Q1 2023 Yatra Online Inc Earnings Call
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Ladies and gentlemen, welcome to Yeah coffee, Scott first quarter 'twenty 'twenty three earnings conference call. At this event would begin shortly thank you for your patience.
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Good day, ladies and gentlemen, and thank you for standing by welcome to the yachts office goes first quarter 'twenty 'twenty three earnings Conference call. My name is Irene and I will be the coordinator school days event.
Note all participants will be in listen only mode. If you would like to ask a question on todays 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 my knees handbags, Ronnie how does E money. Please go ahead.
Yeah. Thank you Irene and good morning, everyone welcome to <unk>.
Fiscal first quarter of 2023 financial results.
<unk> ended June 32022.
Used to be joined on the call today by all sorts of U S pharma Sydney.
The following discussion including responses to your questions reflects.
Matt has been abused.
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.
Certain statements made on today's call may constitute forward looking statements.
It's all based on management.
And beliefs and are subject to several risks.
Uncertainties that could cause actual results to differ materially.
What are the description of these risks please refer to our filings with the SEC.
In our press release.
What.
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 Luke.
Thank you Manish.
Every one and thank you for joining us today for our first quarter earnings call of fiscal 'twenty three.
I'm pleased to report that we had our best quarter yet.
Of Covid, the gross bookings growing 56% sequentially, demonstrating a strong recovery post all thank god.
And you'll find all of the 899 million also they play good accelerating growth of 49% Q on Q.
Adjusted revenue of INR, one 5 billion, which is approximately $15 9 million U S dollars decreased 28% Q on Q.
Adjusted EBITDA for the quarter also came in the post pandemic high <unk> hundred $23 5 million.
It was approximately $1 $6 million for the quarter.
This included our investments behind the initiative.
That's a very strong start to fiscal 'twenty, three especially in corporate travel.
The June quarter, the proximity and 90% of pre COVID-19 levels as offices, I think that bodes back to levels seen prior to the pandemic.
This was also strong.
Domestic travel.
The quarter had approximately 100% of pre COVID-19 levels.
Particularly hard thing was that we had our best quarter in terms of new corporate customer signings with a record 27 large.
I'm sorry, the enterprises chose the I'll talk to us like Paul well their travel needs.
Clearly underscores the value and robustness of our banking platform.
Well as a superior service levels that people wait to our customer.
Okay.
No extra travel has also continued to recover.
It's recovering strongly since the easing of international travel restrictions.
At the end of March 'twenty two.
So in many of the approximately 60% of pre COVID-19 levels.
India's GDP growth was a strong eight 3%.
Fiscal year 'twenty two.
The IMF expects India's GDP to grow at about seven 2% in 2023.
As it relates to your answer.
All of the travel industry has unfolded to history.
He's like travel tends to grow at approximately two ex U.
In developing markets.
1.5 X multiple and developed markets.
We believe we should be able to achieve growth above market rates.
Continuing to take share in the corporate travel market.
The consumer market has gone to news that secular shift from offline to online.
But the expansion of the travel industry and the macro conditions continue to be favorable.
Does it makes our fleet size is expected to almost double over the next five years.
The aviation Ministry Decently full costing almost three X increase in air passengers.
But 400 million the next decade.
Let me give you. An example here on how demand is driving exciting agenda in India.
India, which was recently bought by the Tata group cause aggressive expansion plan.
You know, what though and this is.
October of this year. It is looking to add six wide body of 25, 94 narrow body air drops to it.
You also.
100 planes on order.
Meet the expansion over the longer term.
This is on a base of about 600 aircraft currently operating in India.
As you can see from here, you've got almost 5% capacity expansion happening in the near term just by India.
In addition to air India, We've got a new airline Argos I added which was launched in August .
We've got gateways also coming out of bankruptcy.
To start flying again later this year.
The incremental capacity on the airline front long would be increased airport infrastructure to drive continued expansion of the travel industry.
I think inflation, which seems to be a hot topic globally up late.
I would say I think relatively well.
Yeah, the inflation rate in the month of July was six 7%.
And with long term averages and down from the peak of seven 8% in April of this year.
Believe that demand and consumer confidence in India is relatively high.
We don't expect growth to slow down in India.
We are seeing in more developed markets.
Perhaps one of the reason why the benchmark stock index in India.
D is only down less than 5% year to date.
Trading at levels similar now lift out of the yard.
