Correspondence 0001828852-23-000192 from Mondee Holdings, Inc. (MOND) (CIK 0001828852)
Mondee Holdings, Inc. (MOND) (CIK 0001828852)
Date: Dec. 21, 2023 · CIK: 0001828852 · Accession: 0001828852-23-000192
AI Filing Summary & Sentiment
File numbers found in text: 001-39943
Referenced dates: November 17, 2023
Letter
mondee-seccommentletterr
Mondee Holdings, Inc. 10800 Pecan Park Blvd. Suite 400 Austin, Texas 78750 VIA EDGAR December 21, 2023 U.S. Securities & Exchange Commission Division of Corporation Finance Office of Energy & Transportation 100 F Street, NE Washington, D.C. 20549-0405 Attention: Jenifer Gallagher, Staff Accountant Robert Babula, Staff Accountant Re: Mondee Holdings, Inc. Form 10-K for the Fiscal Year ended December 31, 2022 Filed April 11, 2023 File No. 001-39943
U.S. Securities and Exchange Commission December 21, 2023 Page 2 Dear Ms. Gallagher and Mr. Babula: Set forth below is the response of Mondee Holdings, Inc. (the “Company,” “we,” “our” or “us”) to the comments made by the staff (the “Staff”) of the Division of Corporation Finance of the U.S. Securities and Exchange Commission (the “Commission”) contained in the Staff’s Letter dated November 17, 2023 with respect to the Company’s Form 10-K for the Fiscal Year ended December 31, 2022 filed with the Commission on April 11, 2023 (the “Form 10-K”). The numbered paragraphs below correspond to the numbered comments in the Letter and the Staff’s comments are presented in bold italics. Form 10-K for the Fiscal Year ended December 31, 2022 Financial Statements Note 10 – Revenue Disaggregation of Revenue, page F-34 1. We understand from your response to prior comment six that you believe the requirements of FASB ASC 606-10-50-5 do not apply to the revenue streams that comprise your Travel Marketplace segment revenue, including those derived from sales of airline tickets and in connection with reservations made for hotel accommodations, rental cars, travel insurance and other travel products and services, in the form of service fees, margins and commissions, or incentive payments based on the amounts or volumes of bookings and transactions, because such arrangements involve a similar performance obligation. You also state “there is no significant level of disparity in the nature, amount, timing and uncertainty of revenues and cash flows associated with the travel marketplace revenue,” although provide no details to support either assessment or to demonstrate how your aggregation of these various sources of revenues serves to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. FASB ASC 606-10-50-6 requires disclosure that enables users to understand the relationship between the disaggregated revenue information and the related segment disclosures, while FASB ASC 606-10-55-90 and 91 clarify that you should consider how information is presented outside of the financial statements when selecting appropriate categories, to include investor presentations and earnings releases, and provides examples of categories that may be applicable to your business, including the type of service, market or type of customer, type of contract, and sales channels.
U.S. Securities and Exchange Commission December 21, 2023 Page 3 On page 15 of your November 2023 Investor Presentation we see that you characterize your business as having “diversified revenue streams” and depict an evolving mix of revenue streams between markup, commissions, GDS/NDC, Fintech, Ancillaries, and Subscriptions, while grouping revenues based on the categories of consumer economics, supplier economics, and diversified, and indicating a long term target for air transactions of 50% compared to 80% now and 100% a few years ago. The remarks prepared for your recent earnings call include references to demand with differentiation between your “core business sectors” and “emerging sectors for new-era distributors, experts and influencers,” also noting the evolving mix of products in differentiating between your historic offerings that were limited to air transactions, stating that you “…have since added hotels, where Gross Bookings grew year-to-date 74% compared with the same period last year,” that hotels, packages, and other content “enjoy a higher Take Rate than air [and] continue to grow rapidly,” and that you “anticipate that cruises and activities will be a growth driver in late 2024.” In explaining the recent increase in the take rate within the earnings call remarks, you further clarify that it was “driven mostly by the uptake of higher-margin hotel content and the diversification of revenue streams, including fintech and ancillary services” and that you expect this important metric “to continue expanding into the double digits with the addition of cruises and a greater mix of non-air content.” We note disclosures on pages 32 and 33 of your annual report referencing the risk of adverse consequences if you are unable to maintain existing, and establish new, arrangements with travel suppliers, explaining that a significant portion of revenue is derived from commissions and incentive payments from travel suppliers, “especially airline suppliers, and GDS service providers,” clarifying that while you “generally maintain formal contractual relationships” with travel suppliers, you “maintain more informal arrangements with certain travel suppliers, such as airlines, GDS service providers, hotels and other travel product companies,” emphasizing the risk that these can be terminated with or without notice and may create uncertainty with respect to terms and pricing, and explaining that your largest airline clients are seeking to increase use of direct distribution channels by moving client traffic to their proprietary websites. Given these and other observations, including separately identifying and quantifying changes in commission revenues and incentive revenues when explaining variances in travel marketplace revenues in MD&A, unless you are able to demonstrate how differences in the various revenue streams based on the products, revenue types, and distribution channels are immaterial in understanding how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors, further disaggregation should be provided to comply with FASB ASC 606-10-50.
