Yatra Online, Inc.

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the IACRA Fiscal First Quarter 2023 Earnings Conference Call. My name is Irene and I will be the coordinator of today's event. Please note, all participants will be in listen-only mode. If you would like to ask a question on today's call, please press star, then one on your telephone keypad. If you'd like to withdraw your question, please press star, then two. I would now like to turn the conference call over to Manish Hemrajani, Head of ER. Manish, please go ahead. Manish Hemrajani, Head of ER. Manish Hemrajani, Head of ER. Manish, please go ahead.

Manish Hemrajani, Head of ER. Manish Hemrajani, Head of ER. Manish Hemrajani, Head of ER. Manish Hemrajani, Head of ER. Manish Hemrajani, Head of ER. Manish Hemrajani, Head of ER. Manish Hemrajani, Head of ER. Manish Hemrajani, Head of ER. Manish Hemrajani, Head of ER. Manish Hemrajani, Head of ER. Manish Hemrajani, Head of ER. Manish Hemrajani, Head of ER. Manish Hemrajani, Head of I'm pleased to be joined on the call today by Yatra, CEO and Co-Founder of Zoop Sringi. The following discussion, including responses to your questions, reflects management views as of today, August 30th, 2022. We don't undertake any obligation to update or revise the information. Before we begin our formal remarks, allow me to 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 defer materially. For a description of these risks, please refer to our filing with the SEC and our press release file earlier this morning. Copies of this and other filings are available from the SEC and also 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 today for our first quarter earnings call of fiscal 23. I'm pleased to report that we had our best quarter yet since the advent of COVID, with gross bookings growing 56% sequentially, demonstrating a strong recovery post-Omicron. The revenue of INR 899 million also reflected accelerating growth of 49% Q1Q. Adjusted revenue of INR 1.25 billion, which is approximately 15.9 million US dollars, increased 28% Q1Q. Adjusted EBITDA for the quarter also came in at a post-pandemic high of INR 123.5 million, which is approximately 1.6 million dollars for the quarter. This included our investments behind the freight initiative. This was a very strong start to fiscal 23, especially in corporate travel. Exited the June quarter at approximately 90% of pre-COVID levels as office traffic reverts back to levels seen prior to the pandemic. Business was also strong. Domestic travel hitting the quarter at approximately 100% of pre-COVID levels. What's particularly heartening was that we had our best quarter in terms of new corporate customer signings with a record 27 large medium-sized enterprises chose the Yatra platform for their travel needs. It clearly underscores the value and robustness of our proprietary platform, as well as the superior service levels that we provide to our customers. International travel has also continued to recover. It's recovering strongly since the easing of international travel restrictions at the end of March 22, is trending at approximately 60% of pre-COVID levels. India's GDP growth was a strong 8.3% fiscal year 22. The IMF expects India's GDP to grow at about 7.2% in 2023. As it relates to Yatra, looking at how the travel industry has unfolded through history, see that travel tends to grow at approximately 2x GDP in developing markets versus a 1.5x multiple in developed markets. We believe we should be able to achieve growth above market rates as we continue to take share in the corporate travel market and as the consumer market continues the secular shift offline to online. Would the expansion of the travel industry and the macro conditions continue to be favorable? India's aircraft fleet size is expected to almost double over the next five years. The aviation ministry recently forecast an almost 3x increase in air passengers at 400 million the next decade. Let me give you an example here on how demand is driving fleet expansion in India, which was recently bought by the Tata Group, the aggressive expansion plan. Near-term, and this is as early as October of this year, it is looking to add six wide-body and 25 narrow-body aircrafts to its fleet. There are also about 200 planes on order, fleet expansion over the longer term. This is on a base of about 600 aircrafts currently operating in India. As you can see from here, you've got almost 5% capacity expansion happening in the near-term just by Air India. In addition to Air India, we've got a new airline, Akasa Air, which was launched in August. We've got jet airways also coming out of bankruptcy, expected to start flying again later this year. The incremental capacity on the airline front, along with the increased airport infrastructure, could drive the continued expansion of the travel industry. Having inflation, which seems to be a hot topic globally of late, India is faring relatively well. India's inflation rate in the month of July was 6.7% and with long-term averages and down from the peak of 7.8% in April of this year. We believe that demand and consumer confidence in India is relatively high. We don't expect growth to slow down in India as we are seeing in more developed markets. This is perhaps one of the reasons why the benchmark stock index in India, the Nifty, is only down less than 5% from its year-to-date peak, trading at levels similar now to the start of the year, and the Nasdaq is down almost 24% year-to-date. IPO market in India also seems to be opening up. We've had an IPO after almost four months last week, and the offer was about 35 times oversubscribed and listed at a 41% premium. We've provided you some updates on our India filings as well. You may recall our Indian subsidiary, Yatra Online Limited, the draft red herring prospectus, the DRHP, March 25th, the Securities and Exchange Board of India said it. is the main regulatory body in India for a potential stock market offering. We are continuing to work with the regulator to obtain the necessary clearances for the DRHP. We expect this offering, if completed, to strengthen our balance sheet, better position us to take advantage of the rapidly recovering leisure and business travel market in India. The faster than anticipated recovery that we are