Q3 2023 Yatra Online Inc Earnings Call
Speaker 2: Thank you for your patience. The Yatra Fiscal 3rd Quarter 2023 Financial Results Call will begin shortly.
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Speaker 2: Hello and welcome to the Yatra fiscal third quarter 2023 financial results call. My name is Alex and I'll be co-ordinating the call today. If you'd like to ask a question at the end of the presentation you can press star 1 on your telephone keypad. If you'd like to withdraw your question you may press star 2.
Speaker 2: I'll now hand over to your host, Manish Hemrajani, Head of Investor Relations. Please go ahead.
Speaker 3: Thank you Alex. Good morning everyone.
Speaker 3: Welcome to the Opt-in fiscal third quarter 2023 financial results for the period ended December 30 plus 2022.
Speaker 3: I'm pleased to be joined on the call today by Yatra CEO and co-founder of GroupShringy.
Speaker 3: And CFO Rohan Mittal.
Speaker 3: The following discussion, including responses to your questions, reflects the
Speaker 3: management news as of today, March 28, 2023.
Speaker 3: We don't undertake any obligation to update or revise the information.
Speaker 3: Before we begin our formal remarks, allow me to remind you that certain statements made on today's call may constitute forward-looking statements.
Speaker 3: which are based on management's current expectations and beliefs.
Speaker 3: and are subject to several risks and uncertainties that could cause actual results to differ materially.
Speaker 3: For a description of these risks, please refer to our filings with the SEC and our press release pile earlier this month.
Speaker 3: Copies of this and other filings are available from the ITC.
Speaker 3: and also on the investor relations section of our website.
Speaker 3: With that, let me turn the call over to Dhruv. Dhruv, please go ahead.
Speaker 4: Thank you, Manish.
Speaker 3: Good morning everyone and thank you for joining us today for our third quarter earnings call fiscal 23. Before we discuss our results for the quarter, let me first provide you with an update on our ongoing India IP of graphics.
Speaker 3: As you may recall, our Indian subsidy is also online limited.
Speaker 3: I was in the draft red-heading prospectus just about a year ago on March 25, 2022 with security and exchange.
Speaker 3: The study has issued the final observation letter dated November 17, 2022 to Yatra, which means that Yatra India's proposed initial public offering can open for subscription within 12 months of that date.
Speaker 3: We commenced our India investor outreach, the India road shows in earnest at the beginning of the March quarter. We met with a number of market investors in India, including large domestic mutual funds, family offices and hedge funds who are focused on the Indian market. Our story has been well received given the strong underlying performance, the strong recovery in both consumer and corporate travel in India and favorable macro trends for sustainable long term growth which are supported by the government prioritizing infrastructure spending in the aviation sector.
Speaker 3: However, given the overall macro environment,
Speaker 3: and the global market sentiment. The investor feedback process has taken longer than expected. But the key investors continue to remain engaged with us.
Speaker 3: and we are hopeful and confident of getting the IPO done in the near term.
Speaker 3: Switching tracks to the macro of the business environment.
Speaker 3: In the December quarter, domestic aviation witnessed a strong recovery with air passenger traffic up 17% year over year and 19% Q on Q. The Indian government remains committed to growth in this sector by way of infrastructure spending on new airports and expansion of existing airports. The Indian government is committed to growth in this sector by way of infrastructure spending on new airports and expansion of existing airports and expansion of existing airports and expansion of existing airports.
Speaker 3: under the UDA and scheme launch by the government in October 2016
Speaker 3: More than 425 new air routes have been commenced to date. We plan to take that number to a thousand by 2026.
Speaker 3: The number of operational airports have also grown in the last 5 years from 74 to 141.
Speaker 3: And the government plans to have 220 airports operational by 2026.
Speaker 3: Last month, but now play with what you say.
Speaker 3: There's two mega orders.
Speaker 3: one with Airbus and the other with Boeing, adding up to 470 aircrafts.
Speaker 3: 70 of these are for wide body aircrafts and double-iron planes which are going to be used for long-haul international travel. And 400 of our narrow-body, single-iron aircrafts to be used for domestic and near-shore destinations.
