Q2 2025 Yatra Online Inc Earnings Call
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Speaker Change: Hello everyone and welcome to the Yatra 2Q25 Earnings Conference Call.
Ezra: My name is Ezra and I will be your coordinator today. If you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. I will now hand you over to your host, Manish Hemrajani, VP of Corporate Development and IR. Manish, please go ahead.
Manish Hemrajani: Good morning, everyone, and welcome to our Earnest Conference Call for the fiscal second quarter of 2025, covering the peer-ended September 30th, 2024.
Manish Hemrajani: I'm pleased to be joined on the call today by Yathra's CEO and co-founder Dhruv Shringi.
Manish Hemrajani: The discussion today, including responses to your questions, reflects Manish's views as of November 13, 2024. We undertake no obligation to update or revise any forward-looking statements, whether as a result of your information, future events, or otherwise.
Manish Hemrajani: Before we begin, I would like to remind you that certain statements made on today's call may constitute forward-looking statements.
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Thank you. Thank you. Thank you.
Thank you, Manish, and good evening, everyone.
Manish Hemrajani: Thank you for joining us for our second quarter 2025 earnings call.
Manish Hemrajani: As you would recall, we completed the acquisition of Globe Travels, a leading corporate travel and mice company headquartered out of Calcutta, on September 11, 2024. Our results that we discussed today will include Globe's performance for the 20-day period.
Manish Hemrajani: For the quarter ended September 30, 2024, we reported total revenue of INR 2.36 billion, marking an impressive year-over-year increase of 151%, primarily fueled by a strong organic performance in our hotels and packages segment.
Manish Hemrajani: and in our meetings, incentives, conferences and exhibitions, which is the MySpace. Our organic growth rate was also equally impressive at 121%.
Manish Hemrajani: The robust growth in mice underscores our ability to capture the rising demand for corporate travel and event services, further solidifying our market presence.
Manish Hemrajani: Despite headwinds in the B2C air segment, our corporate travel segment continues to demonstrate strength, showing significant growth across all major metrics.
Manish Hemrajani: In the second quarter of FY25, we onboarded 29 new corporate clients, collectively adding an annual billing potential of INR 1.2 billion. This not only expands our client portfolio, but reinforces our value proposition as a trusted partner in the corporate travel space.
Manish Hemrajani: As I mentioned earlier, on September 11, 2024, we completed the acquisition of Globe Travels for INR 1.28 billion in cash. I'd like to highlight some strategic advantages we expect from this acquisition.
Through this acquisition, we have to add substantially
Manish Hemrajani: to its customer base with about 360 new customers from globe. This would be in addition to our 850 large corporate customers that we currently service.
Manish Hemrajani: This enhanced base solidifies our leadership position in the corporate travel market in India and reinforces our competitive advantage.
Manish Hemrajani: The expanded customer base is expected to strengthen our position with suppliers, enabling us to negotiate more favorable terms, which in turn allows us to deliver even greater value to our customers.
Speaker Change: Globe Travels is well known for its expertise in the Mines sector. By integrating Globe's capabilities with our recent organic growth in Mines, Yafra is positioned to become one of the largest players in the fast-growing segment in India.
Speaker Change: The acquisition of Globe Travels also brings access to a diverse and largely non-overlapping client base, thereby diversifying our client portfolio across various industries.
Speaker Change: This diversified portfolio presents ample cross-selling opportunity for Yatra's hotels and expense management platform, allowing us to provide a more comprehensive suite of travel solutions tailored to meet the specific needs of our customers.
Speaker Change: With slow travel, last fiscal year delivering adjusted revenue of approximately 470 million INR and adjusted EBITDA margins exceeding 30%, this acquisition is immediately accreted to our financials.
Speaker Change: We also foresee additional potential for margin expansion as we realize synergies. Importantly, Globe Travel's operations are primarily offline, thereby presenting an opportunity to introduce our corporate self-booking platform to their customer base and creating significant efficiencies and enhancing our value creation potential.
Speaker Change: Your travels corporate clients can expect improved cost savings and streamlined operations by leveraging Yatra's digital platform.
