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Yatra Online, Inc. (NASDAQ: YTRA) First Quarter 2024 Earnings Call Transcript, October 16, 2023
Trader: Hello and welcome to Yatra Online, Inc. ‘s Q24 first quarter earnings conference call. My call is Lydia and I will be your operator today. [Operator’s Instructions] It is a great pleasure for me to hand over the floor to your host, Manish Hemrajani. , Head of Investor Relations. Please go ahead.
Manish Hemrajani: Thank you, Lydia. Welcome to Yatra’s fiscal first quarter 2024 financial report [technical difficulties]. Today we have with us Yatra’s CEO and co-founder, Dhruv Shringi, and CFO, Rohan Mittal. The discussion that follows, adding answers to your questions, reflects the administration’s view as of today, October 16, 2023. We assume no legal responsibility to update or revise the information. Before we begin our formal remarks, let me remind you that certain statements made on today’s call would likely constitute forward-looking statements that are based on management’s existing expectations and are subject to various risks and uncertainties that may also cause actual effects to differ materially. For a description of those risks, please see our SEC filings and our press release filed this morning. They can also be found on our Investor Relations website. With that said, let me turn the floor over to Dhruv. Dhruv, move on.
Dhruv Shringi: Thank you, Manish. Good morning everyone, and I appreciate your presence on our FY24 Q24 earnings call. I am very happy to announce a vital milestone for Yatra Online Limited. We have effectively completed our initial public offering in India in the amount of INR 7. 75 billion. , or approximately $93 million, and we are proud to make our debut on the Indian stock exchanges on September 28th. This achievement is of special significance to all of us at Yatra. The budget generated through the IPO is earmarked for strategic investments, acquisitions, biological expansion, technological advancements, strengthening visitor acquisition and retention, and other projects critical to our biological expansion and corporate efforts. In addition, Yatra Online, Inc.
We also benefited from approximately $21 million in additional capital as the promoter of the percentages, THCL, which is a wholly-owned subsidiary of Yatra Online, Inc. , sold those percentages on the open market. The capital not only allows us to pay off MAK’s debt, but also gives us the flexibility to potentially allocate a portion of the residual budget to Yatra over the long term on a consistent basis with percentage buybacks. The recent IPO, along with those developments, provides us with strategic leverage, improving our visibility in the market, diversifying our consistency. with percentage share and, consequently, strengthening the Yatra brand. The IPO was based on a pre-money valuation of INR 16 billion, or about $193 million, which equates to, again, about $3. 03 according to YTRA according to the percentage traded on the NASDAQ.
This is based on a percentage count of 63. 6 million existing percentages in circulation. The existing market cap of the Indian entity is around INR 23. 15 billion, or about $280 million. And after the IPO, Yatra Online, Inc. owned about 65% of its Indian capital. subsidiary, which on a consolidated basis, as I mentioned above, equates to an approximate YTRA inventory value of $3. 03. Now let’s move on to the June quarter results. I’m pleased to report that we had our quarter on the air front since COVID hit, with the highest number of air passengers booked since the pre-COVID era in December 2019. This is a year-on-year increase of 41. 5%, far outpacing the domestic airline industry’s expansion of 14. 8%. In addition, our sequential expansion has been twice as fast as our peers, demonstrating our ability to gain market share and the inherent strength of the Yatra brand.
International travel also showed steady improvement during the quarter, reaching approximately 90% of pre-COVID-19 levels. As we move forward, we remain positive and committed to building on those positive trends to drive further expansion and success. We further strengthened our leadership in the corporate travel sector by signing 19 new corporate clients in the June quarter. These consumers have a potential annual turnover of INR 1. 5 billion, or approximately $18. 2 million. This underscores the roles and leadership of our business travel SaaS platform. According to the IMF, India’s economic expansion remains strong, thanks to a sharp increase in government capital spending and resilient domestic demand. The economy is expected to grow by 6. 3% in 2023 and 2024.