Speaker 3: Air India's current fleet size is approximately 115, nearly quadruples on the back of this border.
Speaker 3: And that takes the expected number of planes in India to grow by over two and a half times from the approximate 700 planes.
Speaker 3: expected number of planes in India to grow by over two and a half times from the approximate 700 planes at the moment.
Speaker 3: to almost 1700 planes.
Speaker 3: planes by 2027.
Speaker 3: The outlook for aviation market in India remains very favorable.
Speaker 3: and we expect a long period of sustained growth on the back of these initiatives.
Speaker 3: India's domestic traffic has now grown to about 2% of the overall world share from 1.6% pre-COVID, but still remains well below China's 6.4% world share, which suggests that there are multiple years of growth ahead of us.
Speaker 3: as we get into a similar environment as China over the next two years.
Speaker 3: India Hotel Industry 2, Berlin-Wursteler, 2022.
Speaker 3: With revenue for available room or red stars recovered to pre-COVID levels despite a slow start to the year 2022 caused by a surge in the Omicron variant.
Speaker 3: Anecdotally, if you look at the results of some of the large hotel chains, they have posted some of the best Scottley results in a very long time in the December quarter.
Speaker 5: We see that domestic occupancy levels and red power have all now surpassed pre-COVID levels with corporate momentum stronger than measured as compared to pre-COVID.
Speaker 6: From a macro standpoint, the IMF predicts India's GDP to grow at about 6.8% in fiscal year 2023.
Speaker 7: As we have mentioned previously, the travel industry has historically grown at approximately one and a half to 2x GDP growth in developing markets.
Speaker 8: We continue to believe that we should be able to achieve growth above market rates driven by share gain in the corporate travel market and the ongoing secular shift from offline to online in the consumer market. Given the ongoing recovery in corporate and leisure travel, our continued success in finding new large and mid-sized enterprise customers.
Speaker 9: We believe we are pause for a strong calendar 2023.
Speaker 10: Aside from seasonality,
Speaker 11: We expect our results to benefit from accelerating growth in our corporate business as we continue to add to our blue chip customer base.
Speaker 12: Just to reiterate, today, Yatskara India sells 1 out of every 4 of the top 100 listed companies in India.
Speaker 13: We serviced three of the big four accounting firms and we serviced three of the top five technology companies in India.
Speaker 14: of the big four accounting firms and we serve three of the top five technology companies in India. Indeed an enviable client base.
Speaker 15: Now on to Office Q3 results.
Speaker 16: I am pleased to report that we delivered strong year-over-year growth of 43% in adjusted revenue given by recovery in both our consumer and corporate travel business.
Speaker 17: The recovery was on account of the domestic travel market in India rebounding back to pre-COVID levels along with the onboarding of new corporate craft alerts.
Speaker 18: in our corporate business. In fiscal year 23, we have signed a record number of over 72 medium to large corporate customers in the first nine months of this fiscal year as the travel recovery has gained momentum.
Speaker 19: Our adjusted revenue for the quarter came in at INR 902 million which is approximately USD 11 billion and INR 902 million.
Speaker 20: 1489 million which is approximately USD 18 million respectively.
Speaker 21: So revenue close to 11 million in the quarter and adjusted revenue close to about 18 million in the quarter respectively.
Speaker 22: Marginal decline in adjusted revenue by 1.7% sequentially was on account of seasonality in corporate business.
Speaker 23: The December quarter typically is the lowest quarter for the corporate business because of the large number of holidays, both on account of Diwali, which happens in October , and then Christmas towards the year end. adjusted EBITDA for the quarter came in at INR 36 million, approximately USD 400,000.
Speaker 24: The decline in adjusted EBITDA by RNR 8 million is due to higher legal and professional services mainly relating to increased compliance costs year over year.
Speaker 25: Our consumer business remains strong on the back of the holiday season and strong growth in the aviation industry.
Speaker 26: Overall, domestic air travel industry volume expanded by around 19% in the third quarter.
