Yatra Online, Inc.

and welcome to the Yatra Second Quarter 2022 Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Manish Hemraja. Ani, please go ahead.

Thank you, Cecilia. Good morning, everyone. Welcome to Yatra's Fiscal Second Quarter 2022 Financial Results for the period ended September 30th, 2021. I'm pleased to be joined on the call today by Astra CEO and co-founder, Dhruv Sringi. The following discussion, including responses to your questions, reflects management's views as of today, December 21st, 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 discussion 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 defer materials, 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 this morning. Copies of this and other filings are available from the SEC and on the IR 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 you and your families continue to stay safe as we navigate our way through the pandemic and its new variants. As we had shared with you in November, we are working with bankers and lawyers in India to explore our options for an India IPO. I'll get into more details later, but following this course of action, I believe will greatly enhance Yatra's strategic flexibility and act as a catalyst to improve shareholder value. Now onto our results. We are pleased to announce strong September quarter results with adjusted revenue of INR 788.7 million. This represents an increase of 61% Q1Q and 109% year-over-year. This growth was faster than the Indian travel industry as a whole, as we began recovering from the Delta-driven lockdowns in the summer months. Case counts, as you would recall, during that period were hovering around the 400,000 mark, and currently they have around the 7,000 mark. In fact, yesterday was less than 6,000. India's mass vaccination program has truly been remarkable, and as of last week, over 820 million people or about 60% of the population had received at least one dose of the vaccine, and about 530 million people, or 40% people, are now fully vaccinated and have received both doses. Air passengers booked was up 93% year-over-year in the September quarter and up 116% sequentially. This outpaced the industry sequential growth of 74%. More notably, our hotel room nights were up more than 6x year-over-year, and up 313% sequentially. We continue to see low levels of competitive intensity on the hotels front during the quarter, and our brand continues to resonate positively with Indian travelers. Adjusted EBITDA was 23.3 million. This is despite the significant investment we are making in the nascent but rapidly growing logistics and freight business. To give you a sense of how much we would have improved the profitability in Yatra had it not been for these investments in the freight business, Adjusted EBITDA would have been almost 30.5 million better or INR 53.8 million for the quarter. And this is despite us being in the midst of a pandemic. As of September 30th, 2021, the balance of cash and cash equivalents and turned deposits on our balance sheet was about 1.855 billion. On a US dollar basis, this translates into adjusted revenue for the quarter of about 10.6 million dollars, and adjusted EBITDA of $314,000 or about $725,000 if you exclude the investments in the freight business. We ended the quarter with a solid balance sheet with a cash balance of approximately $25 million. The strength that we saw in the September quarter carried forward into October and November. In November, industry air passenger numbers grew 19% from October and were up 69% year-over-year. These are the highest levels since February 2020 and have recovered to about 82% of pre-pandemic levels. That said, recovery in international travel has slowed down in the month of December due to the spread of the Omicron variant. However, bookings for domestic travel have again picked up in the last few days after dropping almost 20% from November levels in the first two weeks of December. Domestic travel in India is witnessing a strong resurgence as people realign their plans and should focus towards domestic travel given the restrictions placed on international travel. We believe this bodes well for Yatra given our industry-leading content of domestic hotels and strong brand recall amongst the Indian middle class. Recovery in international travel, however, will be a function of the spread of the Omicron variant and based on past trends following the outbreak of the Delta variant, We expect a recovery in international travel towards the end of the first quarter, early part of second quarter of calendar year 2022. Our pipeline of prospective new customers continues to grow as inbound interest has grown meaningfully post-pandemic. On the corporate side of things, Ross bookings for corporates grew 61% in November as compared to September 21st. Corporate revenue in November was approximately 50% of pre-COVID levels. Despite corporate travel being relatively dormant for the past year, we continue to see inbound interest and sign new customers onto our corporate platform, increasing our market share. We believe online penetration in the corporate travel market in India is approximately 10 to 15% only. A large part of the market, approximately 60%, is still served by smaller offline players. Given the highly fragmented nature of the market, We believe we will continue to take market share going forward and that our corporate business should accelerate growth to levels higher than where we were pre-pandemic, as we see an accelerated shift towards online bookings, especially as contracts come up for renewal at the end of their life and rebidding. The strength of recovery in business travel that we saw in the months of October and November It gives us reason to believe that corporate travel in India will also recover strongly as economic growth continues to happen in the country. There might be a slight lag, however, in terms of recovery of corporate travel compared to consumer travel, but we believe that a technology-enabled corporate travel solution will continue to thrive in the post-COVID world as companies adapt to a