As far as Yatra is concerned, if we take a look at the evolution of the travel industry in recent years, we see that travel tends to grow at a multiple of 1. 5 to 2. 0 times GDP. We deserve to be able to achieve above-market rates of expansion as we continue to gain market share and the client’s market remains strong. The expansion of the travel industry and the macroeconomic situations that remain favorable allow us to do so. The Indian aviation industry is experiencing an unprecedented expansion of its fleet. The fleet is expected to nearly double in the next five years, and the Ministry of Aviation expects the number of air passengers to more than double to about 400 million passengers a year over the next decade.
When it comes to inflation, once again, India is doing relatively well. CPI-based inflation rose to 5. 02% in September from 6. 83% in August, according to data from the Ministry of Statistics. Core inflation fell to 4. 6% in September from 4. 8%. in August, its lowest point since April 2020. Let me now give you more takeaways about our first-quarter results. Our earnings for the quarter ended June 30, 2023 were INR 1,106 billion, or approximately $13. 5 million. This represents a cumulative of 23% year-on-year. Adjusted EBITDA for the quarter stood at INR 115. 4 million, or approximately $1. 4 million, down from the June 22 quarter of approximately $1. 5 million. India’s domestic passenger traffic grew sequentially by 3% in the 3 months ended June 30, 2023.
By comparison, our domestic passenger traffic grew 6%, faster than our competitors, reflecting the strong percentage gains in the market from our customers and commercial businesses. This positive momentum also continued in the following months, with an increase of 18. 3% in the recently ended September. % year-over-year and 7% above pre-COVID, marking seven consecutive months above pre-COVID degrees for domestic passenger air traffic. As a result, the market has firmly recovered from pre-COVID-19 levels. Year-to-date from January to September 2023, India’s domestic market has recorded an expansion of 29. 1% with 112. 8 million passengers travelling during this period. International travel also continued to show resilience and stable improvement during the quarter and is now above 90% of its pre-COVID-19 degrees.
Kotsovolos Panagiotis/Shutterstock. com
As we move forward, we remain positive and committed to building on those positive trends to drive further expansion and success. Let’s move on to more main points about the quarter. Our clients’ business has gained traction thanks to the strong awareness of the logo that yatra. com continues to enjoy in the market. We introduced our Yatra Prime offering during the quarter and early sign-ups have been encouraging, with a positive reaction. For this, we will be offering operations over the next few months. During the quarter, we closed 19 new private business accounts. While this number decreases quarter over quarter, in part due to seasonality, what is encouraging is that the average turnover outlook of the customers we close in this quarter tends to be higher than in the past.
International travel also continues to increase gradually and we are confident that customers will recover sustainably on overseas travel near the coast. In the hospitality sector, revenue from our hotels and packages business amounted to INR 452. 6 million, or approximately $5. 5 million, in the 3 years. months ended [June 20, 2023] (ph), compared to INR 390. 7 million or $4. 8 million in the 3 months. Months ended June 30, 2022, reflecting an increase of approximately 16%. the resumption of domestic travel, as well as the addition of new distribution partners. From a competitive standpoint, intensity remained strong compared to the last quarter and remains manageable overall. From a macro perspective, the Government of India remains strongly committed to the expansion of airport infrastructure in India; An investment of about $12 billion has been earmarked for the construction of 41 existing airports in India.
In addition, according to the new airport policy, of the 21 new airports sanctioned, 12 have already been put into operation. Thus, in a positive macroeconomic environment and given the ongoing recovery in business and leisure travel, our continued good fortune in signing new giants and midsize companies with large corporate clients and a balance sheet now particularly strengthened, we are poised for a solid recovery. In addition to seasonality, we expect our effects to benefit from accelerated expansion in our corporate and customer businesses as we continue to expand our formidable blue-chip visitor base and build on the strength of our brand. Just to reiterate, today, Yatra India serves one of the 4 corporations, or one in 4, of the hundred most giant index corporations in India.
It also serves 3 of the Big 4 accounting firms and 3 of the most sensible five-generation corporations in India. Finally, I would like to express my deepest gratitude to our committed workers and shareholders for their continued support. Pass it on to Rohan to walk you through the main points of monetary performance. Rohan, to you.