U.S. Securities and Exchange Commission December 21, 2023 Page 4 Please submit the revisions that you propose to address the concerns outlined above. In conjunction with your response, provide us with schedules showing the revenues derived for each of the products (e.g. airlines, hotels, auto rentals, cruises, insurance and other), and separately for each revenue type and category as referenced in the Investor Presentation noted above, and each distribution or marketing channel, covering each of the last three fiscal years and the subsequent interim period. The Company acknowledges the Staff’s comment on the Company’s disaggregated revenue disclosures and respectively submits the following revenue schedules for the last three fiscal years and the nine months ended September 30, 2023, disaggregated by segment, revenue stream, underlying travel product and by sales channel associated with the recorded Travel Marketplace segment revenues. For all periodic prospective filings beginning with our Form 10-K for the year ended December 31, 2023, and for the comparative periods presented, we will include an additional level of disaggregation by using the formatting of the Exhibits A, B and C proposed and footnote disclosures below. Please refer to the discussions below about how revenue disaggregation is reassessed in accordance with ASC 606-10-55-91. In the future, we will also reassess the revenue disaggregation and operational information related presentations in prospective investors presentations and earnings releases. With reference to ASC 606-10-55-90 (b) and (c), the CODM continues to review and monitor our operations by our reportable segments (Travel Marketplace and software-as-a-service (“SaaS”) segments). Specifically, with respect to our Travel Marketplace segment, the CODM continues to review the segment’s financial performance on an aggregated basis, as the nature of our overall revenues derived from Travel Marketplace segment essentially represents revenues from travel related activities. We reassessed revenues from the following categories in accordance with ASC 606-10-55-91: (a) Type of good or service (for example, major product lines) Within our Travel Marketplace segment, the Company, as an agent, facilitates traveler suppliers to sell underlying travel products and provides booking services to travelers through computerized network systems, such as global distribution systems (GDS). We generate travel transaction- related revenue from the above booking services. In addition, we generate commission revenues from banks and financial institutions based on the travel booking spend processed through fintech programs partnered with our platform. In our previous Investor Presentation materials, management used to discuss revenues categorized as Consumer Economics, Supplier Economics, Fintech, Ancillaries and Subscriptions without disclosing quantitative information. Such discussions were from various operational concepts, instead of viewing customer contracts through revenue recognition categories from an accounting perspective.
