Yatra Online Inc (YTRA) 2021 Q1 法說會逐字稿

Good day, and welcome to the Yatra First Quarter 2021 Earnings Conference Call. Today's conference is being recorded. (Operator Instructions)

At this time, I would like to turn the conference over to Mr. Manish Hemrajani. Please go ahead, sir.

Thank you, Holly. Good morning, everyone. Welcome to Yatra's fiscal first quarter 2021 financial results for the period ended June 30, 2020. I'm pleased to be joined on the call today by Yatra's CEO and Co-Founder, Dhruv Shringi. The following discussion, including responses to your questions, reflects management's views as of today, September 9, 2020. We do not undertake any obligation to update or revise the information.

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 beliefs and are subject to a number of risks and uncertainties that could cause actual results to materially differ, including factors that may be beyond the company's control. These include expectations and assumptions related to the impact of the COVID-19 pandemic. For a description of these risks, please refer to our filings with the SEC and our press release. Copies of this and other filings are available in the SEC and on the Investor Relations section of our website.

With that, let me turn the call over to Dhruv. Dhruv?

Thank you, Manish. Good morning, everyone, and thank you for joining us. I hope you and your families are all safe and in good health. This is the first earnings call that we are doing in a little over a year, given that we were involved with the Ebix merger. In the meantime, the global COVID-19 pandemic has hit us, requiring the prevention of all non-essential air travel in India. While the situation is what we have -- is not what we had expected, it is a situation that we face.

During this time of extraordinary changes and challenges, I'm proud of the way our teams have responded to these and executed against factors which are not directly within our control. This is also not the first time that we're facing a challenging situation as a company. From the financial crisis back in 2008 to the bankruptcy of Kingfisher Airlines and the subsequent collapse of domestic aviation in India in 2012, we've been through difficult periods before, and each time, we've come out stronger. And I feel confident that the same will be the case this time as well.

We have started to see a gradual recovery in travel after the reopening of domestic aviation towards the end of May post India's nationwide lockdown in the months of March, April earlier this year. We believe the worst is behind us now. We've made all the essential changes to the operations to cut costs to the bare minimum. And after a capital raise in June earlier this year, we believe we have the balance sheet to tee us back to profitability. We now look forward to resuming the same growth and profitability trajectory we were on before all this unfolded. We are excited about our multipronged approach to increase shareholder value. As you would recall, we are one of the leading OTAs in India and the largest corporate travel management business in the country as well.

First, with regards to the return of travel in India after the lockdown, on the consumer side, we started to see some early signs of recovery in travel in India since late May when air travel was allowed to start back up. Domestic clients have now returned to about 25% of pre-COVID levels, and that number continues to grow. And we expect this to reach 40% plus by the end of the calendar year.

On the international air front, airlines are beginning to operate under the bubble agreement between countries. So far, we've seen approximately 10% capacity come back online, and this number continues to increase, literally on a weekly basis as new and new bubble agreements are entered into.

Domestic hotels were earlier taking bookings on a very limited basis, but since September 1, a number of states have allowed hotels to start operations without any quarantine restrictions. We expect to see gradual recovery here as well in the next quarter as people begin to undertake short haul and driving holidays.

On the corporate travel front, we are the leading corporate travel service provider in India. Our easily scalable SaaS technology platform enables us to serve customers of any size in the industry. Currently, the online penetration in the corporate travel market in India as we believe is just under 10%; a large percent of the market, almost 60%, is served by smaller off-line players.

As a result of the pandemic, we believe, and we're already beginning to actually see signs of this, that there will be an accelerated shift towards the online players, especially as big contracts come up for renewal at the end of their life and go through a rebidding process. We remain confident in our platform's capabilities to serve any scale and type of customer.

Our other strategic growth driver is the expansion of our corporate digital platform as we continue to add non-travel-related digital offerings to this capital corporate customer base of ours. As the largest corporate travel service provider in the country, we have strong relationships with all of our corporate customers, which constitute very large and well-known enterprises in India. We continue to make inroads into these organizations with our non-catalog things of expense management, ed-tech and others.

Our ed-tech offering is in partnership with upGrad and has been well received by corporates, even though it's early days yet. In a tough economic climate, we are seeing corporates realized the importance of developing and reskilling the workforce to overcome pressing challenges. Our platform allows our clients to offer these opportunities to their employees, especially as they remain underutilized during the pandemic. Corporates also view ed-tech as an employee retention tool.