more hybrid approach to working, which will be difficult for them to do without the use of technology. And this is something that we've continued to witness on the ground in terms of the new conversations that we have with prospective customers. Globally as well, we are seeing the success of tech-enabled corporate travel platforms like FlipAction, and we don't think India would be any different. We have multiple levers of growing our corporate travel business, and we believe that the digital platform approach that we have adopted is the right one. Our early success in the freight business also lends more support to the validity of this approach. Let me now give you an update on the freight initiative. As we look towards digitizing the logistics space, our corporate travel relationships with both airlines and enterprise executive management, together with our technology capabilities, has given us a significant head start. Despite the pandemic, we have rapidly scaled up this business over the past few months, and we believe this business longer term has the potential to be even larger than our corporate travel business. We expect 2022 to be a year of rapid expansion for this business, and believe that we should be able to achieve revenues of between $4 to $5 million from this business in 2022. The freight industry, as you would recall, is multiple times the size of the travel industry and exhibits similar attributes to what the business travel industry did about a decade ago. The industry is highly fragmented and has very low levels of technology adoption. We are fortunate to be able to leverage the expertise we have acquired in building our corporate travel platform over the past several years in building our freight platform. Additionally, we're also looking to leverage our existing vendor and corporate relationships on both the supply side and demand side for our trade business. We remain confident in our platform's capabilities to serve any scale and type of customers. Our corporate customer base is a great asset for us and is a platform that we continue to leverage to cross-sell services. We are optimistic about Yatra's continued growth and recovery based on the trends that we witnessed in October and November, and believe that our well-recognized brand and healthy balance sheet puts us in a strong position to capitalize if the recovery continues to gain momentum. As I've been telling our shareholders, Yatra will exit the pandemic a more financially stable and profitable company than it was pre-pandemic, and as a result, we'll be in a much better position to capitalize shareholder value. We are not out of the woods yet, I am guardedly optimistic that despite the Omicron variant, the worst of the lockdowns are now behind us, and that we saw the trough in travel in June 2021. The levels of vaccination now in India has lowered case counts to a level low enough to encourage a strong recovery in domestic travel. When we come out of the pandemic on the back of the secular growth in Indian travel, the mid-teen signing growth we've seen during the pandemic in new corporate customers, and in the growth of our hotel network, our digital platform business that is completely additive and has the potential to grow to the size of a pre-pandemic corporate travel business in the coming years, we believe we should be on a significantly better revenue trajectory. We believe the opportunity ahead for Yatra is massive. We believe Indian internet travel has hit an inflection point as we recover past COVID. We believe corporate travel, where the other leaders will also recover quickly. In addition, the efforts that we've made during the pandemic to improve operational efficiency will lead to significantly higher levels of profitability and cash flow. I want to thank our shareholders who have stood by Yatra through these trying times. I am hopeful and honestly believe it's only a matter of time before your patience and understanding are rewarded. Before I open the call for questions, I would like to make a few additional comments. You may have seen our recent press release on the potential listing in India of Yatra's India subsidiary. As we continue to execute our strategy, our board and management team regularly consider opportunities to enhance value for Yatra's shareholders. As part of these ongoing efforts, we are working towards an additional listing in India to support our ongoing strategy, accelerate our growth efforts, and strengthen our offerings. We believe potential benefits of this listing, which would support Yatra's ongoing strategy and value creation opportunities, includes access to an additional pool of capital, including retail and institutional investors in India who are already familiar with Yatra's business and brand, but who are currently restricted from participating in the U.S. capital markets. It will unlock, we believe, additional value for U.S. shareholders, provide a liquid stock that can be used for local M&A in India, add further capital to strengthen the balance sheet, and provide additional sell-side research coverage. The company has engaged leading financial advisors and connections with its evaluation. There is, however, no assurance that Yatra will proceed with the listing or that the exchanges would approve a listing application by Yatra. But having said that, we are optimistic about the future and we believe there is a tremendous amount of growth potential for this business. And the strength that we've seen in the recovery of travel in the months of October and November give us that confidence, give us that belief that travel will come back strongly. We will obviously go through these cycles where new variants are likely to emerge and could impact business in the short term. But we've seen the strength of the Indian market and we believe that the domestic Indian travel market is quite resilient and will continue to grow strongly despite all these hiccups that happen for shorter periods of time. Having said that, I would now like to hand it over to Manish so that we can take any questions that you might have.