up. So these are all the benefits we've gotten from going to the single platform. And then, of course, you have the other side, right? We're able to do more targeted marketing so that we're able to start creating a more unified Mondee brand that we can take all this out on and be more powerful with our marketing spend.
Let's talk AI. ChatGPT came out. Everyone became really aware of it. I think a few months later, Mondee came out with its kind of platform solution, this AI-powered travel system called Abhi. So can you kind of speak to, one, how are you able to get it out so quickly? And how is Abhi different than some of the other kind of chat interfaces we've seen various companies, whether it's in travel or e-commerce or other platforms, have launched?
Yeah. Do you remember I said that during the pandemic, we started broadening what we did, right? We used the pandemic to broaden our content. We used it to broaden our distribution channels and really start expanding the business and giving us a much bigger TAM in the $1 trillion piece of the market that we go after. The other thing we did was we doubled down on our technology investment because that is who we are. Mondee started working on our AI in travel long before it became popular. So we were actively working through machine learning and some of these techniques in 2020, 2021. So what we rolled out in the last year or so is something that we've been working on for quite a while.
The popularity that came with, as you say, the ChatGPTs of the world and so forth simply helped us, made it easier to launch, quite honestly. We were not launching into what was before that severe AI skepticism, right? Now it was starting to become more generally accepted as a tool. So we were able to, under the covers during those years, work on mobile-enabling the AI platform. So we now have the Aavi app and the whole mobile app. And this is geared to the modern era of travel for us, right? It's allowed us to get to the broadest, both global and localized content because we're using AI to help us truly personalize by localizing the experience for that traveler. So it's now become an immersive, we look to provide these immersive and authentic experiences for people. We look to meet their desire for adventure and exploration.
So those are the things that we can do with this platform, with this AI enablement. But it's not new to us. It's part of our makeup. You will have seen - maybe all of you did not see, depending on what you follow in our market space - but last year, we acquired Purple Grids. And Purple Grids was simply - it was not our start in AI. It was really just helping us to button up everything we had already produced with an additional active AI platform and engine. Here's the key thing that, having been in this for a while for us, it really helps us with: the biggest issue with AI - it's not the engines.
There are a bunch of great AI engines out there, right? It's having what are called the LLMs, right? These are the big - the LLMs, I'm sorry - the large language models, right? So this is where you get your learning and experience. This is where you overcome all the things about, "Well, is the information giving me really accurate?" And we've been creating and developing LLMs for a long time now. So in our space, we think we have a phenomenal lead because we have some of the best taught, if you will, AI engines that are out there, so active AI platforms. This is what we're deploying. And this is why getting started early, we believe, has given us a great lead in the marketplace.
That's really helpful to understand kind of the innovation, and particularly using AI. You spoke to 65,000 agents and experts. Is that kind of full-time? Is that part-time? Kind of accessing gig workers has been part of the story. How big of an opportunity can that be, kind of adding people who are really just doing this on the side or casually?
Yeah. First of all, Nick, it's both, right? I mean, we service a huge swath of the full-time travel expert market, whether they're travel agents, whether they're tour operators, etc. We service a full swath of that. And that was Mondee's bread and butter up to 2019, quite honestly. We've now diversified beyond that into many other channels. But as we've gone through those channels, we've. Sorry, come back to the question again.
Well, just kind of accessing gig workers.
Yeah. So the gig workers, right? Yeah. So we provide services to a big swath of the existing full-time space. What happened during the pandemic was an acceleration of people becoming work-from-home agents, right? And you also saw people during that time starting to become a bigger part of the gig economy: a school teacher who wanted to do something for four hours at night at home to supplement, or an Uber driver who was looking for that next gig to work on, right? So what you have is people that are using this as a sideline. But you also have people who are out there. I'll give you an example. There's a group that we work with. It's 50,000 Hispanic working moms in North America, right? And what they do, they're single moms. So they basically are stay-at-home moms for the most part.
They work in their local communities. What they do is they try to provide goods and services into their local marketplace, whether it's their churches, their schools, etc., everything in their local marketplace. We enable them with tools that allow them to sell travel. It gives them a high-value tool that is, the earnings potential is substantial. The nice thing about our platform, it's allowing them to monetize relationships that they have. That's where you get this explosion, right? The example we use that Orestes came up with years ago was a couple of years ago is, if you think about it, right, before Uber, you had a few thousand taxi drivers, right?
There were a few million people running around there in cars that didn't know that they were going to make, in some cases, side income, in some cases, full-time jobs out of providing this kind of a service. We are at that same sea change in travel services where you now are enabling people with a new platform that is highly effective for them to engage their local communities to provide a great service, which has high value to it and high value to them. So that's pretty much how we're tapping into that market. And it's huge. I mean, you've gone from travel agents, as an example, in the hundreds of thousands to now travel experts and enabling travel experts in the millions. That's fundamentally what's happening.
