Yatra Online : Earnings Document

Yatra - Yatra 4th Quarter

Company: Yatra

Conference Title: Yatra 4th Quarter

Moderator:	Manish Hemrajani
Date:	Friday, 3rd June 2022
Conference Time: 09:00 ET
Operator:	Good day and welcome to the Yatra Fourth Quarter and Full Year 2022 Results. Today's

conference is being recorded. And at this time, I would like to hand it over to Manish. Please go ahead, sir.

Manish Hemrajani: Thank you, Reena. Good morning, everyone. Welcome to Yatra's fiscal fourth quarter and full-year 2022 financial results for the period ended March 31st, 2022. I'm pleased to be joined on the call today by Yatra CEO and co-founder Dhruv Shringi. The following discussion, including responses to your questions, reflects management's views as of today, June 3rd, 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 and are subject to several risks and uncertainties that could cause actual results to differ materially. For a description of these risks, please refer to our filings with the SEC and our press release. 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 Dhruv. Dhruv, please go ahead.

Dhruv Shringi: Thank you, Manish. And good morning, everyone. Before I begin, I just want to remind everyone that part of the March quarter, especially the month of January, was significantly impacted by Omicron. It seems a long time back now, but I just wanted to put that out there and hence we should view the discussion and numbers for the quarter in light of that fact.

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During the quarter, we witnessed a swift recovery post an Omicron-induced slowdown in the month of January, with both corporate and consumer businesses recovering to an exit run rate higher than a pandemic high in the recently reported December quarter. Despite January being severely impacted by Omicron, which led to a shutdown in various parts of India, our adjusted revenue for the quarter came in at INR 980 million, approximately USD 13 million, which is up 1% year over year and down only 6.2% Q-on-Q. Despite air passenger traffic declining 20% Q-on-Q. This was on the back of strong recovery in business travel, especially in the second half of Feb and the month of March as the impact of Micron began to subside.

Adjusted EBIDTA for the quarter was INR 53 million, which is approximately 0.7 million USD, and this includes the investment behind the freight initiative. So if we exclude that out, our adjusted EBIDTA for the travel business would have been INR 72 million, which is approximately 0.9 million USD for the quarter. Both our adjusted revenue and EBIDTA came in ahead of consensus. We saw both business and consumer travel recover quickly through Feb and March and have continued on the upward trajectory in April and May.

In fact, domestic passenger traffic in May 2020 was back to 90% of pre-COVID levels, and even our corporate travel business is currently trending at 90% plus of pre-COVID levels. International travel has also begun to recover strongly post the easing of international travel restrictions towards the end of March 2022. The IMF expects India's GDP to grow at about 8.2% in 2022 and 7% in 2023.

As it relates to Yatra looking at how the travel industry has unfolded over the past decade, we see that travel tends to grow at a multiple of GDP in developing markets, and recent third party estimates have pegged the Indian travel sector to grow at a staggering 17.3% CAGR through 2029. We believe we should be able to achieve faster than market growth as we continue to take share in the corporate travel market and as the consumer market continues the secular shift from offline to online.

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Now, let me provide you an update on the India filing. As you may recall, our Indian subsidiary, Yatra Online Ltd filed a draft red herring prospectus on March 25th with the Securities and Exchange Board of India. And that's the main stock market regulator in India for a potential initial public offering and listing of its equity shares on the Indian stock exchanges. We are continuing to work with the regulator to obtain the necessary clearances for the DRHP. We expect this offering, if completed, to strengthen our balance sheet and better position us to take advantage of the rapidly recovering leisure and business travel market in India.

The faster than anticipated recovery that we've witnessed in corporate travel plus the strong resurgence in [inaudible] travel on the leisure side bodes well for our IPO plans later this year. We believe there is significant demand for online travel stocks in India and that the IPO should be well received. While there are worries about recession in the US and Europe, India's economy is growing at a brisk pace as it continues its journey from a developing to a developed nation. The Indian IPO structure also opens up an opportunity for us to explore strategic alliances with partners who might not have been comfortable with an overseas structure.

Now coming to our March quarter results. Adjusted revenue for the quarter ended March 31, 2022, came in at INR 980 million, approximately USD 13 million. This was up 1% year over year and down 6.2% Q-on-Q partially due to seasonality and partially due to the impact of Omicron. Year over year air gross bookings grew 45%, largely on account of an increase in yield. While adjusted revenue grew 5% as margins normalized from the abnormally high margin levels that we had seen in the previous year.

The margins that we are seeing right now, I think, are more indicative of the kind of margins that we would expect to see in the near term going forward. Despite the effect of Omicron year over year, hotel gross bookings and room nights grew by 7.9% and 7.8% respectively. Adjusted

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EBITDA of INR 52.9 million, also improved by 20% Q-on-Q and excluding the investment behind the trade business, came in at INR 72 million in the quarter.

As of March 31st, the balance of cash and cash equivalents and term deposits on a balance sheet was INR 1.368 billion or USD 18 million. The decrease in cash balance from the previous quarter is primarily on account of increase in working capital deployment due to the recovery of the corporate travel business. The recovery has been rapid in both leisure and business travel, and I am pleased to say we are now rapidly heading back to pre-COVID levels. And if recovery remains on track, I strongly believe that we should be able to exceed pre-COVID levels in the coming quarters.

Gross bookings for business travel where we are the market leaders grew 161% year over year in the March quarter and are trending to exceed 90% of their pre-COVID levels in May 2022, levels not seen since February 2020. And we remain optimistic that it should get back or even exceed pre-COVID levels in the near term. We believe that the stronger than anticipated recovery in business travel that we have witnessed should put to rest any lingering doubts that people might have had about the future of business travel. It is very evident that human beings are social animals, and while online tools are great enablers, human beings still prefer a face-to-face interaction.

We see improving inbound interest and continue to sign new customers at an increasing pace onto our corporate platform. Given the highly fragmented nature of the market, we believe we will continue to take market share going forward and that our corporate business should accelerate growth to levels higher than where they were pre-pandemic. As we see an accelerated shift towards online bookings, especially when contracts come up to the end of life and rebidding.

We also recently launched a meta search tool on our corporate platform. This easy-to-use tool should help us expand our market share in the online bookings of business travel. With the

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implementation of this option, large corporations who have multiple vendor partners will be able to search across those vendors and display the best available options for their employees on a single screen, along with rates directly contracted by the corporates with airlines and hotels. The addition of this tool to our platform now gives us the ability to expand our corporate travel platform into international markets.

On the hotel front, our strategic partnership with Flipkart owned Cleartrip to source domestic hotel content from Yatra went live towards the back end of the quarter and we have witnessed a very strong uptake in the subsequent months. We 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 will not only be accretive from an EBITDA perspective but will also help strengthen our relationship with our existing hotel partners and lead to better long-term value creation. When the competitive intensity has risen modestly since the last quarter, overall competitive levels remain manageable on the hotels front, and our brand continues to resonate positively with Indian travelers.

Let me now give you an update on our freight initiative. As we look towards digitizing the logistics space, our corporate travel relationships with both airlines and enterprise executive management, together with our technology capabilities, gives us a significant head start. We have rapidly scaled up this business over the past few months, and we believe this business longer term has the potential to be even larger than our corporate travel business.

Following the successful Indian IPO, I believe we will be in a position to accelerate growth in freight, which is receiving increasing interest because of the freight and logistics challenges that the world is facing. We're optimistic about Yatra's continued growth and recovery based on the trends that we are witnessing and believe that our well-recognized brand and healthy balance sheet puts us in a position to capitalize as the recovery continues to gain momentum.

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