Q3 2022 Yatra Online Inc Earnings Call
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You are currently on hold for today's <unk> third quarter 2022 financial results conference call. At this time, we're still putting additional participants and plan to be underway. Shortly we appreciate your patience and please remain on the line.
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Please standby were about to begin.
Good day and welcome to the Yatra third quarter 2022 financial results Conference call. Today's call conference is being recorded at this time I'd like to turn the conference over to MS. Hammer Johnny Please go ahead.
Thank you Jennifer good morning, everyone.
Welcome to <unk> fiscal third quarter 'twenty.
Actual results for the period ended December .
32021.
I'm pleased to be joined on the call today by <unk> co.
Thank you.
Following discussion, including responses to your questions reflect management's view as of today, whereas 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.
Subject to several risks.
Certainties that could cause actual results to differ materially.
These include expectations and assumptions related to the impact of COVID-19 pandemic.
The ongoing conflict in Ukraine.
For a description of these risks.
Please refer to our filings with the SEC on our press release.
With that let me turn the call over to Rolf. Please go ahead.
Thank you Monique and good morning, everyone and thank you for joining US this morning before I discuss our results I'd like to discuss what we believe will be a major milestone in the evolution.
As we shared with you last week, we are continuing to work with bankers and lawyers in India to explore all options, but in India IPO.
And as we shared earlier, we took the first step in the process with the filing with the golf Red Herring prospectus with SEBI, which is the main market regulator in India.
Oh, Brian is encouraging news to designate positively in India with travelers.
Corporate travel business continues to recover strongly.
Believes this would translate into a successful IPO that could significantly enhance strategic flexibility and act as a catalyst to improve shareholder value going forward.
Benefits of this listing which would support you outside the ongoing strategy and value creation opportunities include access to an additional pool of capital, including retail and institutional investors in India, who are already familiar with the auto business and bad, but who are currently restricted from participating in the U S markets.
Relating the liquid stock that can be used for M&A in India.
Well Catherine to strengthen the balance sheet and provide working capital to accelerate growth in both corporate travel and trade business additional cell types research coverage amongst others.
We also will begin management drove choice.
In India towards the end of April early part of May and we believe we should be in a position to compete offering by the backend of summer of 2022.
Now coming on to our December quarter results.
Adjusted revenue for the quarter ended December 31, 2021 came in.
1.0 for $4 9 million, which is approximately $14 million. This was up 33% Q on Q and 72% year over year.
We witnessed a strong recovery in travel in the December quarter as leisure travelers picked up heading into the Citigroup holiday season.
Hey passengers booked were up 40% year over year in the December quarter, and up 41% sequentially.
Room nights were up more than 72% year over year and about 18% sequentially.
Business travel also came back strongly on the back of lower case counts it could be early part of the third quarter I'm happy to share that this was the highest reported quarterly adjusted as nuclear out there since the onset of COVID-19 in March 2020.
Adjusted EBITDA also improved by 89% in Q1, Q2, INR 44 billion or approximately USD 600000 for the quarter.
Okay.
Despite the investment.
That we continue to make in the nascent but rapidly growing logistics business as of September 32021.
Islands of cash and cash equivalents and term deposits on our balance sheet was INR, one type people billions and.
The change in our cash position versus last quarter is largely on account of increase in working capital on account of the recovery in the corporate business.
On a us dollar basis adjusted revenue for the quarter was $14 million.
Adjusted EBITDA was up about $591000, which was up 89% sequentially showing the leverage in our business model.
We ended the quarter with a balance sheet and a cash balance of approximately $21 million.
As I mentioned above the change in the cash position is largely on account of change in working capital due to recovery of the corporate business.
Please note that while there was some disruption on account of all makes all in December .
There was a further impact which we felt in the month of June .
Into January but having said that recovery has been exactly that both leisure and business travel and turbine March and I'm pleased to say that we are back to a better than November levels exiting March 2021.
Business travel impact maybe other market leaders.
