Yatra Online Inc (YTRA) 2024 Q3 法說會逐字稿

Thank you for your patience, everyone. The Yatra online Inc's fiscal third quarter 2024 earnings conference call will begin shortly. (Operator instructions)

Good day everyone and welcome to the Yatra online Inc's fiscal third quarter 2024 earnings conference call. My name is Drew, and I'll be the operator on today's call. (Operator instructions)

At this time. I would like to turn the conference call over to Manish Hemrajani, Head of Investor Relations. Please go ahead.

Thank you, Drew, good morning, everyone. Welcome to Yatra's Fiscal Third Quarter 2020 Financial Results for the period ended December 31, 2023. I'm pleased to be joined on the call today by Yatra's CEO and Co-founder, Dhruv Shringi; and CFO, Rohan Mittal. The following discussion, including responses to your questions reflects management's views as of today, February 14, 2024. We don't take any obligation to update or revise it.

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 beliefs and are subject to several risks and uncertainties that could cause actual results to 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 filings that are available from the SEC and also on the IR section of our website.

And with that, let me turn the call over to Dhruv. Dhruv please go ahead.

Thank you, Manish. And good morning, everyone, and thank you for joining us for our second quarter earnings call. We are proud to report strong December quarter results. Yatra's air passenger segment recorded a robust 26% year-over-year growth, nearly tripling the industry benchmark of 9%.

This makes it the fourth quarter in a row of share gains for Yatra. In the travel sector, our strong brand recognition and successful strategies and capturing market share has enabled us to grow both our domestic and international air business. As we move forward, we remain optimistic and committed to leveraging these positive trends to drive further growth and success.

We fortified our market leadership in the corporate travel sector by signing 36 new corporate customers in the December quarter, with an annual billing potential of INR2.2 billion, which is approximately USD27 million which underlines the capability and leadership of our corporate travel platform. I would like to highlight here one specific deal that we signed in the December quarter with Aramco Asia India, a wholly owned subsidiary of the global energy leader, Aramco.

Yatra's user-friendly platform will facilitate effortless bookings for flights, hotels, trains and other ancillary services for as Aramco's Asia personnel. This integrated travel solution extends to our ample subsidiaries in key Asian and Asianic markets, including India, Japan, Korea, Singapore and Australia. This multiproduct and multi region deal highlights the capabilities and strengths of our platform and the ability to handle any level of complexity with our cutting edge technology.

In alignment with our commitment to shareholder returns, I'm also pleased to report the repurchase of approximately 280,000 shares under the share buyback program authorized by our Board, and we continue to be active on the buyback front in the current quarter. This move underlines our confidence in Yatra's promising future and our unwavering dedication to maximizing shareholder value.

Now let me provide some color on the macro picture. India's economic landscape remains particularly robust, buoyed by a significant public capital expenditure initiative and the strong domestic economy. The Indian economy is poised for consistent growth with projections are revised upwards, estimating 7% GDP growth in FY24. Travel, as you know, tends to be closely linked to growth in GDP. And over the past decade, in the developing economies, you've seen travel growing closer to 1.5 to 2 times GDP growth.

Domestic air passenger traffic continued on its scorching growth basis in India and continues to remain the fastest growing market globally. December '23, so a total of 13.8 million passengers travel domestically in India, the highest ever monthly passenger traffic number, clearly underscoring the robustness of the Indian aviation sector.

Religious travel is one of the biggest segments of tourism in India. Several popular imaging centers attract annual tourists in the range of 10 million to 30 million despite the existing infrastructural bottlenecks. On this front, the government has done significant amount of work to improve the infrastructure, and we expect that this improvement in infrastructure will continue to drive upward growth in traffic numbers to these destinations.

Our recent Jefferies report highlighted that the Holy city of Ayodhya, could see as many as an influx of up to 15 million visitors each year as a result of the newly built tempo. As per the report, tourism and India contributed USD194 billion to FY19 GDP and is expected to grow at an 8% CAGR to USD443 billion by FY23. Tourism to GDP ratio remained assets at 6.8% and GDP well below most of the large economy. For example, in comparison, China is at 11.6% of GDP, this points to significant headroom for growth in the Indian travel market.

Now let me provide you with some more details of our third quarter. For the quarter ended December 31, 2023, we reported revenues of INR1.1 billion, which is approximately USD13.4 million marketing, a substantial increase of 23% over the last year. Our adjusted margin from air ticketing for those INR1.1 billion, which are USD13.4 million, a 10.2% year-over-year growth. Furthermore, our adjusted EBITDA saw an improvement of 24% year over year, reaching INR44.5 million or approximately USD500,000.

Moving on to further details of the quarter. The corporate segment continues to be somewhat impacted with softness in travel spends in the IT sector. We are confident, however, of the recovery in the near term from our largest contributing sector, especially as we run AI related software development, say, crude globally. In addition, we expect that the new business that we have won over the last few quarters is more than likely to offset the drop that we have seen on account of software in the IT sector in the coming quarters.

On the hotel front, revenue from our hotels and packages business was INR449 million, which is approximately USD5.4 million in the three months ended December 31, 2023. This reflected an increase of 17% year over year. The increase in revenue is attributable to a recovery in domestic travel with a higher number of holiday packages sold as a result.

From a competitive standpoint, the intensity has remained stable from the last quarter and remains manageable overall. As some of you may recall we had launched our Yatra Prime membership program in the middle of 2023. We are taking that a step further and as a gratitude to our Indian shareholders, we have offered that subscription fee to our shareholders in India, expanding the shareholder base and the base for applying customers.

