Yatra Online Q1 2024 Earnings Call Transcript

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Provided by Quartr
October 16, 2023

There are 6 speakers on the call.

Operator

Hello all, and welcome to Yatra Online, Inc. 1Q Full Year 'twenty four Earnings Conference Call. My name is Lydia, and I'll be your operator today. If you'd like to ask a question during the call, you can do so by pressing star followed by the number 1 on your telephone keypad. If you change your mind and wish to withdraw your question, it's It's my pleasure to now hand you over to your host, Manish Hemrajani, Head of Investor Relations.

Operator

Please go ahead.

Speaker 1

Thank you, Lydia. Good morning, everyone. Welcome to Yatra's fiscal Q1 2024 Financial Results for the year We have on the call today Yatra's CEO and Co Founder, Dhruv Singh and CFO, Rohan Mitchel. Following the discussion in response to your question and answer session on the SEC's management views as of today, October 16, 2023. We don't undertake any obligation to update or revise the information.

Speaker 1

Before we begin our formal remarks, let me remind you that certain statements made on today's call May constitute forward looking statements, which are based on management's current expectations and are subject to several risks and uncertainties that could cause Actual results will differ materially. For a description of these risks, please refer to our filings with the SEC and our press release filed earlier this morning. These are also available on our Investor Relations site. With that, let me turn the call over to Dhruv. Dhruv, please go ahead.

Speaker 2

Thank you, Manish. Good morning to all, and I appreciate your presence on our Q1 earnings call for fiscal 2024. I'm delighted to announce a significant milestone for Yatra Online Limited. We successfully concluded our Indian IPO Of INR 7,750,000,000, which is approximately USD 93,000,000 and proudly made our debut On the Indian Stock Exchanges on this 28th September. This achievement holds special significance for all of us at Yatra.

Speaker 2

The funds generated from the IPO are earmarked for strategic investments, acquisitions, inorganic growth, technology advancement, Bolstering customer acquisition and retention and other initiatives pivotal to our organic growth and corporate endeavors. Furthermore, Yatra Online Inc. Also benefited from an additional capital of approximately USD 21,000,000 as the sharing selling shareholder, PHL, Which is a wholly owned subsidiary of Yatra Online Inc. I sold these many shares in the open market. The capital not only enables us to settle the MAC debt, but also provides us the flexibility to potentially allocate a part of the residual funds For future Yatra share buybacks, the recent IPO in tandem with these developments offers us strategic leverage enhancing our market visibility, Diversifying our shareholder base and consequently strengthening the Yatra brand.

Speaker 2

The IPO was based on a pre money valuation of INR $16,000,000,000 which is approximately $193,000,000 which equates to again approximately $3.03 per YTR is a share that trades on NASDAQ. This is based on a share count of 63,600,000 shares outstanding currently. The current market cap of the India entity is approximately US23.15 billion dollars which is approximately US280 million dollars And post the IPO, Yatra Online Inc. Owned about 65% of its Indian subsidiary, which on a consolidated basis, as I mentioned above, equates an approximate share price of YTRA shares of USD 3.03. Now moving on to the June quarter results, I'm pleased to report that we had our strongest quarter on the air front since the advent of COVID with the highest number of air passengers booked since Pre COVID in December 2019, this was up 41.5% year over year, far outpacing the domestic Industry growth of 14.8%.

Speaker 2

Moreover, our sequential growth has been twice the pace of the industry, Faster than our peers, demonstrating our ability to gain share and the inherent strength of the Yatra brand. International travel has also shown a steady improvement during the quarter, reaching approximately 90% of pre COVID levels. As we move forward, we remain optimistic and committed to leveraging these positive trends to drive further growth and success. We further fortified our leadership in the corporate travel sector by signing 19 new corporate customer in the June quarter. These customers have an annual billing potential of INR 1,500,000,000, which is approximately USD 18,200,000.

Speaker 2

This underlines the capabilities and leadership of our corporate travel SaaS platform. As for the IMF, India's economic growth remains robust, Driven by a large public capital expenditure push and the resilient domestic demand, the economy is expected to grow by 6.3% in both 2023 2024. As it relates to Yatra, looking at how the travel industry has unfolded over the last several years, We see that travel trends to grow at a multiple of 1.5 to 2x of GDP. We believe that we should be able to achieve growth rates Above market rates as we continue to take share in the corporate travel market and as the consumer market continues to remain robust. Both the expansion of the travel industry and the macro conditions continuing to be favorable Allow us to do so.