Lending to exceed 75% pre COVID-19 volumes in March 2020 to levels not seen since the 2020 and we remain optimistic that it should get back to close to pre COVID-19 volumes in the June 22 quarter.
While the competitive intensity has risen moderately since the last quarter.
They're all competitive levels remain benign on the hotel, Sean and Bryan continues to resonate positively with Indian travelers.
Business travel.
Macfarlane regrettably impacted volumes in January .
But February onwards, we have seen strong recovery happening and launch has been even stronger.
Overall industry volumes for travel for domestic air travel in March exceeded 83% of pre Covid volumes. So we are seeing strong recovery happening from March leading into the peak summer travel months of April may June across both leisure and business platforms.
On the hotel front we.
We signed a strategic partnership with slip goggle clicks it moving.
Moving now source domestic hotel content from your answer.
We believe that the incremental volume that we drive through this partnership will not only be accretive from an EBITDA perspective, but will also help us strengthen our relationship with our existing hotel partners and lead to a better long term value creation.
India's mass vaccination program has truly been remarkable and as of this week were 825 million people are 60% of the population have been fully vaccinated and close to 1 billion people have received at least one dose.
As a result, India opened up with international travel on their call scheduled for March 27th onwards, we are seeing good early traction on the travel time.
Orders continue to open up globally.
Because of these positive signals on the traction we are gaining an additional initiatives. We believe we can expect to see a quarter that meets or exceeds our bleak or to go with levels sometime this calendar year.
Let me now give you an update on upgrade business as we look towards digitizing the logistics space, our corporate travel relationships at both airlines and enterprise Executive management together with our technology capabilities give us a significant head start we have rapidly scale up this business over the past few months and we believe this business longer term.
Potential to be even larger than our corporate travel business. We expect 2020 to be a year of rapid expansion for this business and we believe that we should be able to achieve revenues of $45 million from this business in fiscal year 2023 following.
Following a successful Indian IPO I believe we'll be in a position to accelerate growth in fleet, which is receiving renewed interest.
Across the globe because of the freight and logistics challenges that people are facing.
We are optimistic about the autos got engineered growth and recovery based on the trends that we are witnessing and believes that a well recognized dial and healthy balance sheet puts us in a strong position to capitalize as the recovery continues to gain momentum.
We are not completely out of the woods I'm optimistic that based on recent trends the worst of the pandemic is now behind us and the levels of vaccination in India.
As lower case down to a level low enough to encourage strong recovery in travel both business and leisure as we have seen in the months. Okay then launch.
We believe the opportunity I had pretty outsized massive we believe Indian Internet travel will hit an inflection point in the coming years as we get past Covid, we believe corporate travel.
Leaders will also recover quickly.
In addition, the efforts 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 once again home standby I'll touch with these trying times.
We believe it's only a matter of time before your patience and understanding that you bought it.
With that let me highlight back diminish manish.
Jennifer can you. Please open up the call for Q&A. Thank you.
Yes would you like to ask a question on today's call that is star one on your telephone keypad.
And we'll go first to Scott Buck with H C Wainwright.
Hi, Good morning, guys. Thank you for taking my questions.
First one for me I'm curious if you're seeing some of the benefits of the market share gains you've made on the corporate side of the new contracts you signed on the corporate side during Covid now that recovery.
Our activity levels are starting to come back or is it still too early for that.
I think they are beginning to see early signs of that Scott.
Firstly as I mentioned, we've seen corporate travel volumes touch about 75% of pre COVID-19 levels in the month of March.
It's relatively early to comment on it but there have been days in the month of March where volume has exceeded all our daily volume has exceeded our pre COVID-19 levels.
So from that perspective, I'm quite hopeful that as we go into April May June of last cooperations reset budgets, we should end up seeing a very strong recovery happening in corporate travel for us on the back of not just recovery of our existing customers, but also on account of the new wins.
Great that's helpful.
