Yatra Online, Inc.

Good morning, everyone. Welcome to Yatra 1Q25 earnings conference call. My name is Kiki, and I will be your conference operator today. During the presentation, you will have the opportunity to ask a question by present star followed by one on your telephone keypad. If you change your mind, please press star followed by two. I will now hand you over to your host, Manish Hamrajani, VP of Corporate Development and IR. Manish, please go ahead.

Thank you and good morning, everyone. Welcome to our fiscal first quarter 2025 financial results for the period ended June 30th, 2024. I'm pleased to be joined on the call today by Yatra, CEO and co-founder through Stringly, and CFO Rohan Mittal. The following discussion, including responses to your questions, reflects management views as of today, August 13th, 2024. We don't take any obligation to update or revise the information. Before we begin our formal remarks, let me 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 differ materially. For a description of these risks, please refer to our filings with the SEC and our press release filed yesterday evening on the IR section of our website. With that, let me turn the call over to Dhruv. Dhruv, please go ahead.

Thank you, Manish, and good morning, everyone, and thank you for joining us for our first quarter 2025 earnings call. For the quarter ended June 30th, 2024, we reported total revenue of INR 1,051 million, which is approximately USD 12.6 million. This represents a decline of 5% year over year. Adjusted air ticketing margins were impacted by a 21% decrease on account of lower volumes. The decline was primarily driven by reduced volumes in the B2C segment as we optimized discounts amid intensifying price competition in the market. Despite challenges in the B2C segment during the June quarter, the corporate travel segment showed robust growth across all key metrics. The company successfully secured 34 new corporate customer accounts, representing an annual billing potential of INR 2028 million or approximately $24.3 million with average billing potential up 77% sequentially. As the leader in corporate travel in India, our customer acquisition rates remain strong, consistently outperforming industry benchmarks. We also continue to actively evaluate strategic opportunities to further bolster our corporate travel segment. In addition, We made substantial progress in our meeting, incentives, conferences, and exhibitions segment, which is the MICE business, this quarter. A newly onboarded team has started damping up operations, and while MICE contributions were modest for the June quarter, early signs for the current quarter are very encouraging, with significant business already secured in the September quarter. In addition, we have also scaled up teams to focus on the mid-market corporate segment, and new products including visa services and car rental services for corporate travelers. Adjusted EBITDA came in at INR 65.6 million, approximately USD 800,000, a decrease from INR 115.4 million in the same period last year, partly reflecting the impact of lower volumes and partly due to the added expense of onboarding teams for new initiatives mentioned earlier. The cost of incremental hires is close to INR 40 million in the quarter. Ex-investment of new initiatives during the quarter, our EBITDA would have been INR 105.6 million, which is broadly similar to last year. Let me emphasize the critical importance of accelerating our investment at this time in the corporate space. Over the past few months, and particularly in the last quarter, the country's largest airline has begun offering deeply discounted fares exclusively on its website and mobile app. In light of the recent consolidation within India's domestic aviation sector and the current aircraft supply constraints, this trend is significantly increasing customer acquisition costs in the B2C market. As a result, it is imperative that we rapidly expand our corporate business and we are actively exploring both organic and inorganic opportunities to achieve this. The MICE industry presents a compelling growth opportunity with its attractive margin profile, making it a strategic addition to our corporate portfolio alongside our visa facilitation and car rental services. Additionally, we have initiated a cost optimization program which includes streamlining over 100 positions within the company. We anticipate realizing the benefit of these cost savings starting in September after accounting for any notice needed obligations. We continue to make progress towards simplifying our corporate structure as well with the board appointed restructuring committee actively engaging with all relevant stakeholders The committee is diligently working on developing a comprehensive proposal to streamline our operations and enhance shareholder value. For the quarter ended 30th of June, 2024, we reported total revenue of INR 1,051 million, which is USD 12.6 million, as I mentioned, down 5% year over year, and adjusted revenue of INR 1,422 million, which is approximately 17.1 million US dollars, which is down 14% year over year, mainly on account of the factors that I mentioned about. While it is our strategy to position ourselves as the corporate provider of choice, we recognize our ideal customer mix must be strategically balanced, and we are determined to winning back and regaining some of our B2C market share by implementing certain strategies in the coming quarter. These strategies we feel will be more