The NASDAQ is down almost 24% year to date.
I feel market in India also seems to be opening up you've.
We've had an IPO after almost four months last week and the offering was about 35 times oversubscribed and Mr down to 41% premium.
Can you provide us some update on that and they'll probably lingers levels.
You may recall, our Indian subsidiary ATA online.
The golf Covid had anywhere else like this but the outage the notch when he says this could go to.
He was an exchange board of India that'd be.
He is the main regulatory body in Indiana for a potential stock market offering.
We are continuing to work with the regulator to obtain the necessary.
Dr H B.
We expect this offering is completed to strengthen our balance sheet.
Our position us to take advantage of the rapidly recovering leisure and business travel market in India.
The faster than anticipated because we that'd be a good thing and Goldberg travel click.
The stronger the surgeons and the bench that went on the laser side.
It's very well for us and our IPO plans later this year.
There is significant demand for online travel stocks in India.
I'd be I feel it should be well received.
Blended all bodies about education in the U S and Europe .
Yes, 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 like <unk>.
It had been comfortable within the <unk> structure.
Now coming to our June quarter results.
I'm focused largely on sequential Q on Q comparison.
Financials as it doesn't really make sense for us to compare year over year and at last year's numbers were extremely depressed.
The branch.
Got wind of the disruption caused by the dental radiant.
Adjusted revenue for the quarter ended.
June 2022 came in at 1.25 billion INR, which is approximately USD $15 9 million, 28% quarter on quarter.
Sequentially Air gross bookings grew 47%.
You're not going to have an increase in used for domestic flights.
Long would be increase in mix of international travel.
Do we use well.
Literally high due to the latest international factors that we've been talking about.
Adjusted revenue grew 19%.
That's for the Air and this was largely on account of a fixed nature of our earnings.
With a higher mix of corporate business.
Well it does continue to outpace overall growth with sequential hotel bookings that room nights up 10%.
85% respectively.
It's all 585000 room nights in the quarter.
It was the highest number of room nights, we have reported since December 2018 quarter.
Continuing to take market share.
Backup supply continues to stand out in a more benign competitive environment.
Yesterday, but golf and $23 5 million.
So improved by 219% year over year, and 134% Q on Q.
This was driven largely by the increase it makes the carpet business that's like do it yet.
As of the end of June 2020, do the balance of cash and cash equivalents and term deposits on our balance sheet.
$978 7 million.
<unk> 12.4 minutes left.
Brees in cash balance from the previous quarter is primarily on account of increase in working capital deployment.
With a strong recovery of the corporate travel business.
Quick one two quarter then.
We have drawn down on the INR $414 million.
USD five 5 million against it you will find I think that the leads from our banks.
We expect the banks to continue to expand these five working capital limits.
The carpet business recovers.
Bus booking for business travel maybe other market leaders.
The June quarter approximately at 90%.
Covid levels.
At the highest level since I've been playing to 'twenty two.
We remain optimistic that we should pass pre COVID-19 levels in the very near term.
Beneath that the stronger than anticipated recovery in business travel that you have.
Yes.
Put to rest any lingering doubts that people may have heard about the future of business problems.
Very evident.
Human beings are social animals, while online tools are great enablers.
Being still play a part in person interactions.
You see improving inbound interest and continue to find new customers.
Increasing base onto our.
Platform.
June quarter was the best quarter, yet in terms of customer signings.
97, large and medium enterprise customers signing up for that service.
In the highly fragmented nature of the market.
We will continue to take market share going forward.
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 deepening.
On the hotel front, our strategic partnership with the dog on theatrical.
Most domestic hotel content from the outdoor which went live in the latter half of the March quarter.
Mr very strong uptake in the subsequent months.
I 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.
Only be accretive from an EBITDA perspective.
Bill also helps tend to not relationship without existing hotel partners.
Lead to better long term value creation.
The competitive intensity has risen modestly since the last quarter or what.
All the competitive level to remain manageable under Waddell funds.
Our guidance continues to resonate positively, but then didn't tablet.
As you May recall, India opened up international travel on a full schedule for March 'twenty seven onwards.
And we are seeing 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 Fintech initiatives.
If you look towards digitizing the logistics space, our corporate travel relationships with both the airlines and enterprise.
Together with our technology capabilities give us a significant head start.
It can be scaled up this business over the past few months and we believe this business longer term has the potential to be even larger than a coffee table.
