Good day everyone and welcome to the Yatra Online, Inc.'s Fiscal Third Quarter 2024 Earnings Conference Call. My name is Drew and I'll be the operator on today's call. All participants will be in a listen-only mode. There will be a Q&A on today's call.

[Operator Instructions] At this time, I would like to turn the conference call over to Manish Hemrajani, Head of Investor Relations. Please go ahead..

Thank you, Drew. Good morning, everyone. Welcome to Yatra's fiscal third quarter 2024 financial results for the period ended December 31, 2023. I am pleased to be joined on the call today by Yatra's CEO and Co-Founder, Dhruv Shringi, and CFO Rohan Mittal.

The following discussion, including responses to your questions, reflects management views as of today, February 14, 2024. We don't undertake any obligation to update or revise the information.

Before we begin our formal remarks, let me 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 filed earlier this morning. These filings are available from the SEC and also on the Investor Relations section of our website. With that, let me turn the call over to Dhruv. Dhruv, please go ahead..

Thank you, Manish, and good morning, everyone. Thank you for joining us for our third quarter earnings call. We are proud to report strong December quarter results. Yatra's air passenger segment recorded a robust 26% year-over-year growth, nearly tripling the industry benchmark of 9%. This makes it the fourth quarter in a row of share gains for Yatra.

In the air travel sector our strong brand recognition and successful strategies in capturing market share has enabled us to grow both our domestic and international air business. As we move forward, we remain optimistic and committed to leveraging these positive trends to drive further growth and success.

We fortified our market leadership in the corporate travel sector by finding 26 new corporate customers in the December quarter with an annual billing potential of INR2.2 billion, which is approximately USD27 million. This underlines the capability and leadership of our corporate travel SaaS platform.

I would like to highlight here one specific deal that we signed in the December quarter with Aramco Asia India, a wholly-owned subsidiary of the global energy leader Aramco. Yatra's user friendly platform will facilitate effortless bookings for flights, hotels, trains and other ancillary services for Aramco's Asia personnel.

This integrated travel solution extends to Aramco's subsidiaries in key Asian and oceanic markets, including India, Japan, Korea, Singapore and Australia. This multiproduct and multi-region deal highlights the capabilities and strengths of our platform and the ability to handle any level of complexity with our cutting edge technology.

In alignment with our commitment to shareholder returns, I'm also pleased to report the repurchase of approximately 280,000 shares under the share buyback program authorized by our Board, and we continue to be active on the buyback front in the current quarter.

This move underlines our confidence in Yatra's promising future and our unwavering dedication to maximizing shareholder value. Now, let me provide some color on the macro picture. India's economic landscape remains particularly robust, buoyed by a significant public capital expenditure initiative and a strong domestic economy.

The Indian economy is poised for consistent growth, with projections now revised upwards estimating 7% GDP growth in FY '24. Travel, as you know, tends to be closely linked to growth in GDP, and over the past decade in the developing economies, we've seen travel growing closer to 1.5x to 2x of GDP growth.

Domestic air passenger traffic continued on its coaching growth pace in India and continues to remain the fastest growing air market globally. December '23 saw a total of 13.8 million passengers travel domestically in India, the highest ever monthly passenger traffic number, clearly underscoring the robustness of the Indian aviation sector.

Religious travel is one of the biggest segments of tourism in India. Several popular religious centers attract annual tourists in the range of 10 million to 30 million despite the existing infrastructural bottlenecks.

On this front, the government has done significant amount of work to improve the infrastructure and we expect that this improvement in infrastructure will continue to drive upward growth in traffic numbers to these destinations.

A recent Jefferies report highlighted that the Holy City of Ayodhya could see as many as an influx of up to 50 million visitors each year as a result of the new rebuilt temple. As per the report, tourism in India contributed USD194 billion to FY '19 GDP and is expected to grow at an 8% CAGR to USD$443 billion by FY '33.

Tourism to GDP ratio in India sits at 6.8% of GDP, well below most of the large economies. For example, in comparison, China is at 11.6% of GDP. This points to significant headroom for growth in the Indian travel market. Now, let me provide you with some more details of our third quarter.

For the quarter ended December 31, 2023, we reported revenues of INR1.1 billion, which is approximately USD13.4 million, marking a substantial increase of 23% over the last year. Our adjusted margin from air ticketing rose to INR1.1 billion, which is USD13.4 million, a 10.2% year-over-year growth.

Furthermore, our adjusted EBITDA saw an improvement of 24% year-over-year, reaching INR44.5 million or approximately USD 500,000. Moving on to further details of the quarter, the corporate segment continues to be somewhat impacted with softness and travel spends in the IT/ITES sector.

We are confident, however, of the recovery in the near-term from our largest contributing sector, especially as AI related software developments take root globally.

In addition, we expect that the new business that we have won over the last few quarters is more than likely to offset the drop that we have seen on account of softness in the IT/ITES sector in the coming quarters. On the hotel front, revenue from our hotels and packages business was INR449 million, which is approximately USD5.4 million.

In the three months ended December 31, 2023, this reflected an increase of 17% year-over-year. The increase in revenue is attributable to a recovery in domestic travel, with a higher number of holiday packages sold as a result. From a competitive standpoint, the intensity has remained stable from the last quarter and remains manageable overall.