As travel activity picks up both corporate and leisure are you guys staffed appropriately or do you have to do a significant amount of hiring rehiring, you know customer service folks or whoever else to meet.
The higher levels of demand.
So we've done some hiring in the last few months as demand has picked up in this hiring has been largely on the corporate travel side of things on the consumer product. We spent the last two years focusing a lot on backend automation, so our incremental head count expansion to take care of the increased volume has.
Negligible on the corporate travel side, there continues to be there continue to be areas, where customers still want to speak to someone especially when it comes to international travel whether regulations around COVID-19 and COVID-19 related restrictions still continue to exist. So in that trial, we are adding some headcount, but the head count which is coming in is.
Cutting and typically at the.
They'll try and claim level.
Frontline staff would average somewhere close to about.
500 to $600.
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So its not okay that.
Head count, which is being either yes.
That's really good color and similarly, it looks like you know marketing sales and marketing expense was the highest level in two years.
Are you comfortable with this level of marketing and sales promotion or do you think there is you know.
More required as you know activity starts to pick up.
I think on the marketing and sales promotion front.
This may.
Maybe slightly higher than this as we go into the April May June quarter would be there, but then again it should stabilize in this quarter. Subsequent to that April may June is leading into the peak summer months and I think given the kind of revenge travel that we're seeing in the demand uptake.
It will make sense for us to spend a little bit more on marketing, but it won't be significantly more it should be more than made up by the increased revenue that we would generate from that so whatever incremental marketing spend that you would see you would still see it being accretive to them.
Bottom line.
Great. That's helpful. And then last one from me you kind of touched on it but given that the last two years had been a little bit on ordinary can you remind us what seasonality looks like in a more normalized environment.
Sure. So the two peak seasons for US are the months of April May June and October November December .
Those are the two peak periods and then.
John said March would be that so in terms of sequencing April may June would be the highest October November December would be the second highest quarter.
<unk> said March would be the third highest in July August September would be the leanest.
Okay perfect I appreciate all the additional color guys. Thank you so much and congrats on the quarter from that at all.
Thank you Scott.
We'll go next to Anja soderstrom with Sidoti.
Hi, Thank you for taking my questions.
I'm just curious about that sleep business, how has stopped progressing.
And have you seen any surprises there or is it better or slower than you expected.
So the freight business continues to recover and then grow.
Grow quite strongly there was a slight disruption while the trade business in the month of January on a governor on the call and maybe in the last couple of weeks of December when place got disrupted but with international travel opening up in international flights coming back on schedule and moving away from the bubble agreements, we are seeing a lot more.
Capacity come on stream for international Air freight and I think Thats, a great Avenue an area for growth for us. So from the <unk> perspective, we are quite excited right now seeing the international travel in the international Air freight open up so that gives us a real incremental avenue for growing upgrade business in the coming months.
Thank you and I'm, a pre COVID-19 level roughly how much of your revenue.
Were derived from international travel.
So pre COVID-19 about 30% of our revenue was coming from 30% to 35% of our revenue depending on the quarter was coming from international travel.
Okay. Thank you and I think you mentioned before.
Did you didn't expect a corporate business travel to come back fully to pre COVID-19 levels and now you're saying that you say that do you think it might come back this year to pre COVID-19 levels.
How has that changed.
So what has happened is through a combination of new customer wins and recovery.
And then you know on our existing customers. We are seeing all corporate travel volumes come back very strongly.
As I mentioned.
I think there's also some kind of when we adopt newer customers via figuring out what I might call zoom fatigue, a number of our customers now want to be in front of their customers. They want to be in fact, a day other team members.
And meet people physically so we are seeing a lot of pent up demand for corporate travel at this point in time.
And that pent up demand is leading to a strong recovery in our popular travel volumes.
So this is what's happening on an existing customer bases and then in addition to that we are seeing new customer wins also coming through and as we go into the the new financially is really therefore those in April to March financial year, as we go into a new financial companies set up new budget spend go up again, so we would expect to see.