Rohan Mittal: Thank you, Dhruv. I will now review our first-quarter figures for the quarter ended June 30, 2023. For the June quarter, we continued to see strong tailwinds and were able to increase our gross reserves to INR 19. 8 billion, i. e. approximately $241 million in the first quarter. quarter, registering a year-on-year expansion of 11%. Revenue from the development of the airline ticketing business increased 30% year-on-year to INR 490 million, or approximately $6 million. Adjusted margin also increased nearly 46% year-on-year to INR 1. 2 billion, or approximately $14 million. The strong expansion is due to sustained demand in the country, as well as the accumulation of special bonuses on previous contracts. Revenue from the hospitality and parcels business grew approximately 16% year-on-year to INR 452 million, translating to approximately $5. 5 million, and adjusted margin creation increased by 1. 6% year-on-year. annually to achieve INR 307 million, or approximately $4. 8 million.
The accumulation of earnings and adjusted margin was due to the recovery in the domestic market, as well as the incorporation of new channel partners. Profits from other facilities were minimized by 43. 8% year-on-year to INR 26. 7 million. This reduction is basically due to a revision. of freight transport activities. Total adjusted margin across all segments combined increased 30. 5% year-on-year to INR 1. 5 billion, or approximately $18. 3 million, and overall profit increase increased 22. 6% year-on-year to INR 1. 1 billion. approximately $13. 5 million. Let’s move on to expenses. Our first quarter loyalty, sales promotion and marketing, sales and customer promotion program prices increased 72% year-over-year to INR 880 million, or approximately $10. 7 million. Our workers’ body prices rose 2. 2% year-over-year. -year at INR 275 million.
Excluding stock-based expenses, the overall charge for expense accrual increased 11%, in line with the accumulation of staff and expertise. Other operating expenses increased by 3. 6% to INR 396 million, or approximately $4. 8 million, primarily due to construction. increase in commissions, legal and professional fees, payment gateway fees, etc. Due to all of the above factors, our adjusted EBITDA profit for the quarter ended June 23 amounts to INR 115. 4 million – INR 115. 4 million, which translates to approximately USD 1. 4 million compared to INR 123. 5 million for the quarter ended June 22. Our gross debt increased to INR 43 million between the March quarter and the June quarter and we ended the quarter with a gross debt of INR 1. 7 billion; sorry, my apologies, INR 2. 4 billion, which is equivalent to about $29 million.
Finally, as of June 30, we had money and money equivalents and time deposits on a balance sheet worth INR 1. 1 billion, or $13. 5 million. We conclude our prepared speech and return it to the organizers, to the moderator. Thank you.
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Operator: [Operator’s Instructions] Our first query comes from Scott Buck of H. C. Wainwright. Your line is open.
Scott Buck: Hi everybody. Thank you for responding to my inquiry and congratulations on the IPO. Dhruv, my first query, could you give us a little more color about the procurement environment and what might make sense for you from a strategic standpoint?
Dhruv Shringi: Sure. Hello, hello, Scott. Scott, when it comes to acquisitions, we’ve taken a look at a few spaces in the past. And I think we’re going to continue to be interested in those spaces. One is offline business in the business travel aspect, where we can earn entities at a fairly low value and then reduce the prices of those companies by implementing our generation responses and, i. e. , operating margin. So, that would be a domain that we would take a look at. The other domain is also, again, in the enterprise sector, where we would take a look at other products and facilities, namely SaaS-based generation responses, such as expense control, for example, that can be cross-sold to our existing gigantic business visitor base. So it’s about: our idea procedure is how to grow our base on the business side or add more products and facilities to build on the existing foundation. So, those would be the key spaces that we would be looking for.
Scott Buck: Great. That’s helpful. And secondly, can you give us an indication of what your market share is lately in the business sector compared to pre-COVID?
Dhruv Shringi: So, compared to pre-COVID, our visitor base expanded markedly by about 15%. So I have the impression that in terms of market share, the number of corporations in this top segment would not have exceeded 15%. Otherwise, it would have been higher through a much smaller number. Therefore, we will only have gained market share in the last year and a half.
Scott Buck: yes, that’s helpful. And then, the last one for me. About how we analyze operating expenses in the future. Do you have to catch up on OpEx now that you have some extra cash to play with?Or do we expect OpEx grades to increase. Are they still largely consistent with what we’ve noticed in recent quarters?