tech-enabled, technology-enabled, and innovation-enabled ones, and will not have a significant negative impact on our operating performance. Meanwhile, we continue to expand our corporate customer base, demonstrated by the strong addition of new corporate customers during the first quarter. We believe that our momentum in garnering reputable corporate clients serves as a testament to our excellent service and attractive platform offerings. Travel volumes in the IT sector, which is one of India's main business travel segments, was subdued in the first quarter of FY25, However, we are pleased to report that our performance in this segment outpaced industry trends. While travel spends on the Yatra platform by IT services customers were approximately 30% below pre-COVID levels, industry reports indicate a nearly 50% decline in overall IT services spends compared to pre-COVID. This demonstrates Yatra's ability to capture an increased share of wallet within its existing customer base. I would like to also take the time to highlight some of our more recent strategic initiatives to expand our market and growth potential. As mentioned last quarter, we've expanded our software service to better meet the needs of our clients through the launch of our expense management solution. We are calling this solution RECAP, which stands for Receipt Capture and Processing. RECAP leverages cutting-edge technologies, including Gen-AI large-language models for its receipt analysis to enable more accurate and comprehensive expense tracking. significantly reducing errors and saving time for our customers. We are currently working with a handful of customers on the expense front as part of our pilot program as we look to cross-sell this product further into our current installed base. Expense management is a large and highly profitable segment, and our product capabilities make it a product that is suitable not just for the Indian market, but for international markets as well. Our initial response from customers has been very encouraging, and this solution allows us to further deepen our relationship with our customers. With our focus on the corporate segment and our commitment to expanding our presence in offering, as mentioned earlier, we've added a team for the MICE segment and the early indications are highly encouraging. To provide you some context to the MICE market, the MICE market is valued at approximately USD 3.3 billion in 2023 and is expected to grow to US dollars 10.5 billion by 2030, deflecting a candle of 18% from 2023 to 2030. Now turning to the broader economic landscape, business travel in India is on an upswing. Currently, India ranks as the ninth largest market globally in terms of business travel expense. The market is expected to reach 38 billion this year and is predicted to grow by 18% next year, surpassing three pandemic levels. This growth is underpinned by a strong economic outlook for the country, with the Reserve Bank of India projecting real GDP growth of 7.2% in FY25. The Reserve Bank of India has also highlighted the positive impact of healthy balance sheets amongst banks and corporates, along with the government's ongoing focus on capital expenditure, and we believe this translates into greater demand in the corporate travel segment in the coming years. While domestic travel remains stable, With expected growth in the highest Indian regions, outbound travel is forecasted to grow significantly. Reports suggest that India's outbound departures could nearly triple to 50 million by 2030, fueled by improving connectivity, more direct and affordable flights, and a growing desire for international travel. While the June quarter posed challenges for our B2C segment, we are encouraged by the strong momentum we are witnessing in our corporate travel business. The growth in new corporate accounts and the existing development in our MySpaces underscores our commitment to driving long-term value for our stakeholders. We continue to fine-tune our strategic initiatives to maintain our position in the corporate sector while working to improve market share and regain share in the direct-to-consumer sector. With that, let me hand the call over to Rohan to walk you through the details of the financial performance. Rohan? Thank you, Dhruv. I will now review our numbers for the quarter ended 30th June 2024. We saw a 17% YOY decline in our gross bookings. This was mostly due to the 20% decline in our air gross bookings as explained earlier. Our hotel and packages gross bookings remain sloppish. Our overall adjusted margin for the quarter decreased by 15% YOY. Our adjusted margins for the air ticketing business were at 6.8% and 11.6% for hotels and packages. Moving on to expenses, as a percentage of total gross booking value, our marketing and sales promotion expenses reduced sharply by 25% on a YY basis. Our personal expenses increased by 23% YY as we continue to invest in talent to build out our mid-market MICE visa and expense management solutions. Other costs remained largely range-bound. On an overall basis, adjusted EBITDA was INR 65.6 million compared to INR 115 million in the quarter ended June 24. Lastly, as of 30th of June, we were carrying cash, cash equivalents, and term deposits of INR 4.5 billion, which is approximately USD 54 million on our books. And our gross debt is to an all-time low level of INR 210 million, which is roughly USD 2.5 million. With this, we conclude our prepared remarks, and I'd like to hand it over to the moderator for Q&A. Thank you.