Speaker 27: domestic travel ended surpassing pre-COVID levels as well in the current quarter.
Speaker 28: We also saw continued strength in new corporate customers with 72 new stylings in the first time in the other
Speaker 29: And the December quarter, as we said, has been a lean quarter given the nature of the industry. International travel continues to improve during the quarter ended December .
Speaker 30: This is following the easing of international travel restrictions and reached approximately 88% of pre-cover levels. With the lifting of all travel restrictions in the Asia Pacific region, which has lagged the global recovery in international travel, we are now optimistic in the outlook for a 15th recovery in the US show international travel as well.
Speaker 31: On account of the above factors, our adjusted air revenue was up 39.2% year over year with air gross cooking up 37% year over year. On the retail side, our adjusted revenue was up 21% year over year with standalone room life up to 0%.
Speaker 32: Please do note that our stand-alone hotel room nights were up 33% compared to stand-alone hotel room nights in the pre-covid era of 2019.
This is all the time that the hotel business continues to benefit from stronger corporate demand as more and more corporates come under the managed hotel program and our partnership has required own
Packages grew 41%, albeit from a small base as the reality played its part in the December quarter. On the liquidity front, as of December 31st, the balance of cash and cash equivalents and firm deposits on our balance sheet.
was INR 1083 million which is approximately USD 13.1 million and this is an increase of INR 380 million.
US dollars 4.6 million versus the September quarter. During the three months ended December .
We raised data for INR300 million for the purpose of meeting our working capital requirements. This was raised from a non-banking financial corporation in India. And subsequent to the end of the quarter, we have been sanctioned, secured sales, invosions and working capital facilities to the tune of INR902 million.
from domestic Indian life.
taking our total facilities in place in India to INR 1452 million versus the pre-COVID level of INR 1300 million.
With these facilities in place, we believe our balance sheet is strong and we are adequately capitalized and have sufficient working capital financing facilities in place to continue to fund the robust growth in our corporate business and be in a position to repay any obligations that come up in the labor part of the year. Given that we are almost at the end of the March quarter, we are now in a position to make notes on the
We thought it would also be proven to share some preliminary expectations for the March 2023 quarter. We Declaration of Mission Interesting and can the I
I record high number of Indians travelled by domestic care per day on an average in February 2023 for passing the previous high of November 2019.
A record high number of Indians travelled by domestic care per day on an average in February 2023, surpassing the previous high of November 2019.stack flat shown, smile while
431,000 people travelled in domestic sites per day in February .
This was up 6.5% from January and higher than the previous record of 430,000 in November 2098.
Based on such quarterly trends to date, we anticipate an adjusted revenue range of INR 1,000,000 to INR 1,700,000,000 which is approximately USD 19.5 to 20.5 million.
for the March 2023 quarter.
This would translate to a sequential growth rate of between 10 and 14 percent on a Q on Q basis and also make the March quarter our strongest quarter since the start of Covid. The Q and A edition during the March quarter are in good proximity.
Yarto Online Limited also set up our only own subsidiary of the device. The objective of this subsidiary is to focus on expanding our software platform for corporate travel to customers in the Middle East and Africa.
With that, let me hand you over to Rohan to walk you through the details of the financial performance. Rohan. Thank you, Dhruv.
I will now review our December quarter results and focus primarily on year-on-year YOY comparisons.
Our adjusted revenue increased by 42.5% YOY to INR 1.49 billion.
The strong YOY growth was driven by a rebound in the air passenger traffic by 17% YOY and improvement in the yields which resulted in a 39.2% increase.
in air ticketing adjusted revenue.
to INR 1.01 billion. Adjusted revenue for hotels and packages was also up by 21% to INR 254 million.
Our other revenue was posted at INR129.3 million in the December quarter and increased from INR52.5 million in the year-ago quarter due to increase in advertising revenue.
Total gross bookings increased by 33.4% YOY.