U.S. Securities and Exchange Commission December 21, 2023 Page 5 Generally, in the travel transaction booking process, both Consumer Economics and Supplier Economics are driven by the Company’s fulfillment of a single performance obligation, which is to facilitate booking arrangements between suppliers and travelers. Consumer Economics is driven by booking of travelers, and Supplier Economics is driven by travel suppliers’ incentives earned on the same booking. In operations, Consumer Economics and Supplier Economics are highly correlated as they are derived by the same booking: we earn (1) mark-up fees and certain commissions per booking at ticketing, (2) certain commissions per booking when the underlying trip is taken by traveler (For those commissions, the Company estimates the variable considerations at booking. However, the amount of revenue that can be earned is susceptible to reversal due to factors outside of the entity’s influence; refer to further discussions in sections (f) and (d) below), and (3) additional incentives when the booking volume performance goals during a period are achieved. Both Consumer Economics and Supplier Economics are priced on a booking basis - the rates could be flat fees or tiered fixed percentages and are subject to frequent modifications in a dynamic market. As such, the Company assesses its operations based on the total net revenue generated from the same booking, instead of separating the highly correlated components within the same transaction. Further, as an industry practice, certain commission and incentive rates are highly restricted among competitors and limited to supplier relationship management within a company. We believe presenting the details of Consumer Economics and Supplier economics would not be meaningful for the users of financial statements, and further disaggregation of revenues generated from mark-up fees, commissions and incentives would put us at a competitive disadvantage in disclosing where our peers have not, and management has not discussed the detailed amounts of travel transaction revenues with investors. Based on the analysis above, we propose to combine the Consumer Economics and Suppler Economics into Travel Transaction revenues in future presentations to investors and financial statements, and present Fintech Program revenues as a separate revenue stream within Travel Marketplace segment. Additionally, we propose to present Travel Transaction revenue stream based on the following underlying travel product given significant business expansions from fiscal year 2023: Air, Travel Package, Hotel, and Other. The following exhibits and footnote disclosures are the formatting we propose by using fiscal years ended December 31, 2020, 2021, 2022 and the nine-month period ended September 30, 2023 as examples to present disaggregated revenue by segment, revenue stream and underlying travel product under ASC 606-10-55-91(a) for future periodic filings beginning with the Form 10-K for fiscal year 2023 and its comparative period: Proposed footnote disclosures: Revenue by segment, stream, and underlying travel product The following first table presents revenue by segment and stream for the fiscal years ended December 31, 2020, 2021, 2022 and the nine-month period ended September 30, 2023:
U.S. Securities and Exchange Commission December 21, 2023 Page 6 Travel Transaction revenues included mark-up fees, commissions and incentive revenues earned from our travel suppliers and global distribution systems based on the booking services provided through our platform to travelers. Fintech program revenues represent commissions earned from our Fintech program partners based on the payment settlements processed on our platform through the specific program. The following second table is a detailed discussion of revenue resources by underlying travel product within Travel Transaction revenues.
U.S. Securities and Exchange Commission December 21, 2023 Page 7 Air transaction revenues included mark-up fees, commissions and incentives derived from the airline ticket booked, and associated ancillary services, such as fees charged for premium seat selection, luggage, and trip insurance. Similarly, the Travel Package, Hotel and Other subcategories include mark-up fees, commissions and incentives derived from travel package booking, hotel booking, and other bookings made as well as additional ancillary services purchased by the travelers. Travel Package presented revenues are generated from a single booking by the traveler for multiple underlying travel products, such as airline tickets and hotel services reserved through one booking. Other included transaction revenues from car rental, cruises, and other travel bookings. In future filings, such as Management’s Discussion and Analysis of Financial Condition and Results of Operations, Investor Presentations, Earnings Releases, Management will no longer distinguish revenues from the above historical operational view. (c) Market or type of customer: Our customers associated with the Travel Marketplace segment are travel suppliers and our fintech partners. We earn Travel Transaction revenues from various travel suppliers based on the underlying travel products booked and travel suppliers partnered GDS networks; we earn the Fintech program revenues from fintech partners, such as banks and financial service companies. We believe the proposed disaggregation in the format of Exhibit A will provide sufficient information to the users of financial statements about our type of customer. (d) Type of contract (for example, fixed-price and time-and-materials contracts): Our Travel Marketplace segment revenues are transactional in nature. Although the fees rates vary with travel suppliers and GDS, the majority of our arrangements have similar terms and conditions and are common practice within travel industry: there are flat fees per booking, flat rate percentages based on gross booking value, as well as flat rate percentages at the time a trip is taken by the traveler; there are also tiered fixed incentive rates based on cumulative gross booking values and/or based on volume of the booking during a period. In the dynamic market environment, rates change frequently through contract amendments to reflect promotional pricing terms offered by the travel suppliers and GDS. From a cash flow perspective, within our Travel Transaction revenues, payments due from our customers vary from a monthly basis to an annual basis at