I think that successfully Indian IPO.
Believe we'll be in a position to accelerate growth in freight.
It's even increasing interest because of the freight and logistics challenges the world is facing.
Optimistic about continued growth and recovery.
On the trends that we are witnessing believes that our vendors recognize Brian and healthy balance sheet.
That's in a strong position to take place as the recovery continues to gain momentum.
We believe the opportunity ahead for you I'll try as Matt says, we believe Indian Internet travel will hit an inflection point in the coming years.
He got box Covid.
We believe corporate travel Libya the leaders.
Although very quickly.
Listen I also want to highlight that the efforts that we made during the pandemic to improve operational efficiency.
Well really begun.
It was significantly higher levels of profitability.
I want to thank our shareholders, who have stood by outside through these trying times.
Hopefully I know unless we believe it's only a matter of time before your patience and understanding you've got good morning.
I'd like to thank everyone for joining the call today.
As always we are available for follow ups.
With that let me hand, it back to you.
Thanks drew.
And we can now open up the call for questions.
Thank you.
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 withdraw your question. Please press star followed by number two when preparing to ask a question. Please and show your phone is on a meals with locally.
Our first question comes from Scott Buck from H C. Wainwright Scott Your line is open.
Hi, Good morning, guys. Thank you for taking my questions I guess the first one for me could you give us a little bit more color now that you're back to essentially pre COVID-19 levels, where is the incremental.
Revenue going to come from in 2023 and 2024.
Hi, Good morning, Scott.
So when do you think about the Incrementals.
Going forward Scott.
This point, the first factor, which is an international travelers.
International travel is still only at about 60% of its people with levels will be.
Like that to continue to scale up and get to you know the people they kind of numbers by the end of this calendar year.
In addition, we have seen very secular growth happening.
Travel in general in India.
So the kind of things that people are talking about in the more developed markets.
Nation.
Consumer is holding back spending.
It doesn't seem to be the case like that in India.
Volume is recovering very strongly in India, India anticipated this demand for travel less disposable income grows in the hands of consumers continue.
Continue to be their income levels are rising they'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.
Expect travel to grow at almost two weeks of GDP growth rates.
There's a very strong secular trend that's happening.
At school and child I'm sorry.
The more general level.
Before you answer that.
Factors that I think are playing really well for us.
On the corporate travel side, we are seeing very strong inbound demand.
Conversion ratio on new customers is looking extremely healthy as more and more companies want to adopt technology.
Because things have been through a significant amount of disruption due to COVID-19 going forward people have realized that they want to work in a more digitized environment.
It was through an offline environment, that's leading to a very strong amount of inbound interest on our corporate travelers.
So one legal for us that will drive.
I believe tremendous amount of growth going forward.
There is the more secular trend in terms of just online adoption that we're seeing play out.
On the travel side on the leisure traveler.
What is happening in tier two markets in India. These markets are typically serviced by the offline agents.
The offline agencies.
A large number of them shop Chubb deal didn't go away.
Bradley permanently we're seeing tremendous amount of uplift happening over there customers moving online from these markets their jobs.
Forget all these customers has pretty much done everything.
Playing in the past two years I think people who've been stuck indoors all under lockdown.
Are the grocery home delivery e-commerce everything online so there's hardly any one in these markets today, who can answer that.
Great.
Savi.
So the online adoption.
Staying on the consumer side also has got significantly accelerated post COVID-19.
These two factors I think will drive a tremendous amount of growth for US then there is obviously new business lines like trade, which we initiated.
I don't want to.
From here on.
Great. That's that's very helpful. And then my second on the corporate travel side, you started 27 large and medium sized customers during the quarter. What's the pipeline look like for you know fiscal 2023 was the first quarter you know just particularly stronger should we expect these elevated levels.
To continue through the year.
I think the way we are seeing in the pipeline at this point in time, we expect this pipeline to continue.
And we would like to actually see exploration happening.
Second half of this year.
So as more and more contracts come up for renewal they come up for bidding.
I just had begun to come back.
Full time working environment only largely in this quarter I still January February we had all make fun.
The only be enforced in April are you seeing companies come back before your time working.
This quarter.
This is the first real quarter, where we've had some things come back and work for you guys.
I think the traction should continue in the only accelerates going forward from here.
Great. That's helpful would you guys need a meaningful ramp in opex to support the the topline growth or are you pretty comfortable with the cost infrastructure you have in place.