The gross bookings increased by 33.4% YOI to an hour 15.8 billion.
reflecting the normal seasonality. Hotel and packages gross bookings also improved 57% YO1 reflecting the strength in our corporate optical hotels.
as well as a 41% volume growth in packages.
Gross air passengers booked were 1.32 million, up 4.2% on a YOY basis.
while the standalone hotel room nights booked were 398,000.
up by 16.3% YY. Moving on to the expenses.
by 16.3% YY. Moving on to the expenses, Marketing and Sales Promotion Expenses.
including adback for consumer promotions and loyalty program costs, increased by 53% on a YOY basis.
to INR 820.9 million. Our personal expenses increased by 22.9% to INR 311.6 million which is about USD 3.8 million.
in the three months ending December 31, 2022, from INR 250, 3.4 million in the previous year's same quarter.
Excluding the employee sharebase compensation costs of INR50, 4.5 million in the three months, ending December 31, 2022.
compared to 49.6 million INR in the previous year's same code.
Personal expenses increased by 26.1%. This is due to the impact of the reinstatement of salaries for employees to pre-pandemic levels.
and annual salary increase, along with increase in headcount. Other operating expenses increased by 43.5%, which is in line with the adjusted revenue growth.
to INR374.8 million versus INR261 million in previous year same quarter.
This was primarily due to the increase in commission, legal and professional charges, and payment gateway charges, rates and taxes.
and provision for doubtful receivables. As of December 30th, December 31st, 2022
We had a cash balance, cash and cash equivalent balance of more than INR1 billion.
a little around USD 13.1 million dollars, which was an improvement over the previous quarter closing of INR 703.
This concludes our prepared remarks.
handing back to Manish. Thank you. Thanks, Rohan. I'd like you to now open up the call for Q&A.
Thank you. As a reminder, if you would like to ask a question, you can press star followed by one on your telephone keypad. If you would like to withdraw your question, you may press star two. Please ensure you're unmuted locally when asking your question.
Our first question for today comes from Scott Buck of HC Wainwright. Scott, your line is now open. Please go ahead. Hi, good morning, everybody. Thank you for taking my question. First one, hoping you could give us a little more color on some of the market share gains on the corporate side and maybe talk a little bit about what the ongoing opportunity is there. Thank you.
Good morning.
On the corporate side, as we've shared, we won 72 customers in the first nine months of the year. The customer base that we are winning are more towards the mid and the larger end of the market. What we are seeing today is that there is an increase in awareness on the part of the organization to adopt technology.
And given that we are the market leaders, we continue to see a strong pipeline on people wanting to adopt technology to service their business target needs.
We've also seen some share shift gains happening in some of our larger customers and we are confident that that will continue to accelerate as well.
In terms of the market opportunity, today while we are servicing close to about 770 customers, the market itself is about 13000 large corporate customers. So there is enough and more headroom for growth for us as we tap into just this first level of mid to large scale corporate customers.
While pre-COVID, the bulk of our demand for technology adoption would either come from the consulting firms or the software development companies which had a more younger and more agile workforce. Workforce, what have you seen up late?
is that even the old school Indian manufacturing companies have now looked at adopting technology as companies focus on trying to get to terms with the new hybrid working environments. So we are seeing a strong resurgence happening in the market suddenly growing from just being the MNCs, stroke large consulting firms to the Indian large corporations also.
wanting to adopt technology out of this space now. Great. That's helpful. And then, Dhruv, I'm guessing any softening in corporate travel due to – I'm sorry. I should say any impact on corporate travel due to kind of the softening macro environment.
or between market share gains and recovery, that's all being offset.
Even in terms of same customer spend, we are not really seeing any slowdown at this point.
The market in India is quite buoyant, demand continues to be strong and there is enough and more growth happening and business happening in the Indian environment.
If you look at even the growth data that IMET puts out, it's anywhere between 6.5-7% kind of growth rate for the economy as a whole. So we are not seeing a slow down of economic activity in India.
There might be one or two pockets which are really heavily export focused. Those might be witnessing some slowdown, but the overall growth in the market continues to be very robust at the moment.
as we witness on the back of what we've seen on the aviation demand. As I just articulated in February , we crossed the highest number of domestic air passengers travelled ever.
