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spk05: 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.
spk00: 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.
spk01: 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.
spk00: Thanks, Dhruv. Irene, we can now open up the call for questions. Thank you.
spk05: Of course. Thank you. ladies and gentlemen if you would like to ask a question please press star then one on your telephone keypad now if you wish to with your withdraw your question please press star followed by number two when preparing to ask a question please ensure your phone is unmuted locally our first question comes from scott buck from hc wayne wright scott your line is open
spk03: hi good morning guys thank you for taking my questions uh i guess the first one drew for me could you give us a little bit more color now that you're back to essentially pre-covered levels where is the incremental revenue going to come from in 2023 and 2024. hi good morning scott
spk01: So when we think about the incremental revenue going forward, Scott, at this point, the first factor which is there is international travel. International travel is still only at about 60% of its pre-COVID levels. We expect that to continue to scale up and get to the pre-COVID kind of numbers by the end of this calendar year. In addition, we are seeing very secular growth happening, travel in general in India. So the kind of things that people are talking about in the more developed markets, like inflation, consumers holding back spending, doesn't seem to be the case like that in India. Bond is recovering very strongly in India, and we anticipate this demand for travel as disposable income grows in the hands of consumers continue to be there. Income levels are rising. We've got a growing middle class population. secular trends are all pointing towards a very strong travel industry. As I mentioned in my opening remarks, we expect travel to grow at almost 2x of GDP growth rates. There's a very strong secular trend that's happening with growth in travel. At a more general level, specifically for Yatra, there are two factors that I think are playing really well for us. On the corporate travel side, we are seeing very strong inbound demand A conversion ratio on new customers is looking extremely healthy as more and more companies want to adopt technology. Companies have been through a significant amount of disruption due to COVID. Going forward, people have realized that they want to work in a more digitized environment as opposed to an offline environment. So that's leading to a very strong amount of inbound interest on our corporate travel side. It's one lever for us that will drive really tremendous amount of growth going forward. The other is the most secular trend in terms of just online adoption that we are seeing play out on the travel side, on the leisure travel side. What's happening in tier two markets in India, these markets were typically serviced by the offline agents. The offline agencies, a large number of them shut shop during COVID, some temporarily, some permanently. We are seeing tremendous amount of uplift happening over there. customers moving online from these markets for jobs. Forget all these customers have pretty much done everything fine in the past two years, right? People who've been stuck indoors or under lockdown, other grocery, home delivery, e-commerce, everything online. So there is hardly anyone in these markets today who can also turn around and say, not tech savvy. So the online adoption, we are seeing on the consumer side also has not significantly accelerated post-COVID. These two factors, I think, will drive a tremendous amount of growth for us. Then there is obviously new business lines like Crate, which we initiated, will add on to growth from here on.
spk03: Great. That's very helpful. And then my second, on the corporate travel side, you signed 27 large and medium-sized customers during the quarter. What's the pipeline look like for fiscal 2023? Was the first quarter just particularly strong or should we expect these elevated levels to continue through the year?
spk01: The way we are seeing the pipeline at this point in time, we expect this pipeline to continue and we would like to actually see exploration happening the second half of this year. as more and more contracts come up for renewal they come up for rebidding you know companies are just have begun to come back to a full-time working environment only largely in this quarter right till january february we had omicron it's only been post april that we've seen companies come back to full-time working this you know quarter the first real quarter where we've had companies come back and work full-time. I think the traction should continue and only accelerate going forward from here.
spk03: Great. That's helpful. Will you guys need a meaningful ramp in OPEX to support the top-line growth, or are you pretty comfortable with the cost infrastructure you have in place?
spk01: The cost infrastructure should not change drastically from here. As we've been talking through COVID, we spent a significant amount of our time and effort during COVID in automating our backend processes and just ramping up the technology stack. And that's putting us in really good state at this point. The other change which we are also seeing is just in terms of sheer consumer behavior. The corporate travel side as well, the adoption of the selfless platform has gone up meaningfully. The higher the adoption on the selfless side, the lower is the manpower cost that we need at our end. Yeah, now just to give you a sense on the corporate travel side, I think 90% of pre-COVID volumes, about 60% of the staff.
spk03: okay that's that's helpful and then last one for me just on the potential indian ipo what should we be thinking about in terms of timing and reading the release it seems like the language there might be a little bit of hedging that you know this actually gets completed so is there a a real risk that um this doesn't happen i don't think they're trying to hedge and i don't think the language should in any way suggest that we are trying to hedge continue to work
spk01: worth the ipo and you know i in fact want to say that market's looking much better than what it has over the last four months at any point over the last four months recent example that we saw the ipo that got subscribed it got subscribed 35x it's trading at a 41 premium it does definitely show that the markets in india are looking up i do agree that you know one summer doesn't make a swallow but i feel that There's enough and more influence behind the India markets to have a successful IPO in the near term.