Let's take kind of a step back and talk industry macro conditions. International travel has recovered nicely. It appears nearly recovered to pre-pandemic levels in most geos. How much pent-up demand do you see existing? And maybe for some context, Mondee originally has a lot of U.S. outbound flights. So Asia recovery has been a factor. Is there still pent-up demand? Is there more recovery to come? How do you see the landscape today?
Yeah. I mean, look, the primary bow wave of pent-up demand sort of crested, right? And we see still significant pent-up demand, particularly in certain regions. Our expansion into Latin America is because of one of those. We see that as a region that is still enjoying and recovering some, well, really, not even so much recovering, but enjoying the outcome of the pent-up demand, that bow wave as it flows out. Same thing we see in places upcoming like the Middle East. You certainly see it. China was one of the—and Asia in general was one of the last to recover, China being the biggest piece. It has subsequently recovered nicely. But it's created that bow wave. And again, it started with business travel outbound, as an example.
So we've been able to effectively take advantage of those tailwinds and build on them, build market share as these markets opened up. So we've been able to expand market share that way. So we do still see some pent-up demand. It's been a nice tailwind. We believe it'll continue to be a tailwind. But now you're also into just the high rate of growth that travel itself enjoys everywhere. And with the emergence of the new consumer, right, the millennial, Gen Z, really the Gen Zs who travel differently. They interact differently. But they travel much more extensively than the previous two generations. We see travel continuing to grow. So the tailwind is flowing nicely into that whole digital nomad that was born with that generation. And we see it continuing for quite some time.
Okay. You see strong trends. You spoke earlier to kind of the revenue diversification. It started with flights. Then it's cars and hotels and cruises. How does that manifest in the model? What drives take great expansion in the model from here? It seems like the diversification has helped. Where do you see it going longer term?
I mean, it continues, right? I mean, Mondee started with the toughest thing to master in the market era. I mean, that's the toughest business to make money in, to make a profit in travel. And we were able to do that, do that successfully and very profitably, primarily because of the underpinning technology and its efficiency. But beyond that, when you start adding hotels, when you start adding cruises, etc., you do two things. A, you add not only higher margin product from a take rate perspective, but you also, if you think about it, you've already done, you have your CAC. You've acquired the customer. What people generally, if they're traveling extensively, they're going to book the air first. So if you have them on your platform for air and you start adding these other things on, the incremental cost of acquiring the customer is minimal.
So that also helps to expand your take rate and your EBITDA, your EBITDA margins. So we continue to grow that. And these things, today, you'll see it manifest from we were low single digits in take rate to now we're high single digits. We certainly have targets in the near term of getting it into the teens. And we can see taking it beyond that when you put the whole model together and then you start adding SaaS components to it and financial services to it. We see this going into—we see that take rate continuing to expand. And with it, we see margin expansion at the EBITDA line as well.
How should we look for the expansion to come? Is this going to be organic efforts or maybe inorganic? We're going to make some acquisitions to kind of bolster up hotels or certain verticals?
It's a mix of both. Everything Mondee does is a balance of organic and inorganic, right? And we do that very disciplined, very planned way. Our recent acts were our acquisitions early last year and throughout the year, say, in Latin America. Those have added content to us. They've added margin to us and allowed quicker organic growth, quite honestly, because of the nature of the content, the ground transport, the hotels, etc. So we'll continue to do a balance of both. And it'll be targeted at content. It'll be targeted at distribution, which are the parts of our moat, the other one being technology, obviously, that we want to continue to consolidate and grow and provide out to our customers and their consumers.
All right. So we're up on time here. But the last question I'd like to ask is, what do you think investors should walk away from this meeting with? And what do you think our conversation, or what do you think kind of maybe the most common misconception is since Mondee's been public?
Well, let's talk about what we're not, right? Because most people say, "Well, geez, you guys are like an OTA," right? We're not an OTA. Mondee is not an OTA. And we don't compete, really, with OTAs. We compete in that other section. Look, we are a high-growth AI tech company. We're serving up expert, expert-supported experiences to the modern travel consumer. That's really who we are, right? And if people take nothing away other than that, I would say take away that Mondee is a business that started in one place. We have broadened and evolved to another. We are providing to the modern-era traveler the experiences they're looking for in a very effective way. And we enjoy a substantial competitive edge that's built on our tech foundation, merged with our content, merged with our distribution network.
Those are our key competitive moats that are difficult to replicate, particularly with the effectiveness we have in our platform.
Great. Great answer. Jim, thanks for being here.
Absolutely. Nick, thank you very much. I appreciate it.