Likewise, hotels have been reporting occupancy and webcar rates that they've never really witnessed in a very long time.
So economic activity in the country continues to remain very buoyant at this point and we're not seeing any signs of a slowdown.
That's great. And then last one for me, it looks like personnel expenses were up a bit sequentially. Can you talk about any hiring you've been doing or may need to continue to do on that funding and how it could impact office?
Sure. So personally expenses sequentially moved up on the March, the year over year there was a bigger jump. The year over year jump is also because last year, this is now 2021, October , November , December that we are referring to, a large part of the working population in the US that will still have reduced salary levels.
and salaries only began to get reinstated towards the middle of 2022. So there is some effect of that base effect coming through when it comes to salary cost. In terms of incremental cost from here while there will be annual inflationary cost increase which is where.
In terms of headcount
We might add one or two more people in the senior team, but beyond that...
the most significant number of people that will get added will be more at the operating level. So from a weighted average cost point, if you start going to have a large impact.
on the overall cost structure of the organization.
It's going to be much more towards the front end and front line staff, which is there to service the corporate demand as we go into more and more corporates and go through a transition process with them as they adopt technologies. There is some manual servicing effort also which is there.
So it's going to happen more at that end and hence should not have a meaningful impact on our overall cost structure Great, that's very helpful. I appreciate the time guys. Thank you.
end and hence should not have a meaningful impact on our overall cost structure. Great, that's very helpful. I appreciate the time guys. Thank you. Thank you.
Thank you. Our next question comes from Anja Söderstrom from Sordoti. Anja, your line sound open, please go ahead.
Hi and thank you for taking my questions.
You signed 72 new customers in the quarter. How long does it take for them to build up and become a significant contributor to your top line?
So these are customers who have been signed over the 9 month period. But the vast majority of this only started happening towards the May kind of timeframe, May-June kind of timeframe. So typically you look at a 90 day to 120 day implementation cycle for a large customer.
and then another 30 to 60 days for them to ramp up volume. So you would see the bulk of the effect of these new signings playing out in the current models.
So starting from January , you start seeing these numbers come true. Okay, thank you. And you know that you expect sort of guided for the fourth quarter going to be pretty strong. How should we think about that building up in the next year? Is that going to be expected?
talking about as they get implemented, their numbers continue to break in and there will be a waterfall effect of that happening. And likewise, we are seeing strong resurgence happening on the B2C side as well. So today we are seeing both cylinders firing strongly on the corporate side and on the B2C side and we expect this trend to continue.
Okay, thank you. In terms of expansions in Dubai and Africa, how meaningful are those for you?
As of now, obviously, this is just the start of the process. We think over the next few days, it will take a bit of time for them to become meaningful contributors. But we are quite excited about these market opportunities. The dynamics when we studied these markets are very similar to where India was seven, eight years ago in terms of technology. However, COVID has now made it.
almost imperative for organizations to adopt technology at a much faster pace. So we are very excited about these markets. It might take a bit of time for them to become meaningful contributors, but in the long run, I think this can be a very interesting and very highly-attributed business for us because we are creating margins out here.
as the field fast plays are extremely high. OK, thank you. That was all for me.
fast play are extremely high. Okay, thank you. That was all for me. Thank you.
Thank you. Our next question comes from Lisa Thompson of Zacks Investment Research. Lisa, your line is now open. Please go ahead. Thank you. Good morning. So you showed excellent revenue growth this quarter.
but also expenses were up so that the losses kind of increased. Is there anything in the quarter that was, say, exceptional, or how do you expect expenses to trend versus revenues? I didn't get a chance to go through in huge detail, but I did notice the interest expense was up a lot, and I assume that goes away when you do a capital cash raise.