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mondee-seccommentletterr
Mondee Holdings, Inc. 10800 Pecan Park Blvd. Suite 400 Austin, Texas 78750 VIA EDGAR December 21, 2023 U.S. Securities & Exchange Commission Division of Corporation Finance Office of Energy & Transportation 100 F Street, NE Washington, D.C. 20549-0405 Attention: Jenifer Gallagher, Staff Accountant Robert Babula, Staff Accountant Re: Mondee Holdings, Inc. Form 10-K for the Fiscal Year ended December 31, 2022 Filed April 11, 2023 File No. 001-39943
U.S. Securities and Exchange Commission December 21, 2023 Page 2 Dear Ms. Gallagher and Mr. Babula: Set forth below is the response of Mondee Holdings, Inc. (the “Company,” “we,” “our” or “us”) to the comments made by the staff (the “Staff”) of the Division of Corporation Finance of the U.S. Securities and Exchange Commission (the “Commission”) contained in the Staff’s Letter dated November 17, 2023 with respect to the Company’s Form 10-K for the Fiscal Year ended December 31, 2022 filed with the Commission on April 11, 2023 (the “Form 10-K”). The numbered paragraphs below correspond to the numbered comments in the Letter and the Staff’s comments are presented in bold italics. Form 10-K for the Fiscal Year ended December 31, 2022 Financial Statements Note 10 – Revenue Disaggregation of Revenue, page F-34 1. We understand from your response to prior comment six that you believe the requirements of FASB ASC 606-10-50-5 do not apply to the revenue streams that comprise your Travel Marketplace segment revenue, including those derived from sales of airline tickets and in connection with reservations made for hotel accommodations, rental cars, travel insurance and other travel products and services, in the form of service fees, margins and commissions, or incentive payments based on the amounts or volumes of bookings and transactions, because such arrangements involve a similar performance obligation. You also state “there is no significant level of disparity in the nature, amount, timing and uncertainty of revenues and cash flows associated with the travel marketplace revenue,” although provide no details to support either assessment or to demonstrate how your aggregation of these various sources of revenues serves to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. FASB ASC 606-10-50-6 requires disclosure that enables users to understand the relationship between the disaggregated revenue information and the related segment disclosures, while FASB ASC 606-10-55-90 and 91 clarify that you should consider how information is presented outside of the financial statements when selecting appropriate categories, to include investor presentations and earnings releases, and provides examples of categories that may be applicable to your business, including the type of service, market or type of customer, type of contract, and sales channels.
U.S. Securities and Exchange Commission December 21, 2023 Page 3 On page 15 of your November 2023 Investor Presentation we see that you characterize your business as having “diversified revenue streams” and depict an evolving mix of revenue streams between markup, commissions, GDS/NDC, Fintech, Ancillaries, and Subscriptions, while grouping revenues based on the categories of consumer economics, supplier economics, and diversified, and indicating a long term target for air transactions of 50% compared to 80% now and 100% a few years ago. The remarks prepared for your recent earnings call include references to demand with differentiation between your “core business sectors” and “emerging sectors for new-era distributors, experts and influencers,” also noting the evolving mix of products in differentiating between your historic offerings that were limited to air transactions, stating that you “…have since added hotels, where Gross Bookings grew year-to-date 74% compared with the same period last year,” that hotels, packages, and other content “enjoy a higher Take Rate than air [and] continue to grow rapidly,” and that you “anticipate that cruises and activities will be a growth driver in late 2024.” In explaining the recent increase in the take rate within the earnings call remarks, you further clarify that it was “driven mostly by the uptake of higher-margin hotel content and the diversification of revenue streams, including fintech and ancillary services” and that you expect this important metric “to continue expanding into the double digits with the addition of cruises and a greater mix of non-air content.” We note disclosures on pages 32 and 33 of your annual report referencing the risk of adverse consequences if you are unable to maintain existing, and establish new, arrangements with travel suppliers, explaining that a significant portion of revenue is derived from commissions and incentive payments from travel suppliers, “especially airline suppliers, and GDS service providers,” clarifying that while you “generally maintain formal contractual relationships” with travel suppliers, you “maintain more informal arrangements with certain travel suppliers, such as airlines, GDS service providers, hotels and other travel product companies,” emphasizing the risk that these can be terminated with or without notice and may create uncertainty with respect to terms and pricing, and explaining that your largest airline clients are seeking to increase use of direct distribution channels by moving client traffic to their proprietary websites. Given these and other observations, including separately identifying and quantifying changes in commission revenues and incentive revenues when explaining variances in travel marketplace revenues in MD&A, unless you are able to demonstrate how differences in the various revenue streams based on the products, revenue types, and distribution channels are immaterial in understanding how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors, further disaggregation should be provided to comply with FASB ASC 606-10-50.
