Q3 2021 Yatra Online Inc Earnings Call
Ladies and gentlemen, you are currently on hold for the Yatra third quarter 2021 conference. At this time, we are assembling today's audience and we plan to be underway. Shortly we appreciate your patience on please remain on the line.
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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 hemorrhage. Johnny. Please go ahead Sir.
Thank you Abby good morning, everyone wishing you all a happy new year and hope everyone is safe and healthy welcomed.
Welcome to Yatra its fiscal third quarter 2021 financial results for the period ended December 31, 2020, I'm pleased to meet joined on the call today by our CEO and cofounder Roofing Inc.
The following discussion including responses to your questions.
Management's views as of today February four 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 maybe beyond the companys control.
These include expectations and assumptions related to the impact of the COVID-19 pandemic.
On a description of these risks.
Please refer to the filings with the SEC and on.
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 drew.
Yeah.
Thank you on H B.
Good morning, everyone and thank you for joining us this morning, let.
Let me start by wishing everyone, a safe and healthy Mario 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.
<unk> data from index suggests that the worst of the pandemic is behind US the number of daily cases in India continue to decline.
From a peak of about 98000 back in the middle of September they've come down to about 11000 yesterday.
Additionally, in India weighted vaccine rollout has also started last month.
On the daily vaccination count continues to rise gradually.
We believe this bodes well for <unk>.
As a whole and especially for the travel sector as the strength continues.
We finished 2020 on a strong note as our adjusted revenue increased 61% sequentially from the third quarter.
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 growth local 100% sequentially.
This growth in revenue combined with strong cost controls enabled us to reduce our adjusted EBITDA loss.
36 million, which is approximately 500000 U S dollars down from 125 million INR in the September quarter.
In USD terms thats 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 a liquidity at $3 million in net cash and are well on our way to profitability. We believe in 2021.
As you look to the year ahead, we see 2021 is the year of recovery.
<unk> seen 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.
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-19 levels.
Passenger load factors continue to improve gradually and are currently approximately $70 72 per se.
We believe the capacity could reach close to a 100% of pre COVID-19 levels by the middle of this calendar year.
On the international Air, France, However, recovery continues to be muted.
This is impacted by border restrictions based on call it cash balance in various countries.
<unk> continued to operate on the air bubble agreements between countries. So.
So far we have 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 hotel, we started taking bookings if you recall in may on a very limited basis. However, since September.
A number of hotels and number of states in India, Although have allowed the hotel to start operating with limited quarantine restrictions and we've seen demand recovers strongly during the Diwali and Christmas holiday season.
Mentioned above.
Hotel room nights booked grew over 400% Q on Q, we expect to see recovery to continue on the domestic hotel club as we head towards the summer travel period.
We continue to make solid progress on the corporate travel front as well and signed 10 notable customer contracts during this quarter.
And do bear in mind that this is a period in which still a number of organizations where either shaco continue to look in a limited manner.
We believe we are well positioned to leverage a scalable SaaS platform.
And continue to take market share we are the leading business job was the weighted in India.
Pipeline of prospective new customers continues to grow as inbound interest has increased meaningfully both by level we.
We believe the online penetration in the corporate travel market in India is approximately 10% to 15%.
Large part of the market.
Absolutely, 60% is held by smaller offline players as a result of the pandemic. We are seeing evidence of an accelerated shift towards online says, especially as contracts come up to the end of life on EBIT, we remain confident in our platform capabilities to serve any scale entitles customers.
Corporate travel recovery is expected to lag consumer, but please note that before COVID-19.
Corporate travel was growing at a faster rate and we expect this dynamic to Doug post Covid.
Okay.
Beyond just recovery from Covid, we believe the Indian travel market is back on its strong secular growth strength last meet IMF projected India to grow at 11, 5% in 2021 day only.
The 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 IMF stages that India had taken very decisive action letter decisive steps to deal with the pandemic and to deal with the economic consequences of it.
