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spk02: Ladies and gentlemen, good day and welcome to the Yatra third quarter 2021 conference call. Today's call is being recorded. And at this time, I would like to turn the call over to Manish Hemrajani. Please go ahead, sir.
spk03: Thank you, Abby. Good morning, everyone. Wishing you all a happy new year and hope everyone is safe and healthy. Welcome to Yatra's fiscal third quarter 2021 financial results for the period ended December 31st, 2020. I'm pleased to be joined on the call today by YASTA's CEO and co-founder, Dhruv Sringi. The following discussion, including responses to your questions, reflects management's views as of today, February 4th, 2021. 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 the filings of the SEC and our press release 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?
spk04: Thank you, Manish. Good morning, everyone, and thank you for joining us this morning. Let me start by wishing everyone a safe and healthy new year, and I hope that you and your families are safe as we continue to navigate our way through what we hope is the last leg of the pandemic. While unfortunately much of North America and Europe is still facing a tough winter surge, recent data from India suggests that the worst of the pandemic is behind us. The number of daily cases in India continue to decline, and from a peak of about 98,000 back in the middle of September, they've come down to about 11,000 yesterday. Additionally, an India-wide vaccine rollout has also started last month. and the daily vaccination count continues to rise gradually. We believe this bodes well for India as a whole and especially for the travel sector as the strain continues. We finished 2020 on a strong note as our adjusted revenue increased 61% sequentially from the prior quarter, a clear indication that travel in India is well on its way to recovery. Although this is coming off a small base, hotel bookings were particularly strong with room nights growing over 400% sequentially. This growth in revenue further combined with strong cost controls enabled us to reduce our adjusted EBITDA loss to INR 36 million, which is approximately 500,000 US dollars, down from 125 million INR in the September quarter. So in USD terms, that's down from about $1.7 million in the previous quarter to about half a million dollars in the current quarter. We exited the year with over 33 million in net cash and went on our way to profitability, we believe, in 2021. As we look to the year ahead, we see 2021 as the year of recovery as vaccine distribution takes hold and travel restrictions lift gradually. The domestic aviation market in India continues to be resilient and is well poised on its path to recovery. Q3 passenger traffic was up 113% on Q2, and December 2020 traffic now stands at about 56% of December 2019 levels. In terms of capacity, we are back to approximately 80% of pre-COVID levels, and passenger load factors continue to improve gradually and are currently approximately 70-72%. We believe the capacity could reach close to 100% of pre-COVID levels by the middle of this calendar year. On the international air front, however, recovery continues to be muted. This is impacted by border restrictions based on COVID case counts in various countries. Airlines continue to operate under air bubble agreements between countries. So far, we've seen approximately 10 to 15% of the capacity come back online. This number continues to increase, albeit at a slower pace than the domestic aviation. We expect the recovery in international to continue to be more gradual and largely dependent on the rate of global vaccinations. Domestic hotels started taking bookings, if you recall, in May on a very limited basis. However, since September, a number of hotels and a number of states in India, rather, have allowed hotels to start operating with limited quarantine restrictions. And we've seen demand recover strongly during the Diwali and Christmas holiday season. As mentioned above, our hotel room nights booked grew over 400% Q&Q. We expect to see recovery to continue on the domestic hotel front as we head towards the summer travel period. We continue to make solid progress on the corporate travel front as well and sign 10 notable customer contracts during this quarter. And do bear in mind that this is a period in which still a number of organizations were either shut or continued to work in a limited manner. We believe we are well positioned to leverage our scalable SaaS platform and continue to take market share. We are the leading business travel providers in India. Our pipeline of prospective new customers continues to grow as inbound interest has increased meaningfully post pandemic. We believe online penetration in the corporate travel market in India is approximately 10 to 15%. A large part of the market approximately 60% is served by smaller offline players. As a result of the pandemic, we are seeing evidence of an accelerated shift towards online pairs, especially as contracts come up to the end of life and we remain confident in our platform's capabilities to serve any scale and type of customer. Corporate travel recovery is expected to lag consumer, but please note that before COVID, corporate travel was growing at a faster rate and we expect this dynamic to return