U.S. Securities and Exchange Commission December 21, 2023 Page 4 Please submit the revisions that you propose to address the concerns outlined above. In conjunction with your response, provide us with schedules showing the revenues derived for each of the products (e.g. airlines, hotels, auto rentals, cruises, insurance and other), and separately for each revenue type and category as referenced in the Investor Presentation noted above, and each distribution or marketing channel, covering each of the last three fiscal years and the subsequent interim period. The Company acknowledges the Staff’s comment on the Company’s disaggregated revenue disclosures and respectively submits the following revenue schedules for the last three fiscal years and the nine months ended September 30, 2023, disaggregated by segment, revenue stream, underlying travel product and by sales channel associated with the recorded Travel Marketplace segment revenues. For all periodic prospective filings beginning with our Form 10-K for the year ended December 31, 2023, and for the comparative periods presented, we will include an additional level of disaggregation by using the formatting of the Exhibits A, B and C proposed and footnote disclosures below. Please refer to the discussions below about how revenue disaggregation is reassessed in accordance with ASC 606-10-55-91. In the future, we will also reassess the revenue disaggregation and operational information related presentations in prospective investors presentations and earnings releases. With reference to ASC 606-10-55-90 (b) and (c), the CODM continues to review and monitor our operations by our reportable segments (Travel Marketplace and software-as-a-service (“SaaS”) segments). Specifically, with respect to our Travel Marketplace segment, the CODM continues to review the segment’s financial performance on an aggregated basis, as the nature of our overall revenues derived from Travel Marketplace segment essentially represents revenues from travel related activities. We reassessed revenues from the following categories in accordance with ASC 606-10-55-91: (a) Type of good or service (for example, major product lines) Within our Travel Marketplace segment, the Company, as an agent, facilitates traveler suppliers to sell underlying travel products and provides booking services to travelers through computerized network systems, such as global distribution systems (GDS). We generate travel transaction- related revenue from the above booking services. In addition, we generate commission revenues from banks and financial institutions based on the travel booking spend processed through fintech programs partnered with our platform. In our previous Investor Presentation materials, management used to discuss revenues categorized as Consumer Economics, Supplier Economics, Fintech, Ancillaries and Subscriptions without disclosing quantitative information. Such discussions were from various operational concepts, instead of viewing customer contracts through revenue recognition categories from an accounting perspective.