Speaker Change: As part of the combination of YASRA and GLOBE, we had identified synergies upwards of INR 60 million per year on account of combining supply and GDSDs alongside automation-related cost benefits.
Speaker Change: We remain well on track to achieve these and potentially realize synergies a bit in excess of these.
Thank you.
Additionally, we have achieved
Speaker Change: Notable organic progress in our lives and corporate hotel business this quarter, as evidenced by the outperformance in our hotels and partitioned segments.
Speaker Change: This segment saw gross cooking increase by 68% year-over-year, of which organic growth was about 44%, and the rest accounted for by the acquisition of globe.
Speaker Change: Our adjusted EBITDA for the quarter reached INR 66.7 million, up 91% year-over-year, and up 28% on an organic basis.
Speaker Change: This strong performance underscores the continued momentum of our strategic initiatives.
Speaker Change: Moving on to some of the more recent developments which have happened, firstly let me talk about expense management.
Speaker Change: Our expense management solution, ReCap, is progressing well with several large customers currently in the platform, in the pilot phase.
Speaker Change: This product has seen encouraging responses, indicating its strong potential as a cross-sell option within our current customer base and also on a stand-alone basis.
Speaker Change: Given the significant demand and profitability in potentially the expense management sector, we see substantial opportunities to scale recap both in India and internationally, thereby deepening our customer relationships and reinforcing our value proposition.
Speaker Change: Moving to our Corporate Platform Partners Program, last quarter we announced its legit partnership with GW Travels, a premier travel management company based in the United Arab Emirates under our CTP program.
Speaker Change: This partnership enables offline and online travel agencies to benefit from new revenue streams, differentiated offerings, and advanced travel-related products and services.
Speaker Change: To the CPP program, partners like DW Travels can leverage Yarza's cutting-edge platform to offer a superior travel experience to their customers, thus unlocking new growth opportunities and solidifying our position as a leading provider in the travel management space.
Thank you.
through self-cooking tools.
Speaker Change: The new booking capability of the NDC platform integrates a richer booking experience with greater transparency and flexibility for customers. It also provides access to special pairs which are otherwise not accessible through the GDS platforms.
Speaker Change: By integrating NVC, Apple Edge ensures that the corporate tablets on our platform have access to this wider array of choice and a streamlined booking experience.
Speaker Change: This integration not only supports cost efficiency, but also empowers businesses with smarter, more informed decision making.
Speaker Change: This milestone reinforces JABSOM's commitment to innovation and leadership in the corporate travel management space.
Speaker Change: We have managed to stabilize the volumes and have focused on improving operating performance.
Speaker Change: We have seen the benefit of this flow through in the month of September and October and expect the same to continue in Q3 as well.
Speaker Change: Our brand Yatra.com continues to have strong brand recall, which has in a relatively short period of time enabled us to offset the impact of these industry headwinds.
Speaker Change: In addition, we continue to make strong inroads on selling personal travel to the employees of our corporate customers. And the attached rate of personal travel goes up almost 20% versus the same quarter last year.
Speaker Change: This channel continues to remain a very cost-effective channel for customer acquisition for us.
Speaker Change: Towards the end of September, we have also launched a revamped user experience on our website and mobile apps for Android and iOS, and the initial response to conversion optimization on the new platform is very encouraging.
Speaker Change: In the September quarter, India's corporate travel sector experienced significant growth, reflecting the country's robust economic performance and evolving business dynamics.
Speaker Change: The Reserve Bank of India's economic outlook during this period further underscores the nation's economic resilience and growth prospects.
Speaker Change: India's corporate travel market is undergoing a transformative phase driven by new work models and technology innovation.
Speaker Change: A recent Deloitte report highlights that innovation in corporate travel is key to enhancing employee experience and optimizing costs.
Speaker Change: The MICE segment has also been a significant contributor to this group. Companies are increasingly investing in MICE activities to foster team cohesion, engage clients and drive business development.
Speaker Change: This trend has led to a surge in demand for hotels, consulting facilities and related services.