On our hotel network front, we recently announced a partnership with Amazon India to provide our hospitality partners with a wide range of products catering to their various needs. Hospitality partners can leverage the Amazon business marketplace as a one-stop destination to access a wide range of products across categories to cater to their needs and secure products in a safe and efficient manner.

Now a quick update on the litigation against Ebix as well. So while I'm not at liberty to give any details of the litigation, I would just like to point out here that a large part of our legal cost for this litigation is linked to the outcome of the case, and it's not a direct cash outflow for us at the moment. Additionally, neither are we dependent nor have we based our operational planning on a favorable outcome from the litigation.

Coming to our fiscal first quarter results, this quarter reflected bulk of the impact of the nationwide COVID lockdown in India as travel was largely shut in the month of April and May and only gradually began to open up in June. In the June quarter, our adjusted revenue decreased by 86% to INR 236.2 million or USD 3.1 million. Our adjusted EBITDA loss increased to INR 309.4 million, which is approximately $4.1 million in the 3 months ended 30th June from an adjusted EBITDA loss of INR 205.8 million or about $2.7 million in the 3 months ended June last year.

There was also an adverse impact of INR 168.4 million or USD 2.2 million on our operating performance in the current quarter due to legal and professional fees related to the merger transaction with Ebix. Some of these are onetime in nature and will be nonrecurring. Excluding this, our adjusted EBITDA loss would have been INR 141 million or USD 1.9 million for the quarter versus an adjusted loss of INR 205.8 million or USD 2.7 million for the same quarter last year. So despite COVID, we've been able to, on an ongoing basis, drive improvement through cost control in our EBITDA loss.

Talking a bit more on the cost side. During the quarter, we focused our efforts on restructuring our costs and significantly brought down our fixed cost run rate from approximately $2.7 million a month in the month of March 2020 to approximately $1.2 million a month for the month of May 2020 through a combination of company-wide salary cuts ranging from 25% to 75% and renegotiation of contracts with our various service providers.

We believe our current liquidity position and optimized cost structure provides us with enough capital to withstand the prolonged slowdown if it were to transpire in the travel industry. As of June 30, 2020, the balance of cash and cash equivalents and term deposits on our balance sheet was INR 3.675 billion or approximately USD 48.7 million. Since then, however, we have settled our ATB litigation, and we have filed (inaudible) for some the same. As part of that, a final payment was made for the earn-out of the acquisition of approximately $11 million, and our current cash balances as of 31st of August 2020 is approximately $34 million.

Given our reduced burn rate, we believe we have adequate liquidity on our balance sheet to return to profitability. With our optimized cost structure and newly launched higher-margin initiatives, we believe we can now attain break-even at approximately 50% of our pre-COVID 2009 -- December 2019 quarter run rate of $22.2 million.

We're excited about our partnership with Zaggle on the expense management front as well. We view expense management as an integral part of our digital offering as we continue to diversify beyond our core portfolio of travel to become an end-to-end business solution platform for our clients. Joining hands with Zaggle helps us drive efficiency for our clients by automating the expense management process. Our technology platforms complement each other, and we look forward to growing with Zaggle to drive lasting business impact for our clients. A third-party report by MRFR put the Indian expense management software market as the fastest-growing market globally at USD 593.3 million by the end of 2025, growing at a CAGR of 14.1%.

Lastly, I would like to remind everyone that India's travel market and corporate travel market, in particular, was the fastest-growing travel market globally, pre-pandemic, growing at a 12% CAGR, and expected to reach $32 billion by 2020. A large part of the corporate travel market was off-line, pre-pandemic, and we expect the shift from off-line to online to accelerate as a result of the pandemic, benefiting online players like we at Yatra in the longer term.

This concludes our prepared remarks. Let me now open the call for Q&A. Manish, over to you.

Thanks, Dhruv. Holly, can you please open up the call for Q&A?

(Operator Instructions) It appears there are currently no telephone questions. So I'd like to hand the call back to our hosts for any additional or closing remarks.

Thanks, Holly. Thank you, everyone, for joining us today. We look forward to speak to you in the near future. Dhruv, any closing remarks?

Just I would like to thank everyone, again, for taking out the time. I know it's been a while since we last communicated. Now going forward, we will end up obviously interacting on a quarterly basis. And if there are any follow-up questions that any of you have, please feel free to reach out to Manish or me. Thank you so much, and stay safe.

Thank you.

Ladies and gentlemen, this concludes today's call. Thank you for your participation. You may now disconnect.