Speaker 2

The Indian Aviation Industry is witnessing unprecedented expansion of its fleet. The fleet is expected to almost double over the next 5 years, and the Aviation Ministry is forecasting more than doubling in air passengers Approximately 400,000,000 annual air passengers in the next decade. Regarding inflation, Again, India is failing relatively well. CPI based inflation stood at 5.02% in September as compared with 6.83% in August, According to data from the Ministry of Statistics, core inflation fell to 4.6% in September from 4.8% in August And this was the lowest since April 2020. Now let me provide you with some more details on our Q1 results.

Speaker 2

Our revenue for the quarter ended 30th June, 2023 was reported at INR 1,106,000,000, Which is approximately US13.5 million dollars This was up 23% year over year. Adjusted EBITDA for the quarter reached INR 115,400,000, which is approximately US1.4 million dollars marginally lower versus the June 22 quarter At about USD 1,500,000. India's domestic passenger traffic saw a sequential growth of 3% in the quarter ended June 30, 2023. Compared to this, our domestic passenger traffic grew 6%, Faster than peers, reflecting strong market share gains for both our consumer and corporate businesses. This positive momentum has carried over into subsequent months as well, With the recently concluded September month up 18.3% year over year and up 7% This is pre COVID marking 7 consecutive months of above pre COVID levels on the domestic air passenger traffic front.

Speaker 2

So the market has firmly recovered from the pre COVID levels. Year to date from January to September 2023, Indian domestic market has registered a growth of 29.1 percent with 112,800,000 passengers flying during this period. International travel has also continued to show resiliency and steady improvement during the quarter and has now surpassed 90% of its pre COVID levels. As we move forward, we remain optimistic and committed to leveraging these positive trends to drive further growth and success. Moving on to further details of the quarter.

Speaker 2

Our consumer business gained further traction On the back of strong brand recall that the yatra.com brand continues to enjoy the market, we launched our Yatra Prime offering during the quarter And the initial sign ups have been encouraging with positive response to this offering continuing in the subsequent months. During the quarter, we closed 19 new corporate customer accounts, while the number is lower Q on Q partly due to seasonality. What was encouraging was that the average billing potential of the customers that we closed during this quarter trended higher than in the past. International travel also continues to improve gradually, and we are optimistic in the outlook for a sustained recovery in nearshore international travel. On the hotel front, revenue from our hotels and packages business was INR452,600,000, Which is approximately USD 5,500,000 in the 3 months ended June 20, 2023, as compared to INR 390 700,000 or USD 4,800,000 in the 3 months ended June 30, 2022, Reflecting an increase of almost 16%.

Speaker 2

The increase in revenue is on account of recovery in domestic travel Along with additions of new distribution partners, from a competitive standpoint, the intensity has remained stable From last quarter, it remains manageable overall. From a macro standpoint, the Indian government remains strongly committed to the growth of airport infrastructure in India, An investment of almost $12,000,000,000 has been earmarked for the enhancement of 41 existing airports in India. Additionally, under the greenfield airport policy, out of the 21 new airports that were sanctioned, 12 have already come online. So with the positive macro backdrop and given the ongoing recovery in corporate and leisure travel and our continued success in signing new large and medium Enterprise customers and now a significantly bolstered balance sheet, we believe we are poised for strong back half of FY 2024. Aside from seasonality, we expect our results to benefit from accelerating growth in both our corporate business and consumer business As we continue to add to our formidable blue chip customer base and leverage the strength of our brand.

Speaker 2

Just to reiterate, Today, Yatra India serves 1 of 4 of the 1 out of every 4 of the top 100 listed companies in India. It also services 3 out of the big 4 accounting firms and 3 of the top 5 technology companies in India. Finally, I would like to express my deepest appreciation of our dedicated employees and the shareholders for their unwavering support. With that, let me hand it over to Rohan to walk you through the details of the financial performance. Rohan, over to you.