<unk> travel come back very strongly in the April May June quarter.
Okay and to the extent you have that one year customers are they more in house that going to outsource that or is it are you winning desktop from competitors.
We are largely winning them from competitors and we are also meeting.
The win is happening on the backup technology adoptions are likely you've spoken in the past as more and more companies get used to working in a hybrid environment. They realize they can't do a lot of their business processes manually.
And as they move towards automating their business processes, including travel and expense management. We are the market leader in an automated solution for business travel we are seeing strong interest towards our products and services.
Thank you and then just a last one and you have a good cash position and you're looking to make as dampening the balance sheet with this India listing what are your capital allocation priorities at this point.
Sure. So the capital allocation priorities would be one area would be deploying more capital behind growing the fleet and the corporate travel google's. The although it would be a certain amount of incremental spend on consumer marketing as the market recovers and we see a lot of the wins travel happening in the domestic Indian market.
So these would be two key areas and then the third behind that would be eligible to spend on the tech side of things.
We expand our product portfolio on the corporate travel side.
Okay. Thank you that was all for me.
Sure. Thank you.
We will go next to Lisa Thompson with Zacks investment research.
Hi.
I was wondering if you could talk a little bit about what you see maybe your cash breakeven level is as far as what revenues given the new corporate structure with all the new automation versus pre COVID-19 .
Sure. So I don't know operating level do you think the cash.
England should happen between $18 million to $20 million a quarter.
<unk> revenue.
Should mean cash flow breakeven for us at an operating level.
Okay, Great and you made a comment that you thought you could get to pre COVID-19 levels.
At the end of this year and if I look back to 2019.
You're doing $36 million quarters, do you think that's going to happen this year.
So 2019, our exit quarter. So if I look at the full year 2019.
Our exit quarter was I think about $23 million in terms of revenue. So that's the number that we think we should be able to get to in the very near term at least get to the $23 million number and if I look at you know full year number all year, we did about $80 million on current exchange.
Rates. They exchange rates has also moved about 20% in dollar terms from 2019, turning now but in current exchange rate terms, we would have done $80 million for the full year of fiscal 'twenty, which is roughly $20 million a quarter. So we think we are on track in the coming fiscal year to do better than that.
Great. Thank you that's all my questions.
Thank you.
And as a reminder, that is star one for questions.
We'll go next to Jeff Van <unk>.
With Craig Hallum.
Great Hey, guys. Thanks for taking my questions just wanted to follow up on the last question around margins. I think you had previously given some thoughts of what your EBITDA margin or EBITDA dollars would be around 90 million maybe the better question. At this point is just what is taken.
Take it one step further beyond the breakeven question, if you get to a $100 million in revenue what kind of EBITDA do you think you could you know.
Throw off I guess, what I'm trying to understand as you've got more capital potentially coming in the door through the Indian IPO and Ian are you pivoting back more to a growth mode as opposed to.
Maybe what I would describe as a more of a balanced mode. I think you had given some pretty aggressive EBITDA margins you thought you could hit just what do you think at 100.
Yeah, I still think.
Get that at 100, we should be between 15% to 20% kind of margin levels.
I don't see any reason why we should not be able to get to those margins.
In a more normalized environment.
Because we are seeing very strong uptake happening on corporate travel we are also seeing.
<unk> adopting a lot more technology than they've done in the past so the relative servicing cost has gone down quite meaningfully compared to where it was in the pre COVID-19 kind of era. So I still base level I'm confident that we should be able to deliver 15% to 20% kind of operating margin as we get to a $100 million number.
Okay.
Okay, great. Thanks for taking my questions Congrats.
Yeah. Thank you.
Hi, Jennifer are any further questions on the line.
At this time there are no further questions.
Alright, great. Thanks, everyone for joining the call today and as always we're available for follow ups drove anything to add.
Hello, Thank you everyone stay safe guys. Thank you.
This does conclude today's conference we thank you for your participation.
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