The call center and soft tissue not changed drastically from here as we've been talking through Covid.
A significant amount of our time and effort during COVID-19 and automating our back end processes and you just.
Ramping up the technology stack and that's putting us in really good stead at this point yeah.
The other change, which we're also seeing is just in terms of consumer behavior.
Corporate trial that looks like at Angola, the adoption of the self book platform has gone up meaningfully.
Early adoption on the cellphone side the lawyers the manpower costs that we need at all right.
Yeah, and just to give you a little sense on the corporate travel side.
I think 90% pre COVID-19 volumes.
About 60% of the staff.
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 there's actually gets completed so is there a real risk that just doesn't happen.
I don't think they're trying to hedge and I don't think the language. It in any way suggests that'd be a 90 or hedge.
I'm here to work.
Well, it's the IPO and you know what I want to say that pockets looking much better than what it has over the last four months at any point over the last four months.
You send the example that piece all the ideal that got subscribe that got subside thirty-five act, it's trading at a 41% in premium.
I will definitely show that the markets in India.
Looking up Oh, I do agree that you know one somebody doesn't make us swallow, but I feel that.
You're talking more tailwind behind the India markets also have a successful IPO in the near term.
Okay. That's helpful. I appreciate you guys, taking my questions and congrats on the quarter.
Thanks, it's all that stuff.
Thank you. Our next question comes from Lisa Thompson from Zacks Investment Research Lisa Your line is open.
Thank you 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 its pent up demand changing things how should we look at it.
Yes.
Good morning, Lisa.
Hi in terms of some seasonality firstly.
As you know there will be some effect of seasonality now coming into play.
We are nearing our people with levels from a volume perspective.
But it should not be of any significant impact as yet because we are beginning to see some pent up demand.
Fox over events travel and continue to be there.
Unless seasonality you think while the seasonality effect is beginning to play it it's still at a relatively modest level.
Alright that sounds good.
And then my other question is.
Where are you on now when you look back to 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 EBITA margins how has the world changed for you.
So for us the one big difference, which has happened is happening on the EBITDA margin and we are seeing meaningful improvement, namely.
The EBITDA margins as we go forward. This is largely on account of.
This change in consumer behavior.
Both on the corporate side and on the laser side, where customers are getting much more comfortable doing it themselves and meeting much lesser support.
That's definitely one thing which is there.
The thing, which we are seeing very good traction on is the adoption of the hotel programs.
Both the consumer side and the corporate side.
As we all recall you know have better long term margins.
I expect as we continue to scale up the hotel business.
Then should further enhance from there.
On the whole, we expect our operating margins continue to improve.
As we go forward.
You have some sort of number in mind of where you think you can go ultimately.
See the the near term.
The margins that we've been talking about.
The high teens.
And we think that you know I'd say, if I was just about the investments that you're making behind the plate business for the core travel business. That's the kind of margin number that'd be all working towards.
In the near to midterm.
Great. Thank you that's all my questions.
Thank you Lisa.
Thank you. Our next question comes from I'm, Yeah. So that's strong from Sidoti and company. Your line is open.
Okay, great. Thank you for taking my questions.
Well I'll start off and we're not far off on that and the Indian IPO do you have any more color on that and the timing of stuff I think you've talked before about that.
Happening.
Towards the end of this summer and with their Nashville.
What's the timeframe for that.
Yeah. So I think we continue to work with the regulator in India, and we're working very closely with them.
The timing as I said, you know the markets are beginning to look up.
We've seen the first IPO happened in almost four months now.
Peter a couple of months there was no real no idea that happened in the market.
One that type of thing that we have for another couple of which we believe are lined up.
The near term.
Can you give us a good indication of the kind of secular trend.
Markets are projecting.
Then based on market conditions.
That we should be looking at this and we had always said this that you know sometime around September October kind of time line what.
What we had initially anticipated.
No we continue to work towards those.
Okay.
You can look on that yeah.
Okay and cancer, 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 and that's sort of picked up to 83% of the COVID-19 levels pre COVID-19 levels How's that been trending since June for you.
Since June isn't there is some seasonality impact which is there in the air passenger traffic numbers. These are published by the.
The government the aviation authority in India. So there is some impact of seasonality, but it's not as Dawkins Wahoo one.
One would have expected.
Got it.
It is still I think some pent up demand, which is that on the travel side. So it's helping maintain volumes.