spk03: Great. That's helpful. I appreciate you guys taking my questions, and congrats on the quarter. Thank you so much, Scott.
spk05: Thank you. Our next question comes from Lisa Thompson from Zacks Investment Research. Lisa, your line is open. Thank you.
spk04: Good morning. So I have two questions for you. First is, given current situation, what's your feeling about the next few quarters? Are you going to see normal seasonality or is pent-up demand changing things? How should we look at it?
spk01: Good morning, Nisha. In terms of seasonality, firstly, there will be some effects of seasonality now coming into play. as we are nearing our pre-COVID levels from a volume perspective. But it should not be a very significant impact as yet because we are beginning to see, you know, still some pent-up demand. You know, sparks of revenge travel still continue to be there. The seasonality effect, while the seasonality effect is beginning to play, it's still at a relatively modest level.
spk04: All right. That sounds good. And then my other question is, where you are now, when you look back at pre-COVID, your business model, how is it going to be going forward after everything that's happened? What is your feeling about gross margins compared to back then and EBITDA margins? How has the world changed for you?
spk01: See, for us, the one big difference which has happened is happening on the EBITDA margins, and we are seeing meaningful improvement happening in the EBITDA margins as we go forward. This is largely on account of, you know, just changing consumer behavior, both on the corporate side and on the leisure side, where customers are getting much more comfortable doing it themselves and needing much lesser support. So that's definitely one thing which is there. The other thing which we are seeing very good traction on is the adoption of the hotel program, both the consumer side and the corporate side. Hotels, as we all recall, have better long-term margins. We do expect, as we continue to scale up the hotel business, it should further enhance from there. On the whole, we expect our operating margins to continue to improve as we go forward.
spk04: Do you have some sort of number in mind of where you think you can go ultimately?
spk01: See, the near-term, mid-term margins that we've been talking about in the high teens, and we think that's, you know, so if I was to just get out the investment that they're making behind the plate business for the core travel business, that's the kind of margin number that we are working towards in the near to mid-term.
spk04: Great. Thank you. That's all my questions.
spk01: Thank you, Lisa.
spk05: Thank you. Our next question comes from Anya Soderstrom from C.T. and Company. Anya, your line is open. Okay, great. Thank you for taking my questions.
spk06: I want to start off with a follow-up on the the Indian IPO. Do you have any more color on the timing of that? I think you talked before about that's happening towards the end of the summer and we're there now. So what's the timeframe for that?
spk01: So, Ania, we continue to work with the regulator in India and we're working very closely with them. And the timing, as I said, you know, the markets are beginning to look up. We've seen the first IPO happen in almost four months now. period of four months, there was no real, no IPO that happened in the market. We've had one that's happened. We have another couple which we believe are lined up in the near term. That will give us a good indication of the kind of secular trend markets are projecting. Then based on market conditions, expect that we should be looking at this. And we had always said this, that, you know, sometime around the September, October kind of timeline, what we had initially anticipated. And we continue to work towards those. Okay, thank you.
spk06: Okay, thank you. We're looking forward to that. And pardon me, I missed part of your prepared remarks. I don't know if you had touched on this, but in terms of the air passenger traffic, that's sort of picked up to 83% of the COVID levels, pre-COVID levels. How has that been trending since June for you?
spk01: Since June, there is some seasonality impact which is there in the passenger traffic numbers. These are published by the government and the aviation authority in India. So there is some impact of seasonality, but it's not as stark as what one would have expected with COVID. There is still, I think, some pent-up demand which is there on the travel side, so it's helping maintain volumes.
spk06: Okay, thank you. And I think during the COVID, you sort of reduced the salaries during the pandemic. Has this gone back or what can we expect in terms of that?
spk01: So there is some, you know, rationalization that's happening on the salaries as, you know, the market is really hot for talent. In India, like most of the parts of the world, there is an ongoing war for talent, so to speak, The salary levels are back, in most cases, to pre-COVID levels. But we've also been able to rationalize our headcount quite significantly with technology. As I mentioned in response to Scott's question, look at the corporate travel side of things. We are now trending towards 90% of pre-COVID levels, about 60% of the workforce. So while there might be, you know, individual salary costs which have gone up at a collective level, we're able to keep our costs in check.