Talk a little bit about that. That's actually interesting. Sure. So the interest expense also had a bit of one-off in it for the new facilities that we've taken. The upfront administrative fee for all these facilities would have got a charge to the P&L in the December quarter. There will be some of that one-off effect which will be there which won't be there going forward.
because these facilities will then be in a reckoning nature. So that's one aspect of it. The other in terms of marketing cost given that you know our frequently this is typically the highest quarter for personal carbon. There was a bit of incremental marketing cost which was there. And we did that consciously also because we thought it was important to just get the brand out there.
from next year's perspective and to build out some sustainable direct traffic for us. So that's a slight one-off which is there. But otherwise, we should see as we go into the subsequent quarter, profitability also growing in line with revenue growth.
Great, that helps a lot. And does the strong hotel business kind of affect product mix? Is that a lower margin business?
So, Hukhales is a higher margin business for sure and as we move forward, we expect this to keep improving our product mix going forward.
This will be a relatively slower burn because the skew at this point from a revenue perspective is still heavily in favor of air. But we expect hotels to continue to scale up nicely like we have seen in the last four or five hotels. So today close to about 20% of our revenue comes from hotels.
And about another 14 odd percent comes from other services and the remaining from air. Do we expect the mix to continue to hold at this level?
with just a gradual improvement happening in
We spoke about the kind of capacity expansion that we are seeing on the part of the airlines. We spoke about the new peaks being reached by domestic air traffic. So air in India is also growing at a very big pace. So it's not just a hotel part, like we would see in more developed parts of the world.
In India, it's actually all boats rising at this point of time. Great, thank you. That's all my questions. Sure, thank you. Thank you. As a reminder, if you'd like to ask a question, you can press star 1 on your telephone keypad.
Our next question comes from Jeff VanRee from Craig Hallam. Jeff, your line is now open. Please go ahead. Great. Thanks for taking my questions. A couple for me. I want to, Drew, if I look back at the pre-COVID period, and let's take maybe the March 19 quarter, and I look specifically at Aaron Hotel, and I compare now what you would assume you'll see in the next two weeks.
higher than those numbers as a baseline reference. So as we go forward, Jeff, we should start seeing numbers begin to grow from that baseline.
We are today getting to that stage where we should be crossing those baseline numbers.
The big difference which will be there will be in the profitability that in that quarter where we are coming further on operating profit margins would be significantly different.
So you know she was saying something? Yeah also Jeff we should be looking at the IRR number not the USD number because currency has moved unfavourably in that direction.
Okay, and then I guess just to complete the picture on the March 23 quarter, I think you gave us a pretty good glimpse on revenues and you commented on a few of the expense items but I guess ultimately what matters here I would think
EBITDA is going to be the key number one of. How should we think about EBITDA for the March quarter? Jesse, I'm giving the guidance for the EBITDA, but overall we expect the macro environment and our business environment to continue to improve.
As you're seeing improvement happening in the revenue, it should have a flow-through effect to the bottom line as well. Just two other quick ones if I could. My standard question, I know I've been asking it for a while. I think you had laid out roughly 17-19% of the margin then targeted.
recognizing we've been through a lot of turmoil and economic headwinds, etc. But just touch on the logistics in terms of any expectations for 23.
So logistics business has been in the last quarter relatively slow. I'm sure you guys are all following the global logistics wave and you would have seen that our global shipping rates have completely collapsed.
They are now trading anywhere between 60 to 75 percent lower than where they were as recently as about six to nine months back. So there is a bit of softening on that side. Plus obviously exports out of India are a bit soft given the recession that we are looking at in the U.S. and other parts of the world. So the logistic part is slightly slower at this point in time slower than what we saw last week. So we are looking at the
Yeah, so we've issued debt and we've taken on working capital facilities. The working capital facilities are more perpetual in nature, i.e. they are like a revolver facility which is there. And the debt which we've taken, that was a debt of INR 300 million. And this was taken in the month of, I think, on January 30th, December 20th.
the December year end.
So they are the current quarter event. Okay, thank you. Thank you. We currently have no further questions, so I'll hand back to Manish for any further remarks.
Thank you, Alex. Thanks everyone for joining the call today. And as always, we are available for follow-ups. Thank you.
Thank you all for joining today's call. You may now designate your lines.