Typically tends to grow at about one and a half to one seven times GDP growth and we anticipate India will get back to these levels of growth as vaccination becomes more present.
If India follows the path of what on many developed countries have done we can expect to see growth to inflect for travel.
Levels, even beyond pre COVID-19.
Turning to our third fiscal.
What are the results we saw a meaningful sequential recovery this quarter, reflecting a gradual opening of the country and rising air passenger traffic as capacity continues to be added.
This recovery in domestic travel led to a sequential quarterly growth of 61% and adjusted revenue to INR $607 million, which is approximately $8 $3 million versus $5 $1 million in the previous quarter.
This growth in revenue for the combined with strong cost control enabled us to reduce our adjusted EBITDA loss from a 125 million, which was approximately $1 $7 million in the September quarter to about $36 million or approximately.
Half a million U S dollars for the current quarter.
We continue to hold on cost 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 growth driver is the expansion of our corporate digital platform as we continue to derive 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 on enterprises in India, We continue to make.
Inroads into these organizations with our non travel offerings of expense management at Deca and others.
And now a quick update on the litigation against the Ebix.
On September 30th.
2020 also filed an amended complaint expanding its claim against certain banks of Ebix. While also expanding the claims alleged against the ebix to into the claim for Claude.
Our hearing for arguments concerning the motion to dismiss filed by the other party has been set for March 22nd.
2021.
While im 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 whether the litigation is linked to the outcome of the case and <unk>.
Other 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 31, 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 2.2 dollars $7 million of our debt during the current quarter and our outstanding debt as of December 31, 2020, now stands at only 110000 U S dollars.
Given our continually reducing book.
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-19.
We expect to see an accelerating shift from offline to online travel bookings and we believe you'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 cash flow.
I want to thank all our shareholders, who stood by US through these trying times I am hopeful and honestly believe it is only a matter of time before your patience and understanding is awarded.
This concludes our prepared remarks alerted I'll hand, it back diminish to take forward the Q&A monesia over to you.
Thanks drew.
Please open up the call for Q&A.
Thank you.
If you would like to ask a question. Please signal by pressing star one on your telephone keypad. If you are using a speaker phone. Please make sure you're on mute function is turned off to allow your signal to reach our equipment.
Again, it is star one if you would like to ask a question and we'll pause for a moment to allow everyone an opportunity to signal for questions.
Yeah.
We will take our first question from Matthew <unk> with Sidoti.
Okay.
Sorry, I had myself on mute.
Okay.
So a couple of questions for you from back in the queue. First is on I think you mentioned 10, new corporate customers signed this quarter can you give a sense of.
Maybe what the size distribution that was was there any.
Sort of flat to up type.
Blue Chip type company.
Company is it predominantly smaller what.
Yeah, what are we looking at there.
Hi, Hi, Matt So in terms of the customer distribution. These are all.
Reasonably large organizations, there is one which would stand out and be in the top.
On top of the teen customers of ours.
But the others would all be reasonably large mid sized operations and they would include some blue chip International LNG there's debt.
Got it thank you and debt.
You know again I think we've talked about this last quarter, but what was the number one feature that sort of.
Came off or if there was one that.
Got you lands.
I don't think its one each on that I think now it is a comprehensive solution that we're offering to customers and it's the combined offering of product and the service delivery, which is getting us. These customer wins there is a more secular trend about customers wanted.
To adopt digitization.
And we are the leading player when it comes to a digital platform called business travel management in India. So that definitely gives us an edge, but over and above that it's now the comprehensive product solution that we built it as a day.
<unk> integrated solution, it's got the ability to handle complex workflows, it's got the ability to Malaysia approval Costas mechanisms make sure. All billing reconciliation is done seamlessly in a digitized manner. So all of these automated workflows, which have been built together and then income.