Dhruv Shringi: yes, then OpEx grades are probably not going to be replaced in a very significant way, right?We could see a small single-digit increase or a half-digit increase, but not much beyond that, at least as far as constant costs are concerned.
Scott Buck: That’s right. It’s perfect. Well, it’s about time, guys. Thanks a lot.
Dhruv Shringi: Not at all. Thank you, Scott.
Operator: Thank you. [Operator’s Instructions] We have a Cobb Sadler phone from Catamount. Your line is open.
Cobb Sadler: Hey guys. Thank you for answering the query. I just received an inquiry about new business consumers. I think what you said was: I’ve got the number right in front of me, [$18 million] (ph) related to those accounts. When do you think it’s possible that you can reach this compliance rate with those accounts?So what? As it turns out, that’s more than the classic consumers you’ve added. So, are they bigger? And when we get to $18 million, if that’s the right number?Thank you. One more inquiry.
Dhruv Shringi: Sure. Of course, Scott. So, in order to achieve this cost of compliance, we’re looking at a six-month period to achieve this full compliance rate for as long as new consumers are deployed. Where we’re coming from, right, those are numbers as of June 30, so we expect all of that to come into play during the January-March 2024 quarter, right?So that’s what we’re looking for when the time comes. to those consumers. They’re all online within that kind of time frame. Why are they. . . Or are they bigger? Yes, we had some wonderful wins this quarter, which boosted the average. There are some consumers that are larger than the classic average consumer that we would point out, and that’s part of the reason why the average per consumer has increased.
There are other conversations like this as well and we remain very positive about the strength of our pricing proposition for our giant commercial customers.
Rohan Mittal: And, Cobb, he’s 19 years old, no. . .
Cobb Sadler: Okay. And then, basically, – 18 – okay, 19. So, between $4. 5 million and $5 million per quarter and – Sorry, Manish, go ahead.
Manish Hemrajani: No, I’m just saying that there are 19 signed clients.
Cobb Sadler: Okay. They gave it to me. 19 consumers signed. Have you indicated how much they can simply contribute, such as the source of income related to the 19?
Dhruv Shringi: yes, Cobb, the $18 million figure you were referring to, I’m sorry, Manish, let me tell you about that. Cobb has 19 clients with an annual turnover of $18 million. So what is the $4. 5 million consistent with the quarter you were communicating about?
Cobb Sadler: I hear you. That’s right. It is ok. They gave it to you. And that. . . They don’t think it’s a crystal ball, they think it can happen in six months, maybe, if. . . Some things take longer than expected, probably six to nine months. This $4. 5 million is additional. . .
Dhruv Shringi: That’s right.
Cobb Sadler: Matrix. . . on the existing profit base. That’s $4. 5 million consistent with the quarter. Very well. And then the other query about. . .
Dhruv Shringi: I’m sorry, Cobb, can I interrupt you? That’s gross turnover potential, not profit potential, right?Turnover will make up about five to 6% of this amount. [indistinguishable] It’s true. Yes.
Cobb Sadler: Okay. It makes more sense. It looked unusually large. Very well. So, still, you have 800 customers. So it’s 19 more, and it seems fine. It is ok. The other thing about your purchases. So, what are the parameters under which shares are bought back?I mean, is there a valuation level? I’m guessing you’re trading, I mean, is the stock trading at a 50% drawdown now?There’s? Yes, about 50% off now. So when might you start buying back shares?Do you want to hold a board meeting or can you do it now if you want?I guess I’m looking for the right moment and what are the triggers for you?
Dhruv Shringi: So, Cobb, this is something that the board is thoroughly investigating with counsel, and we’ll stick to that procedure. And in the short term, we’ll go back and update our shareholders on our idea. procedure in this regard.
Cobb Sadler: Okay. All right, all right. Congratulations on the IPO.
Dhruv Shringi: Thank you very much. Thank you.
Operator: We don’t have any more noteworthy questions. So I’ll call Manish Hemrajani again for final remarks.
Manish Hemrajani: Thank you, Lydia. Thank you all for participating in today’s call. As always, we will be available to follow up. Do not hesitate to contact us. Thank you. Thank you all.
Operator: This concludes today’s call. Thank you for us. Now you can disconnect your lines.