Speaker 3

Thank you, Dhruv. I will now review our quarter one numbers for the quarter ended June 30, 2023. For the June quarter, we continue to witness Strong tailwinds, and we were able to grow our gross bookings to INR 19,800,000,000, Which is about USD241 1,000,000 in quarter 1, registering a Y o Y growth of 11%. The revenue from air ticketing business increased by 30% year on year to INR 490,000,000 which is about USD6 1,000,000. The adjusted margin also increased by almost 46 percent y o y to INR 1,200,000,000, which is roughly USD 14,000,000.

Speaker 3

The strong growth was driven by sustained travel demand in the country as well as an accrual of threshold bonus of serious contracts. Revenue from the hotel and packages business increased by almost 16% year on year to INR452 million, Which translates into about USD5,500,000 and the adjusted margin increased by 1.6% year on year To INR 307 million, which is roughly USD4.8 million. The increase in revenue And adjusted margin is on account of recovery in domestic travel as well as addition of new distribution partner. Revenue from the other services decreased by 43.8 percent year on year to INR 26,700,000. The decrease was primarily due to a relook at the freight business.

Speaker 3

The total adjusted margin from all the segments combined Increased by 30.5 percent year on year to INR 1,500,000,000, which is roughly USD 18,300,000. And the total income increased by 22.6 percent year on year to INR 1,100,000,000, approximately USD 13,500,000. Moving on to the expenses. Our quarter 1 marketing, sales promotion, consumer promotion, loyalty program costs Increased by 72% on a year on year basis to INR880 million, which is roughly USD10,700,000 Our personal expenses increased by 2.2% year on year to INR 275,000,000. Excluding share based expenses, the personal expense cost increased by 11%, which is in line with the increase in headcount as well as appraisals.

Speaker 3

Other operating expenses increased by 3.6 percent to INR396,000,000, which is roughly USD 4,800,000, Primarily due to increase in commission, legal, professional charges, payment gateway charges, etcetera. Due to all of the above factors, Our adjusted EBITDA profit for the quarter ended June 23 stands at INR 115,400,000, 115,400,000, which translates into about USD1,400,000 as compared to USD123,500,000 In quarter ended June 22, our gross debt increased by €43,000,000 from the March quarter to the June quarter, And we ended the quarter at a cross debt of 1,700,000,000 Sorry, my apologies, of INR 2,400,000,000 which translates into about $29,000,000 Lastly, as of June 30, We were carrying cash and cash equivalents and term deposits on a balance sheet worth INR 1,100,000,000, which is USD 13,500,000. With this, we conclude our prepared remarks and hand it back to the organizers, to the moderator. Thank you.

Operator

Thank you. Please ensure your device is unmuted locally. Our first question today comes from Scott Buck of H. C. Wainwright.

Operator

Your line is open.

Speaker 4

Hi, everybody. Thank you for taking my questions and congratulations on the IPO. Drew, my first question, could you give us a little more color on the acquisition environment and maybe what could potentially make sense For you guys from a strategic perspective?

Speaker 2

Sure. Hi, good morning, Scott. Scott, in terms of the acquisitions, we've looked at a couple of areas in the past and I think those areas will continue to remain areas of interest for us. One is offline businesses on the corporate travel side where we can acquire entities at a reasonably low price And then take out costs from those businesses by putting in place our technology solution and improve the operating margin significantly. So that would be one area that we would look at.

Speaker 2

The other area is also again in the corporate space where we would look at other products and services, especially SaaS based technology solutions like an expense management, for example, that can be cross sold to our existing large corporate customer base. So it's about our thought process is how do we either grow our base on the corporate side or Add more products and services to leverage the existing base. So those would be the key areas that we would look at.

Speaker 4

Great. That's helpful. And second, can you give us an indication of where your market share position Is today in corporate travel versus where it was pre COVID?

Speaker 2

So versus pre COVID, obviously, we've Expanded our customer base by about close to 15%. So my sense is that in terms of market share, because the number of Companies in that top segment would not have grown by 15%, right, would have grown by a much smaller number. So we will only have gained market share over the course of the last year and a half.

Speaker 4

Yes, that's helpful. And then last one for me, just on how we should be thinking about Operating expenses moving forward, do you have a meaningful amount of kind of catch up that you need to do on OpEx now that you have some additional cash To play with or should we expect OpEx levels to remain kind of largely consistent with what we've seen in the past few quarters?