Buying with day rates that we're getting on the offline service an exception handling that we are providing is what's getting us. These customers. So it's a complete package as opposed to just one element of it which is driving new customer wins.
Great. Thank you.
Sure.
As a reminder to start wondering if you would like to ask a question. We will take our next question from Scott Buck with H C. Wainwright.
Hi, guys. Thank you for taking my question.
I'm curious if you've seen any meaningful changes in the way people are booking are you seeing more closed and travel are people booking further out in the future anticipating.
The nation rollout and any expectation around on a permanent C around any of these changes.
Hi, Scott.
Scott one of the changes that we are seeing in terms of trains.
Being more shorter.
Higher frequency holiday travel, especially when it comes from near term destination. So people on taking all breaks.
They're traveling near to their destination near to their hometown.
But there is.
Ohio frequency the durations have come down we are on seeing that many seven day isn't about kind of base happening.
So we are seeing more like three four night kind of breaks, but we are seeing it's happening at a much higher frequency.
The other train which is also there is debt and this is maybe it's still a bit more limited is equal working from.
These kind of leisure destinations so people renting out of homes is renting out.
Alternative accommodations.
Accommodations for an extended period of time and working from there. So that's a more nuanced Greg but the more general trend that PSC is short on frequency.
And sorry on shorter duration and higher frequency and the category of hotels also that people are preferring it smaller four and five stars. So we've seen people.
Upselling in.
In terms of their preferences and going towards higher category of hotels.
No.
Helpful. Thank you.
Also hoping maybe you could provide a little bit more color around what you're seeing in the corporate travel market in terms of activity and potential timeline of our preparation should we think about corporate travel is being <unk>.
Three months six months behind leisure or do you think the zoom calls and video conferencing is going to last meaningfully longer than that.
Yeah at this point in time.
We've begun to see some early traction on the recovery on the corporate travel site on.
Number of customers have opened up in January.
We've got feedback from some of the other large ones opening up in Fab and then the next batch is scheduled for April. So my sense is that youre looking somewhere between that three to six months day in a timeframe.
Whereas corporate travel will lag leisure travel, but by the middle of this year, given what's playing out in India at least I feel on the domestic travel from corporate.
Corporate travel should be between.
65% to about 75% of pre COVID-19 levels at least on the domestic travel product.
Yes, that's great last one from me I'm curious the.
Potential air bridges, where travel bubbles, how useful have you guys seen them be in driving some at least regional international traffic.
And would you expect to see more of these kind of travel arrangements between countries here over the next six to 12 months.
Yeah.
Joe I think that's all day.
It's something that we are watching very closely Scott and I think the wendy's travel bubble agreements come into play.
We do see a slowed on traffic.
So India in Dubai as an example, all side <unk> seen a fair degree of traffic is happening over the past few months between India and Dubai on it.
All of the travel bubble that's been operating over there.
<unk> seen a similar trend average for Maldives, we expect <unk> in the near term to also go through a similar process, but having said that a word of caution on this is also necessary given that the new strain of the wider seems to be a hearing in some other countries. So in.
Here you can see it for example was.
Fairly high traffic corridor, but come early January there's been significant restrictions, which have come into play given the new variant of the wireless in the UK.
So I think the bubbles that definitely very helpful. But.
We need the bubbles lost consistently.
In India. There is talk of herd immunity coming out and that definitely bodes fairly well for India. So I think domestic will recover and continue to recover at a faster pace international. Unfortunately, we'll have these fits and spurts given what's happening in different countries.
Great. That's very helpful guys I appreciate your time this morning.
Thank you Scott.
And there are no additional questions. So I would like to turn the call back to my niche from Murjani for any additional or closing remarks.
Thank you Abby and thanks, everyone for joining the call today, we look forward to speaking to you during the course of the quarter. Thank.
Thank you guys.
Thank you.
Ladies and gentlemen, this concludes today's call and we thank you for your participation you may now disconnect.
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