spk06: Okay, and it seems that the corporate travel is picking up. Is there any sort of, do you have any correlation or sort of any quantification there on that, how much of a pull that is for also the leisure travel then to pick up with you in tandem with the corporate?
spk01: See, typically, we've seen leisure come back faster than business travel. The travel will come back and recover faster, and that's what happened out here. Business travel, I think, recover with a one-to-two-quarter kind of lag, which is what we are seeing. So while leisure travel has been at elevated levels since October, November of last year, the travel has only begun to really gain traction since March, April of this year. There is maybe a one to two-quarter kind of lag in consumer travel and corporate travel. That's why I was suggesting that by the end of this year or early part of next year, we'll have corporate travel also since pre-COVID levels.
spk06: Okay, thank you. And the last one is in terms of the competitive landscape, has that changed at all for you?
spk01: See, we've seen the competitive landscape be a bit more benign at this point in time compared to pre-COVID levels. Some of the disruptors like, you know, we had ATM, OYO, all of these guys have scaled back competitive intensity. That's creating a more level playing field, so to speak.
spk06: Okay. Thank you. That was all from me.
spk01: Sure. Thank you for your questions.
spk05: Thank you. Our next question comes from Jeff. Jeff, your line is open.
spk02: Great, thanks. Thanks for taking my questions, guys. Just a few from me, if I could. First, on the balance sheet, just thoughts on cash flow and cash balance over the next couple quarters. You commented on working capital, and I think that credit drawdown, but just talk about what you're seeing and expecting with respect to cash flow, cash balance for the next two quarters. Maybe start there and then I'll get a couple of follow-ups.
spk01: Sure. So on the cash balance side, there is deployment of working capital that's happening as the corporate travel business is recovering. Given that, you know, now we've reached 90% of pre-COVID levels, we are expecting some growth from here on. There will be some cash consumption that will happen on the working capital side of things. That's largely coming in from the drawdown that we've done to receive the financing facilities that we have. That's where the cash will come in. And we also expect these facilities to increase in size if the business continues to recover. Just to give you a comparative, pre-COVID facilities were about $25 million. at this point in time are about five and a half. So as the business continues to scale up, we expect these facilities to also continue to grow up to help finance the working capital requirements.
spk02: Okay, that's helpful. And then on the freight side, just refresh. I want to be clear on that answer I think you gave to the earlier question about high teens target near-term margins. on EBITDA side, and then you talked a bit about, I think that was pre the investments for freight. So can you just touch on freight again and help us understand expectations around both revenue and investments there?
spk01: So the investment that's happening on freight is in the range of $200,000 to $300,000 a quarter. That's the kind of investment level that they're looking at at the operating side. And there is some working capital deployment also about, you know, two to three million, which is there on the trade side. In terms of revenue expectations, revenue expectations actually have to be in the range of about three to four million dollars, as we had spoken about earlier. Trade business from that perspective, as I said, you know, they are investing behind it, but it's not, you know, investment is of an earth-shattering amount, right? So it's only to the tune of 200 to 300,000 dollars a quarter. We expect this investment to happen another two to three quarters at max, and then we should start seeing profitability come through from the trade side as well.
spk02: Okay. And last, then, on the 27 new corporate medium and large businesses signing the quarter, is there any way to put some value around those signings and give us an anchor point to compare that to just to get a sense of bookings momentum?
spk01: You know, obviously, we track that quite closely, but it's not something that we publicly disclose. And, you know, at this point, we need to keep our disclosures consistent with what we are disclosing in India in the DRHP and what we are disclosing in the U.S. So we have to just maintain parity. This is something going forward that we can consider sharing.
spk02: Okay. And then on the DRHP side, Just to get one point of clarification on the IPO. So when the DRHP gets approved, what is, in your understanding, the typical timeline from approval to actual completion of the IPO?
spk01: So from approval to completion, you know, can be a four to six week kind of timeframe. You know, it then depends on market conditions as well, Scott. Sorry, Jeff, as you well know, right? So it will be a function of that, but the markets are conducive and happen in a six-week time frame.
spk02: Got it. Okay. Thanks so much for taking the questions. Appreciate it. Not at all.
spk01: Thank you.
spk05: Thank you. Currently, we have no further questions. Therefore, I would like to hand back to Manish for any closing remarks.
spk00: Thank you, Irene. Thanks, everyone, for joining the call today. As always, you're available for follow-up questions. Thank you so much. Take care. Thank you.
spk05: Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for being with us today. Have a lovely day ahead. You may disconnect your lines now.
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