witnessing in corporate travel Strong research into revenge travel on the leisure side is very well for us and our IPO plans later this year. There is significant demand for online travel stocks in India, but the IPO should be well received. While there are worries about recession in the US and Europe, the economy is growing at a brisk pace as it continues its journey from a developing to a developed nation. India IPO structure also opens up an opportunity for us to explore strategic alliances with partners might not have been comfortable with an overseas structure. Now coming to our June quarter results. I'll focus largely on sequential Q on Q comparisons, financials as it doesn't really make sense for us to compare year over year and that last year's numbers were extremely depressed. Count of the disruption caused by the Delta variant. Adjusted revenue for the quarter ended 30th June 2022, came in at 1.25 billion INR, which is approximately USD 15.9 million, 28% quarter-on-quarter. Consequently, air gross bookings grew 57%, mostly on account of an increase in yield for domestic flights, along with the increase in mix of international travel. The two yields were considerably high due to the various international factors that we've been talking about. Adjusted revenue, however, grew 19%, met for air, and this was largely on account of fixed nature of our earnings, along with a higher mix of corporate business. Hotels continue to outpace overall growth with sequential hotel gross bookings and room rates up 110%, 85% respectively. sold 585,000 room nights in the quarter, so the highest number of room nights we have reported since the December 2018 quarter. We continue to take market share as our breadth of supply continues to stand out in a more benign competitive environment. Trusted EBITDA of $123.5 million also improved by 219% year-over-year and 134% year-on-year. This was driven largely by the increase in mix of corporate business that I referred to earlier. As of 30th of June 2022, the balance of cash and cash equivalents in term deposits on our balance sheet, $978.7 million, USD $12.4 million. The decrease in cash balance from the previous quarter is primarily on account of increase in working capital deployment to the strong recovery of the corporate travel business. To go into quarter end, we have gone down on INR 440 million, USD 5.5 million against receivable financing facilities from our banks. We expect the banks to continue to expand these working capital limits so corporate business recovers. First bookings for business travel where we are the market leaders, which is the June quarter approximately at 90% pre-COVID levels. the highest level since February 2020. We remain optimistic that we should pass pre-COVID levels in the very near term. We believe that the stronger than anticipated recovery in business travel that we have witnessed put to rest any lingering doubts that people may have had about the future of business travels. It's very evident human beings are social animals and while online tools are great enablers, beings still prefer in-person interactions. We see improving inbound interest and continue to sign new customers and increasing pace onto our corporate platform. June quarter was the best quarter yet in terms of customer sign-in. 27 large and medium enterprise customers signing up for our service. Given the highly fragmented nature of the market, we believe we will continue to take market share going forward. Our corporate business should accelerate growth to levels higher than they were pre-pandemic, as we see an accelerated shift towards online bookings, especially as contracts come up for their end-of-life renewal and re-bidding. On the hotels front, our strategic partnership with Flipkart owned ClearTrip, plus domestic hotel content from Yatra, which went live in the latter half of the March quarter, has witnessed a very strong uptake in the subsequent months. We believe that this partnership has the potential to more than double our hotel volumes over the next 12 months. We believe that the incremental volume that we drive through this partnership not only be accreted from an EBITDA perspective, it will also help strengthen our relationship with our existing hotel partners, lead to better long-term value creation. Competitive intensity has risen modestly since the last quarter. Overall competitive levels remain manageable on the hotel front. The brand continues to resonate positively with Indian travellers. As you may recall, India opened up international travel on a full schedule from March 27th onwards, and we have seen good traction on the international front as borders continue to open up globally. The airlines deploy incremental capacity towards international travel. Let me now give you an update on our freight initiative. We look towards digitizing the logistics space. Our corporate travel relationships with both airlines and enterprises Customers, together with our technology capabilities, give us a significant head start. We've 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. Being a successful Indian IPO, we believe we'll be in a position to accelerate growth in freight, which is receiving increasing interest because of the freight and logistics challenges the world is facing. Optimistic about Yatra's continued growth and recovery based on the trends that we are witnessing. We believe that our well-recognized brand and healthy balance sheet. We are in a strong position to capitalize as the recovery continues to gain momentum. We believe the opportunity ahead for Yatra is massive. We believe Indian internet travel will hit an inflection point in the coming years to get past COVID. We believe corporate travel will display the other leaders. to cover very quickly. I also want to highlight that the efforts that we made during the pandemic to improve operational efficiency already begun to work significantly higher levels of profitability. I want to thank our shareholders who have stood by Yatra through these trying times. Hopefully and honestly believe that it's only a matter of time before your patience and understanding are rewarded. I'd like to thank everyone for joining the call today. And as always, we are available for follow-ups. With that, let me hand it back to you.