Yatra Online, Inc.

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.

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 Yatsa's CEO and co-founder, Dhruv Sringi. Following discussion, including responses to your questions, reflects management 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 with 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?

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 going 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 are well 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% queue on queue. 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 rebidding. 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, EdTech and others. And now a quick update on the litigation against EBICS. On September 30th, 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 cashflow. I want to thank all our shareholders who've 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.