Speaker Change: Technology advancements have played a pivotal role in reshaping corporate travel. The adoption of tech-enabled, personalized, and sustainable solutions is driving the corporate travel landscape in India.
Speaker Change: Companies are leveraging digital platforms for travel booking, expense management in real time, itinerary adjustments, enhancing efficiency and traveler satisfaction.
Speaker Change: The RBI's economic outlook for the September quarter reflects the positive trajectory for India's economy. Domestically, the RBI has maintained a favourable growth forecast at 7.2% for fiscal year 2025.
Speaker Change: The robust performance of the corporate travel sector is both a contributor to and a beneficiary of India's positive economic outlook.
Speaker Change: As businesses expand and engage in more face-to-face interactions, the demand for proper travel services increases, stimulating growth in related industries such as hospitality, aviation, and event management.
Speaker Change: A stable and growing economy, as indicated by the RBI's outlook, provides the confidence and financial capabilities for businesses to invest in corporate travel. The central bank's policies aim that maintaining inflation within target range and supporting growth create a conducive environment for corporate activities, including travel.
Speaker Change: While the challenges remain in the B2C segment, we are highly encouraged by the strong momentum we are experiencing in our corporate travel business, alongside the value creation expected from the globe acquisition and the growth in our live segments.
Speaker Change: The addition of new corporate accounts and the development in MI's business exemplify our commitment to delivering long-term values for stakeholders. We will continue refining our strategic initiatives to maintain our leadership in the corporate sector and are simultaneously exploring ways to increase our share in the direct-to-consumer market.
Speaker Change: With that, I'll hand the call over to Rohan, who will provide a more detailed breakdown of our financial performance.
Thank you. Thank you.
Rohan: Thank you for joining. I will now review our financial performance for the quarter ended September 30th, 2024.
Rohan: While our overall gross bookings stayed stable, this was the result of different performance across our business segment, reflecting shifts in the air and hospitality market.
Rohan: Airdrops bookings fell by 10% year over year to INR 13.3 billion which is roughly USD 1.58 million for the quarter. This decline is due to the aforementioned challenge in the B2C segment.
Rohan: However, we continue to focus on optimizing our air ticketing operations and improving margins through cost-efficiency and targeted initiatives.
Rohan: On the other hand, our hotel and parking segment saw a robust growth, with gross bookings increasing by 68% year-over-year to INR 3.7 billion, which is roughly USD 44 million.
Rohan: This was on account of strong corporate hotel performance as well as nice business performance.
Rohan: Our overall adjusted margin for the quarter was at INR 1.4 billion.
Rohan: Our adjusted margin percentage for air-ticketing business was at 7% and 11% for the hotel and packages business.
Moving on to expenses.
Rohan: As a percentage of total gross booking value, marketing and sales promotion expenses, including consumer promotion and loyalty program costs, decreased by 18% year-on-year to INR 679 million, which is actually UFC 8.1 million.
Rohan: Our personal expenses, excluding share-based payments, increased by 20% year-on-year as we continue to invest in talent, which allows us to build our mid-market, nice, visa and expense-management businesses.
This also includes the partial impact of annual appraisals also.
Rohan: are running operating expenses have increased by 15% compared to the year ago quarter.
Thank you.
Rohan: On an overall basis, our adjusted EBITDA was INR 66.7 million, which is a little short of USD 1 million. This reflects an increase of 91% on an year-on-year basis.
Rohan: Lastly, as of 30th of September, we were carrying balance of cash, cash equivalents and term deposits on our books of INR 2.2 billion, which is roughly USD 26 million dollars.
Rohan: Our gross net as of 30th September was INR 277 million, which is roughly US$3.3 billion.
Rohan: With this, we conclude our prepared remarks and I'd like to hand it over to the moderator for the Q&A. Thank you.
Speaker Change: Thank you very much. If you would like to ask a question please press star followed by one on your telephone keypad now. If you change your mind or that your question has been answered please press star two.
Satsang with Mooji
Speaker Change: Our first question comes from Scott Buck with HC Wainwright. Scott, your line is now open, please go ahead.