With the positive macro backdrop and given the ongoing recovery in corporate and leisure travel and the rise in discretionary spending and now a significantly bolstered balance sheet. We believe we are well poised for a strong FY24 and '25. As for seasonality and softness that I touched upon earlier in the ITES sector, 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.

Given our stronger balance sheet following the IPO, we've already begun to see early signs of improving supply margins and expect this to gain further momentum in the quarters ahead and have a meaningful positive impact on our operating performance going forward.

With that, let me hand it over to Rohan to walk you through the details of the financial performance. Rohan.

Thank you, Dhruv.

I will now review our Q3 numbers for the quarter ending December 31, 2023. Our gross bookings for the quarter was INR18.6 million (sic – see SEC filing Form 6-K, "INR18.6 billion"), which is of the USD224 million, about 18% Y-o-Y, which is up by 22% and the hotels and packages up 4% Y-o-Y.

For the December quarter, our total revenue grew by 23%, INR1.1 billion, which is up in USD13.4 million on account of sustained cover demand. Adjusted margins were up across air hotel package and other services. The air ticketing business up by 10% Y-o-Y to INR1.1 billion while the hotel and package business adjusted margin was up by 4% Y-o-Y to INR264 million, which was roughly $3.2 million.

Adjusted margin from other services was also up by 49% Y-o-Y. Moving to the expenses, Q2 marketing and sales promotion expenses, including consumer promotions and loyalty program costs increased by 8% on a Y-o-Y basis to INR884 million, which is roughly USD10.6 million.

Marketing increased lagged the overall gross bookings growth of 18%, which shows strong brand recall of Yatra. On personnel expenses, excluding share-based payment expenses increased by 8% YoY to INR279 million, which is roughly USD3.4 million.

Payment gateway costs as a percentage of the total gross bookings remain range-bound, while other expenses increased by about 13% on Y-o-Y basis. On an overall basis, adjusted EBITDA stands at INR44.5 million as compared to INR36 million in the quarter ended December.

Lastly, as of 31 December 2023 balance of cash and cash equivalents and term deposits on our books was a little above INR5 billion, which is roughly USD60.7 million. Our gross debt as on 31 December '23 was INR852 million. We reduced this by almost 51% at a gross level on a quarter-on-quarter basis.

With this, we conclude our prepared remarks, and I'd like to hand it over to the moderator for Q&A. Thank you.

(Operator instructions)

Scott Buck from H.C. Wainwright.

Hi. Good morning, guys, thanks taking my questions. First one, I may have missed it in the prepared remarks, Dhruv, but can you comment a little bit on some of those pricing headwinds that you saw in the second quarter and how they impacted the third quarter and maybe what the outlook is, where the fourth quarter on this.

In terms of pricing headwind, what we have seen is that during the quarter, the overall macro industry has remained fairly robust, but there is an expectation that on the domestic aviation side, we will see some capacity constrains and capacity being pulled out by one of the largest in India for repair of the Pratt & Whitney engines.

And this withdrawal of capacity in the current quarter is likely to see a slight increase in airfares, as we would expect airfares, we grew up in the mid to high single digits, compared to the same quarter last year. So there is a little bit of pricing headwind which is there. And we expect this to carry on till about the summer months. And it's only around the July, August time frame that we see the capacity begin to come back into the ecosystem.

So for the next two quarters, there is going to be a bit of pricing increase, which we will see. And that may have a slight bit of softening, but that may result in a slight bit of softening in demand.

Great. That's helpful. And my second -- hoping you could give us a little bit more of an update or a little more color on international travel and the trends you're seeing there. I mean, it seems like that's been a bit of a laggard versus corporate and leisure travel. It's been catching up since COVID?

Yes, sorry. International travel actually improved quite meaningfully in the last quarter. It was just a little bit ahead of our weighted average growth rate of 26% that we saw. So we've seen strong recovery happening on the international side in the last quarter, and there is more capacity expansion that's happening on the international front, we've seen some of the airlines like Air India deploy more capacity on the international routes. We've also seen some of the international airlines bring back a little bit of that capacity into the Indian market on the back of the demand, which is there.

So we should continue to see good momentum on international travel. So while in the first half of our fiscal year of last year. International travel lagged behind in the last quarter, which is the December quarter. International travel has gained momentum and is carrying forward that same momentum into the current quarter.

Great. That's helpful. And then last one for me. I'm just curious, given the severe just dislocation between where the US shares trade and where the local shares are valued, what kind of fungibility, if anything is there between the shares? And maybe you could help kind of walk us through that a little bit.

As of today, Scott, there are two separate entities. One is a holding company, and the other is the operating company. So on account of that, these two are shared today as these are not fungible, but we continue to work with our counsel to see if there is any way for that to make them fungible. But it's a bit too early to state on that categorically as to what would that -- what shape would that take?

But having said that, I think like you pointed out, I think there is a large arbitrage opportunity that exists today between the prices of the two indexes side, India being the whole market is trading at a very different price point compared to where the US is trading. But in terms of fungibility, I think that's all, unfortunately that I can share at the moment.

I appreciate the added color and congrats on the results.

Thank you.

(Operator instructions)

We have no further questions in the queue. So I'll hand back over for any closing remark.

Thanks, Dhruv. Thank you, everyone, for joining the call today. And as always, we are available for follow-up.

Thank you.

Concludes today's Yatra online Inc. Fiscal Third Quarter 2024 earnings conference call. You may now Connectra line.