Okay. Thank you.
During the Covid, you sort of or just the salaries during the pandemic.
Has just come back on what can we expect in terms of that.
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 other parts of the World. There is no ongoing war for talent so to speak off.
So salary levels are back in most cases to peak levels.
We've also been able to rationalize our headcount quite significantly.
Technology.
But as I mentioned on this one to Scott's question.
The corporate travel side of things, we are now trending towards 90% of pre COVID-19 levels.
About 60% of the workforce.
So while they might be annoying individual salary costs, which have gone up by their collective level.
So you're able to keep our cost in check.
Okay, and it seems that the corporate travel is picking up but is there any sort of.
And 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.
Typically we've seen leisure come back faster than business travel.
Cause I will win well, we'll come back and they got a little faster and that's what's happened out here.
Hello.
I think as they come up with the one to two quarter kind of lives, which is what we are seeing some wireless.
As you travel has been at elevated levels since October November of last year.
They're traveling has only begun to really gain traction since March April of this year.
It is a maybe a one to two quarter kind of lag.
Consumer travel and golf their travel that's why I was suggesting that you know by the end of this year or early part of next year I mean, our corporate travel also.
So to speak already levels.
Okay. Thank you and the last one is.
In terms of the competitive landscape has that changed at all for you.
Have you seen the competitive landscape be it a bit more benign at this point in time compared to vehicle, we're glad wounds.
The disruptors like it'll be hard C. P. M oil all of these guys have scaled back competitive intensity that's.
That's creating a more level playing field so to speak off.
Okay. Thank you that was all for me.
Sure.
And for your questions.
Thank you. Our next question comes from Jeff Jackson.
Jeff Your line is open.
Great. Thanks, Thanks for taking my questions guys. Just a few from a few for me if I could first on the balance sheet just thoughts on on cash flow and cash balance over the next couple of quarters. You've commented on working capital I think 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.
A couple of follow ups.
Sure. So on the cash balance I don't 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-19 levels.
We are expecting some growth from here on it will be some cash consumption that happened on the working capital probably the thing that's largely coming in from the drawdown that you've done.
So does he will financing facilities that they have.
That's where the cash will come in.
We also expect these facilities to increase in size.
Business continues to recover.
Just to give you any comparative speak always.
Facilities are about $25 million at this point in time was about five and a half. So that's the business continues to scale up and we expect these facilities to also continue to go up.
To help finance the working capital requirements.
Okay. That's helpful and then on the on the freight side just refresh I'm one of the clear on the on that answer I think you gave to the earlier question about a high teens target near term margins.
On the 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 in investments there.
So be investment that's happening on trade is in the range of two to $300000, but well do that.
What kind of investment level that you're looking at that would be operating site.
And there is some working capital deployment also.
About two to 3 million, which is there on the freight side.
Jones of revenue expectations with revenue expectations for next year to be in the range of about $3 million to $4 million.
We had spoken about earlier trade business from that perspective, as I said, you know Oh.
We are investing behind it but it's not you know investment.
I know chartering them out right. So it's all lead to the tune of 200 to $300000 a quarter.
We expect this investment to happen.
Another two to three quarter that Mike and then we should start seeing.
The ability come through from the freight side as well.
Yes.
And last one on the on the 27, new corporate medium and large business the size of the quarter. So anyway 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.
Yeah.
Obviously, these drags that quite closely but it's not something that would be publicly disclose and you know at this point, we need to keep our disclosure is consistent with what we are disclosing in India and they'll be at H b.
And what we had this building in the U S. So we have to just maintain Saturday Dod.
Todd This is something going forward that we can consider shedding.
Yeah, Okay, and then on the D. D. R. H P. Just to get one point of clarification on the IPO. So when the the D. R. H P gets approved what is your understanding of the typical timeline from approval to actual completion of the IPO.
So from approval to completion.
B, a four to six week kind of timeframe Apple doesn't get on it then depends on market conditions as those Scott and Jeff as you well know right.
So it will be a function of that but the markets are going to use it.
It can happen in a six week timeframe.
Got it okay. Thanks, so much for taking the questions I appreciate it.
Thank you.
Thank you currently we have no further questions. Therefore, I would like to hand back to money for any closing remarks.
Thank you Irene and thanks, everyone for joining the call today.
As always we're available for follow up questions. Thank you so much.
Yes.
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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