post-COVID. Beyond just recovery from COVID, we believe the Indian travel market is back on its strong secular growth trend. Last week, IMF projected India to grow at 11.5% in 2021, the only economy globally with double-digit growth projections. The growth projections come on the back of an estimated 8% contraction in the economy in 2020. The IMS stated that India had taken very decisive action, very decisive steps to deal with the pandemic and to deal with the economic consequences of it. Travel typically tends to grow at about 1.5 to 1.7 times GDP growth, and we anticipate India will get back to these levels of growth as vaccination becomes more prevalent. If India follows the path of what many developed countries have done, we can expect to see growth to inflect for travel at the levels even beyond pre-COVID. Coming to our third fiscal quarter results, we saw meaningful sequential recovery this quarter, reflecting a gradual opening of the country and rise in air passenger traffic as capacity continues to be added. This recovery in domestic travel led to a sequential quarterly growth of 61% in adjusted revenue to INR 607 million, which is approximately $8.3 million versus $5.1 million in the previous quarter. This growth in revenue further combined with strong cost control enabled us to reduce our adjusted EBITDA loss from $125 million INR, which was approximately $1.7 million in the September quarter, to about $36 million INR, or approximately half a million US dollars for the current quarter. We continue to hold our costs to the minimum and we believe we've got 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 of this unfolded. One other strategic road driver is the expansion of our corporate digital platform as we continue to add non-travel related digital offerings to our captive corporate customer base. As the largest corporate travel service provider in the country, We have strong relationships with some of the biggest and best-known enterprises in India. We continue to make inroads into these organizations with our non-travel offerings of expense management, ed tech, and others. And now a quick update on the litigation against EBICS. On September 30, 2020, Yatra filed an amended complaint expanding its claim against certain banks of EBICS. while also expanding the claims alleged against EPICS to include a claim for fraud. Our hearing for arguments concerning the motion to dismiss filed by the other party have been set for March 22nd of 2021. While I'm not at liberty to give any further details of 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 outflow for us. Additionally, neither are we dependent nor have we based our operational planning on a favorable near-term outcome from the litigation. As of December 31st, 2020, the balance of cash and cash equivalents and term deposits on our balance sheet was approximately 33.7 million. This was after us having paid down about $2.27 million of our debt during the current quarter. and our outstanding debt as of December 31st, 2020 now stands at only 110,000 US dollars. Given our continually reducing birth, 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 and corporate travel market in particular was the fastest growing travel market globally pre-pandemic with a 12% CAGR and was expected to reach 32 billion by 2022. A large part of the travel market, corporate travel in particular, was offline pre-COVID. We expect to see an accelerating shift from offline to online travel bookings, and we believe we're already seeing that in our numbers. When we come out of this pandemic, we believe we should be on a significantly better revenue growth trajectory. and will leverage our improved operational efficiency to drive higher profitability and cash flow. I want to thank all our shareholders who have stood by Yatra through these trying times. I'm hopeful and honestly believe it is only a matter of time before your patience and understanding is rewarded. This concludes our prepared remarks. I'm going to now hand it back to Manish to take forward the Q&A. Manish, over to you.
spk03: Thanks, Dhruv. Operator, please open up the call for Q&A.
spk02: Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, it is star 1 if you would like to ask a question, and we'll pause for a moment to allow everyone an opportunity to signal for questions. We will take our first question from Matthew Galenko with Sidoti.
spk00: Sorry, I had myself on mute.
spk01: So a couple of questions for you, and then I'll jump back in the queue. First is, I think you mentioned 10 new corporate customers signed this quarter. Can you give a sense of maybe what the size distribution that there was, were there any, you know, sort of flagship type, blue chip type companies? Is it predominantly smaller? What, you know, what are we looking at there?
spk04: Hi, I'm Matt. So in terms of the customer distribution, you know, these are all, you know, reasonably large organizations. There is one which would stand out and be in the top, top 15 customers of ours, but the others would all be, you know, reasonably large mid-sized corporations. And they would include some blue chip international MNCs as well.
spk01: Got it. Thank you. And, you know, again, I think we talked about this last quarter, but what was the number one feature that sort of came up or if there was one that got you wins?