Speaker 2

Yes. So OpEx levels will not change very significantly, right. We would see Maybe low single digit to mid single digit kind of increase, but nothing significantly beyond that, At least on the fixed cost.

Speaker 4

Right. That's perfect. Well, I appreciate the time, guys. Thank you very much.

Speaker 2

Not at all. Thank you, Scott.

Operator

Thank you. We have a question from Cobb Sadler of Catamount. Your line is open.

Speaker 5

Hey, guys. Thanks for taking the question. I just had a question on The new corporate customers, I believe you

Speaker 1

said it was did I

Speaker 5

have the number right? I don't have it

Speaker 1

in front of me,

Speaker 5

dollars 18,000,000 Incremental associated with those accounts, when do you think you might hit that run rate with those accounts and what? That seems to be bigger than traditional customers that you've added. So are they bigger? Why? And when we hit the 18, if that's the right number?

Speaker 5

Thanks. One more question.

Speaker 2

Sure. Sure, Scott. Sorry, sure, Bob. So in terms of getting to that run rate, Bob,

Speaker 5

we are

Speaker 2

looking at A 6 month kind of time lag to get to that full run rate by the time the new customers get implemented. So if you look at from where we were, Right. This is numbers as of 30th June. So we would expect the full thing to come into play By the Jan to March quarter of 2024, right. So that's what we are looking at with regards to these customers.

Speaker 2

They should all be live in that kind of time frame. In terms of why are they or are they larger, yes, we've had some good wins in this Which had pulled up the average. There are a couple of customers who are larger than the traditional average customer that we would sign And that's part of the reason why the average has gone up per customer. There are some other conversations like this also which are going on, And we remain very positive about the strength of our value proposition to our large corporate customers.

Speaker 1

And Carl, I'm going to Okay.

Speaker 5

And so roughly yes. 2018. Okay, 2019. So So $4,500,000 to $5,000,000 a quarter and I'm sorry, Manish, go ahead. So I was just saying that the number of 19 customers signed?

Speaker 4

Yes.

Speaker 5

Okay. Okay. Got you. 'nineteen customer signed. Did you give an amount of which those might contribute like the revenue associated with the 'nineteen?

Speaker 2

Yes. So COB, the 18 billing number that you were referring to sorry Manish, let me just address that. So, Bob, it's 19 customers with an annual billing potential of $18,000,000 So which is the $4,500,000 a quarter that we were

Speaker 1

working on.

Speaker 2

Got you. That's what I'm Yes.

Speaker 5

Okay, got you. And that you think that no crystal ball, you think that might happen 6 months out, For some things take longer than expected, like 6 to 9 months out probably. That $4,500,000 is incremental to the current revenue base. That's 4.5 quarter. Okay.

Speaker 5

And then the question was on

Speaker 2

Sorry, Kop. Can I just This is gross billing potential, not revenue potential, right? So the revenue number will be approximately 5% to 6% of this. Okay. Got you.

Speaker 2

Okay. So let's move on to revenue or quarter. Yes. That's right.

Speaker 5

Yes. Okay. That makes more sense. It sounded abnormally big. So okay.

Speaker 5

So but still And you've got 800 customers, so this is another 19 and that sounds about right. Okay. The other thing was on your buybacks. So what are the parameters by which you might buy back stock? I mean, is there a valuation level?

Speaker 5

I guess you're trading. I The shares are trading at a 50% discount now or they're, yes, 50% discount now roughly. And When might you start buying back shares? What do you have to do to do that? You have to have a Board meeting?

Speaker 5

Or could you do it now if you wanted to? I guess I'm looking for timing and then what are the triggers for you?

Speaker 2

So, Kav, this is something that the Board is carefully considering With Counsyl. And we'll go through this process. And in the relatively near term, we'll come back and update our shareholders With our thought process around this.

Speaker 5

Okay. All right. Sounds good. Thank you. Congrats on the IPO.

Speaker 2

Thank you so much. Thank you.

Operator

We have no further questions in the queue, so I'll turn the call back to Manish Hanrajani for any closing remarks.

Speaker 1

Thank you, Lydia. Thank you all for joining the call today. As always, we are available for follow-up. Please feel free to reach out to us. Thank you.

Speaker 1

Thanks, everyone.

Operator

This concludes today's call. Thank you for joining. You may now disconnect your line.

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Yatra Online Q1 2024
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