Yatra Online, Inc.

We're about to begin. Good day and welcome to the Yacht Trust second quarter 2021 conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Manish Hemrajani. Please go ahead.

Thank you, Katie. Good morning, everyone. Welcome to Yacht Trust fiscal second quarter 2021 financial results for the period ended September 30, 2020. I'm pleased to be joined on the call today by Yadra CEO and co-founder, Dhruv Sringi. The following discussion, including responses to your questions, reflects management views. As of today, November 5th, 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 differ materially, 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 filed this morning. Copies of this and other filings are available from the SEC and on the investor relations section of our website. With that, let me turn the call over to Dhruv.

Dhruv, please go ahead. Thank you, Manish. Good morning, everyone, and thank you for joining us. I hope that you and your families are all safe and healthy as we navigate our way through this pandemic. While the global COVID-19 pandemic continues to have a significant impact on travel, India is seeing a gradual recovery after the reopening of domestic aviation at the end of May. On the consumer side, domestic October passenger traffic numbers were up 33% month over month and now have climbed back to 42% of October 2019 levels. In terms of capacity, we are back to between 55 to 60% of pre-COVID levels and passenger load factors continue to improve week over week. We believe capacity could reach 80% of pre-COVID levels by the end of the calendar year. Since the lifting of the lockdown back in June, we are seeing a meaningful shift towards online from offline. This has resulted in our domestic air market share rising by approximately 20% from pre-COVID levels in a relatively short period of time. We believe some of this shift in buyer behavior may be permanent in nature. On the international front, recovery has been a bit muted as airlines are operating under the air bubble agreements between countries. So far we've seen approximately 10% capacity come back online and this number as well continues to increase gradually, albeit slower than domestic. We expect the recovery in international to be more gradual since it's dependent on signing of international air bubble agreements. We anticipate approximately 20% of capacity to come online. by the end of this calendar year. Domestic hotels have started taking bookings in May on a limited basis and since September a number of bookings have been trickling through. We are seeing some improvement happening as different states are easing the quarantine norms as well and we expect to see gradual recovery here as well in the next quarter as people begin to undertake short haul and driving holidays. The first impact of this we've seen post-quarter end in the month of October where there were two long weekends and we've seen a healthy trend emerging of short-haul domestic holiday breaks. On the corporate travel side where we are the leading provider in India, we expect travel to come back slower and will lag the recovery in consumer travel. That said, we believe we are well positioned to leverage our scalable SaaS technology platform and continue to take market share. I'm happy to report that we recently closed a significant customer who would rank amongst our top 20 customers and is one of the larger players in the retail sector. Currently, the online penetration in the corporate travel market in India, we believe is just under 10%. A large part of this market today, approximately 60%, is served by smaller offline players. As a result of the pandemic, we believe we are already starting to see evidence of that, that there is an accelerated shift towards online players, especially as contracts come up to their end of life and rebidding. We remain confident in our platform's capabilities to serve any scale and type of customers. Another source of optimism in India comes from the recent data that suggested the worst of the pandemic is behind us. The number of daily cases in India continue to decline, since its peak on September 16th at about 98,000. Therefore, yesterday's count was 38,000, which is less than half of the peak. And unlike Europe or North America, we are not seeing a second wave at the moment. We believe this bodes well for India as a whole, and especially for the travel sector if this trend continues. Coming to our fiscal second quarter results, we saw some recovery sequentially this quarter, reflecting a gradual opening of the country since June of the year. This recovery in domestic travel led to a sequential quarterly growth of about 60% in adjusted revenue to INR 377 million or approximately USD 5.1 million versus $3.1 million in the June quarter. This growth in revenue further combined with strong cost control enabled us to reduce our adjusted EBITDA loss from about 309.4 million INR, which is approximately $4.1 million in the June quarter, to 125 million INR, or about $1.7 million for the current quarter. We continue to hold our costs to the minimum, and we believe we have adequate liquidity on the balance sheet to see us back to profitability. We now look forward to resuming the same growth and profitability trajectory we were on before all this unfolded. On top of the return to travel, we continue to be excited about a multi-pronged approach to increasing shareholder value as well. Some of the other strategic road drivers that we are looking at is expansion of our corporate platform as we continue to add non-travel related services as well to our corporate travel customer base. As the largest corporate travel service provider in the country, we have strong relationships with many of the biggest and best known enterprises in India. and we continue to make inroads into these organizations with our non-travel offering. And now a quick update on our litigation against EBICS. On September 30th, 2020, TIASTA filed an amended complaint expanding its claim against certain banks of EBICS, while also expanding the claims alleged against EBICS to include a claim for fraud. While I'm not at liberty to give any further details on the litigation, I would just like to point out here that a large part of our legal cost for the litigation is linked to the outcome of the case and not a direct cash output for us. Additionally, neither are we dependent nor has we based our operating planning on a favorable near-term outcome from the litigation. As of September 30, 2020, the balance of cash and cash equivalents and term deposits on our balance sheet was INR 2.6 billion, which is approximately USD 36.2 million. As announced earlier, we settled our litigation with ATP and made the final payment towards the earner of the ATP acquisition to the tune of approximately $10.6 million in the September quarter, and our current cash balance reflects the balance post that payout. Given our reduced burn rate, we believe we have sufficient liquidity on our balance sheet to return to profitability. 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 about 12% CAGR and expected to reach 32 billion by 2020. A large part of the corporate travel was offline pre-pandemic and we expect the shift from offline to online to as a result of the pandemic benefiting online players like Yatra in the long term. This concludes our prepared remarks, and let me now open the call up for Q&A.