U.S. Securities and Exchange Commission December 21, 2023 Page 5 Generally, in the travel transaction booking process, both Consumer Economics and Supplier Economics are driven by the Company’s fulfillment of a single performance obligation, which is to facilitate booking arrangements between suppliers and travelers. Consumer Economics is driven by booking of travelers, and Supplier Economics is driven by travel suppliers’ incentives earned on the same booking. In operations, Consumer Economics and Supplier Economics are highly correlated as they are derived by the same booking: we earn (1) mark-up fees and certain commissions per booking at ticketing, (2) certain commissions per booking when the underlying trip is taken by traveler (For those commissions, the Company estimates the variable considerations at booking. However, the amount of revenue that can be earned is susceptible to reversal due to factors outside of the entity’s influence; refer to further discussions in sections (f) and (d) below), and (3) additional incentives when the booking volume performance goals during a period are achieved. Both Consumer Economics and Supplier Economics are priced on a booking basis - the rates could be flat fees or tiered fixed percentages and are subject to frequent modifications in a dynamic market. As such, the Company assesses its operations based on the total net revenue generated from the same booking, instead of separating the highly correlated components within the same transaction. Further, as an industry practice, certain commission and incentive rates are highly restricted among competitors and limited to supplier relationship management within a company. We believe presenting the details of Consumer Economics and Supplier economics would not be meaningful for the users of financial statements, and further disaggregation of revenues generated from mark-up fees, commissions and incentives would put us at a competitive disadvantage in disclosing where our peers have not, and management has not discussed the detailed amounts of travel transaction revenues with investors. Based on the analysis above, we propose to combine the Consumer Economics and Suppler Economics into Travel Transaction revenues in future presentations to investors and financial statements, and present Fintech Program revenues as a separate revenue stream within Travel Marketplace segment. Additionally, we propose to present Travel Transaction revenue stream based on the following underlying travel product given significant business expansions from fiscal year 2023: Air, Travel Package, Hotel, and Other. The following exhibits and footnote disclosures are the formatting we propose by using fiscal years ended December 31, 2020, 2021, 2022 and the nine-month period ended September 30, 2023 as examples to present disaggregated revenue by segment, revenue stream and underlying travel product under ASC 606-10-55-91(a) for future periodic filings beginning with the Form 10-K for fiscal year 2023 and its comparative period: Proposed footnote disclosures: Revenue by segment, stream, and underlying travel product The following first table presents revenue by segment and stream for the fiscal years ended December 31, 2020, 2021, 2022 and the nine-month period ended September 30, 2023:
U.S. Securities and Exchange Commission December 21, 2023 Page 6 Travel Transaction revenues included mark-up fees, commissions and incentive revenues earned from our travel suppliers and global distribution systems based on the booking services provided through our platform to travelers. Fintech program revenues represent commissions earned from our Fintech program partners based on the payment settlements processed on our platform through the specific program. The following second table is a detailed discussion of revenue resources by underlying travel product within Travel Transaction revenues.
U.S. Securities and Exchange Commission December 21, 2023 Page 7 Air transaction revenues included mark-up fees, commissions and incentives derived from the airline ticket booked, and associated ancillary services, such as fees charged for premium seat selection, luggage, and trip insurance. Similarly, the Travel Package, Hotel and Other subcategories include mark-up fees, commissions and incentives derived from travel package booking, hotel booking, and other bookings made as well as additional ancillary services purchased by the travelers. Travel Package presented revenues are generated from a single booking by the traveler for multiple underlying travel products, such as airline tickets and hotel services reserved through one booking. Other included transaction revenues from car rental, cruises, and other travel bookings. In future filings, such as Management’s Discussion and Analysis of Financial Condition and Results of Operations, Investor Presentations, Earnings Releases, Management will no longer distinguish revenues from the above historical operational view. (c) Market or type of customer: Our customers associated with the Travel Marketplace segment are travel suppliers and our fintech partners. We earn Travel Transaction revenues from various travel suppliers based on the underlying travel products booked and travel suppliers partnered GDS networks; we earn the Fintech program revenues from fintech partners, such as banks and financial service companies. We believe the proposed disaggregation in the format of Exhibit A will provide sufficient information to the users of financial statements about our type of customer. (d) Type of contract (for example, fixed-price and time-and-materials contracts): Our Travel Marketplace segment revenues are transactional in nature. Although the fees rates vary with travel suppliers and GDS, the majority of our arrangements have similar terms and conditions and are common practice within travel industry: there are flat fees per booking, flat rate percentages based on gross booking value, as well as flat rate percentages at the time a trip is taken by the traveler; there are also tiered fixed incentive rates based on cumulative gross booking values and/or based on volume of the booking during a period. In the dynamic market environment, rates change frequently through contract amendments to reflect promotional pricing terms offered by the travel suppliers and GDS. From a cash flow perspective, within our Travel Transaction revenues, payments due from our customers vary from a monthly basis to an annual basis at