Speaker Change: Hello guys, thanks for taking my questions. First one, Dhruv, I was hoping you could provide maybe a little bit of color on the integration process with Global India and when do you think you'll be able to start doing some of that cross-selling?
Shalom. Good morning Scott.
Speaker Change: In terms of the integration process, there are two steps to the integration process, the way they are looking at them. One is in terms of integration of the supply.
Speaker Change: and those steps have already been taken. So, we will see the benefit of that accruing in the quarter, you know, starting now.
Speaker Change: The other part of the integration is the cost optimization and the cross-sell, which is dependent on implementation of the technology platform into Globe's customers. We would expect that to start kicking in from the early part of January.
Speaker Change: So we'll see more effects of that coming in starting the fourth quarter, because at this point of time, the technology team is working with the globe team in terms of implementing our solution for globe.
Speaker Change: Great, that's helpful. And I was hoping you'd give us some indication of where you're seeing most opportunities in mice and how we should think about that.
Speaker Change: as a growth opportunity over the next, you know, 24 months or so.
Thank you very much.
Speaker Change: I would continue to see Manish joined a double-digit fast track in terms of impact.
and Rohan Mittal.
Speaker Change: And that I think is easily achievable if we continue to focus on cross-selling to our existing customer base. Our penetration of mice today is extremely small when it comes to the size of the customer base that we currently manage.
So there's a lot of option and opportunity there.
Speaker Change: Great. That's really helpful, Cole. And then last one, can you just remind us what's driving the price competition on the B2C business, and I think you kind of touched on it in the prepared remarks, but how long do you think this lasts?
Speaker Change: See, I think on the BTC side, this process actually got initiated by one of the largest airlines in the country.
Speaker Change: on it. You know, they started piloting this back in January of the current year. So it's been already 11 months that they've been doing this and they've only scaled up what they've been doing. I think this is
Speaker Change: likely to stay. And I think from our perspective, we have to keep finding opportunities to add more value to the customer to cross selling things like hotels, car rental, insurance, et cetera. And...
Speaker Change: Look at flights more as a means of customer acquisition rather than as a means of driving profitability.
Speaker Change: Great, that's helpful. I appreciate the time, Dhruv. Thank you very much.
Cheers, Sir. My pleasure. Thank you.
Satsang with Mooji
Speaker Change: As a reminder if you would like to ask a question please press star 1 on your telephone keypad now.
Speaker Change: Copyright © 2020 Mooji Media Ltd. All Rights Reserved. No part of this recording may be reproduced without Mooji Media Ltd.'s express consent.
Our next question comes from Mahu Ramesh.
Thank you. Thank you.
Maho, your line is now open. Please go ahead.
Maho: stocks. What is the update on that? And then the second question is, I understand right, the fourth or third quarter of this year is the peak quarter for you. So, how do you see that evolving so far? Thank you.
Thank you.
Speaker Change: So on the fungibility, we are working with the regulators and our legal team is interacting with them regularly to work out the modalities of collapsing the structure and simplifying the process.
Thank you very much.
Speaker Change: It would be a slightly time-consuming exercise, though all our efforts are to try and expedite that as much as possible.
Speaker Change: But that's one of the key priority areas for us. Our board, if you recall back in July, had set up a steering committee as well with some of the board members on that committee. So we are all actively pursuing that with the regulators in different jurisdictions.
Speaker Change: In terms of your second question, which is with regards to the time, the quarter, Q3 is a very strong quarter for B2C, given that our business is more focused on the corporate side.
Speaker Change: The third quarter is not really a strong quarter for corporate. Corporate travel will have Jan-Feb-March as the strongest quarter because, you know, in this quarter we've got significant amount of holidays, first for Diwali and then for Christmas and New Year. So this is the lowest quarter when it comes to business travel.
Thank you.
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Speaker Change: Thank you very much. That marks the end of the questions and answers session. I will now hand back over to Manish for any closing remarks.
Manish Hemrajani: Thank you. Thank you, everyone, for joining the call today. As always, management is available for follow-ups, so please feel free to reach out. Thank you.
Manish Hemrajani: Thank you very much everyone for joining. That concludes today's call. You may now disconnect your lines.
Satsang with Mooji