spk04: I don't think it's one feature, Max. I think now it's a comprehensive solution that we're offering to customers and it's the combined offering of the product and the service delivery which is getting us these customer wins. There is a more secular trend about customers wanting to adopt digitization and we are the leading player when it comes to a digital platform for business travel management in India. So that definitely gives us an edge But over and above that, it's now the comprehensive product solution that we've built. It's a fairly integrated solution. It's got the ability to handle complex workflows. It's got the ability to manage approval process mechanisms, make sure all billing reconciliation is done seamlessly in a digitized manner. So all of these automated workflows which have been built together and then combined with the rates that we are getting and the offline service and exception handling that we are providing is what's getting us these customers. So it's a complete package as opposed to just one element of it, which is driving new customer wins.
spk01: Great. Thank you.
spk04: Sure.
spk02: As a reminder, to Star 1, if you would like to ask a question, we will take our next question from Scott Buck with HC Wainwright.
spk00: Hi, guys. Thank you for taking my question. I'm curious if you've seen any meaningful changes in the way people are booking. You know, are you seeing more close-in travel? Are people booking further out in the future, anticipating, you know, vaccination rollout and any expectation around kind of permanency around any of these changes?
spk04: Hi, Scott. Scott, one of the changes that we are seeing in terms of trends is we are seeing more shorter, higher frequency holiday travel, especially when it comes to near-term destinations. So people aren't taking long-haul breaks. So they are traveling near to their destination, near to their hometown. But there is, you know, a higher frequency. The durations have come down. We aren't seeing that many seven days and above kind of breaks happening. So we are seeing more like three, four night kind of breaks, but we are seeing it happening at a much higher frequency. The other trend, which is also there is that, and this is maybe still a bit more limited, is people working from these kinds of leisure destinations. So people renting out homestays, renting out alternative hotel accommodations for an extended period of time and working from there. So that's a more nuanced trend. But the more general trend that we are seeing is shorter frequency and, sorry, shorter duration and higher frequency. And the category of hotels also that people are preferring, it's more four and five stars. So we've seen, you know, people upselling, you know, in terms of their preferences and going towards higher category hotels.
spk00: That's helpful. Thank you. I'm also hoping maybe you could provide a little bit more color around what you're seeing in the corporate travel market in terms of activity and potential timeline to recovery. Should we think about corporate travel as being three months, six months behind leisure, or do you think the Zoom calls and then video conferencing is going to last meaningfully longer than that?
spk04: At this point in time, we've begun to see some early traction on the recovery on the corporate travel side. A number of customers have opened up in January. We've got feedback from some of the other large ones opening up in Feb. And then the next batch is scheduled for April. So my sense is that you're looking somewhere between that three to six month kind of timeframe where corporate travel will lag leisure travel. But by the middle of this year, given what's playing out in India, At least I feel on the domestic travel front, corporate travel should be between 65% to about 75% of pre-COVID levels, at least on the domestic travel front.
spk00: Yeah, that's great. Last one for me. I'm curious, these potential air bridges or travel bubbles, how... useful have you guys seen them be in driving, you know, some at least regional, international traffic? And would you expect to see more of these kind of, you know, travel arrangements between countries here over the next, you know, six or 12 months?
spk04: Sure. I think that's a very, that's something that we're watching very closely, Scott. And I think when these travel bubble agreements come into play, we do see a spurt of traffic. Dubai, so India and Dubai is an example of that where we've seen a fair degree of traffic happening over the past few months between India and Dubai on account of the travel bubble that's been operating over there. We've seen a similar trend for Maldives. We expect Sri Lanka in the near term to also go through a similar process. But having said that, a word of caution on this is also necessary given that the new strain of the virus seems to be appearing in some of the countries. So India, UK, for example, was a fairly high traffic corridor. But come early January, there have been significant restrictions which have come into play given the new variant of the virus in the UK. So I think the bubbles are definitely very helpful, but we need the bubbles to last consistently. In India, there is talk of herd immunity coming out, and that definitely bodes really well for India. So I think domestic will recover and continue to recover at a faster pace. International, unfortunately, will have these fits and spurts, given what's happening in different countries.
spk00: Great. That's very helpful, guys. I appreciate the time this morning.
spk04: Thank you, Scott.
spk02: And there are no additional questions, so I would like to turn the call back to Manish Hemrajani for any additional or closing remarks.
spk03: Thank you, Abby. And thanks, everyone, for joining the call today. We look forward to speaking to you during the course of the quarter. Thank you, guys. Thank you.
spk02: Ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.
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