As some of you may recall, we had launched our Yatra Prime membership program in the middle of 2023. We are taking that a step further and as a gratitude to our Indian shareholders, we have offered that subscription free to our shareholders in India, expanding the shareholder base and the base for our Prime customers.

With the positive macro backdrop, and given the ongoing recovery in corporate and leisure travel, and the rise in discretionary spending and now a significantly bolstered balance sheet, we believe we are well poised for the strong FY '24 and '25.

Aside from seasonality and some softness that I touched upon earlier in the ITES sector, we expect our results to benefit from accelerating growth in both our corporate business and consumer business as we continue to add to a formidable blue chip customer base and leverage the strength of our brand.

Given our stronger balance sheet following the IPO, we've already begun to see early signs of improving supplier margins and expect this to gain further momentum in the quarters ahead and have a meaningful positive impact on our operating performance going forward.

With that, let me hand it over to Rohan to walk you through the details of the financial performance.

Rohan?.

Thank you, Dhruv. I will now review our quarter three numbers for the quarter ending December 31, 2023. Our gross booking for the quarter was INR18.6 million, which is roughly USD224 million, up by 18% YoY, with air up by 22%, and the hotels and packages up by 4% YoY.

For the December quarter, our total revenue grew by 23% to INR1.1 billion, which is roughly USD13.4 million on account of sustained travel demand.

Adjusted margins were up across air, hotel, package and other services, with the air ticketing business up by 10% YoY to INR1.1 billion, while the hotel and package business adjusted margin was up by 4% YoY to INR264 million, which is roughly USD3.2 million. Adjusted margin from other services was also up by 49% YoY.

Moving to the expenses, quarter three marketing and sales promotion expenses, including consumer promotions and loyalty program costs increased by 8% on a YoY basis to INR884, which is roughly USD10.6 million. The marketing increase lacked the overall gross bookings growth of 18%, which shows a strong boundary call of Yatra.

Our personal expenses, excluding share based payment expenses, increased by 8% YoY to INR279 million which was roughly USD3.4 million. Payment gateway costs as a percentage of the total gross bookings remained [indiscernible], while other expenses increased by about 13% on YoY basis.

On an overall basis, adjusted EBITDA stands at INR44.5 million as compared to USD36 million in the quarter ended December '22. Lastly, as of 31st December 2023, balance of cash and cash equivalents and term deposits on our books was a little above INR5 billion, which is roughly USD60.7. Our gross debt, as on 31st December '23 was INR 852.

We've reduced this by almost 51% at a gross level on a quarter-on-quarter basis. With this, we conclude our prepared remarks. Now I'd like to hand it over to the moderator for Q&A. Thank you..

Thank you. [Operator Instructions] Our first question today comes from Scott Beck from HC Wainwright. Your line is now open. Please go ahead..

Hi, good morning, guys. Thanks for taking my questions.

First one, I may have missed it in the prepared remarks drew, but can you comment a little bit on some of those pricing headwinds that you saw in the second quarter and how they impacted the third quarter and maybe what the outlook is for the fourth quarter on those?.

Rohan Mittal:.

So there is a little bit of pricing headwind which is there, and we expect this to carry on till about the summer months and it is only around the July-August time frame that we see the capacity beginning to come back into the ecosystem.

So for the next two quarters, there is going to be a bit of pricing increase, which we will see, and that may have a slight bit of softening or that may result in a slight bit of softening in demand..

So there is a little bit of pricing headwind which is there, and we expect this to carry on till about the summer months and it is only around the July-August time frame that we see the capacity beginning to come back into the ecosystem.

So for the next two quarters, there is going to be a bit of pricing increase, which we will see, and that may have a slight bit of softening or that may result in a slight bit of softening in demand..

Great, that's helpful. And my second, hoping you'd give us a little bit more of an update or a little more color around international travel and the trends you're seeing there. I mean, it seems like that's been a bit of a laggard versus corporate and leisure travel just in catching up since COVID..

Yes. Certainly International travel actually improved quite meaningfully in the last quarter. It was just a little bit ahead of our weighted average growth rate of 26% that we saw. So we've seen strong recovery happening on the international side in the last quarter, and there is more capacity expansion that's happening on the international front.

We've seen some of the airlines, like Air India, deploy more capacity on the international routes. We've also seen some of the international airlines bring back a little bit of their capacity into the Indian market on the back of the demand, which is there. So we should continue to see good momentum on international travel.

So while in the first half of our fiscal year of last year, international travel lagged behind in the last quarter, which is the December quarter, international travel has gained momentum and is carrying forward that same momentum into the current quarter..

Great, that's helpful. And then last one from me. I'm just curious given the severe dislocation between where the U.S. shares trade and where the local shares are valued, what kind of fungibility, if anything, is there between the shares? Maybe you could help kind of walk us through that a little bit..

As of today, Scott, there are two separate entities. One is a holding company and the other is the operating company. So, on account of that, these two shares today at least, are not fungible. But we'll continue to work with our council to see if there is any way for us to make them fungible.

But it's a bit too early to state on that categorically as to what shape would that take. But having said that, I think, like you pointed out, I think there is a large arbitrage opportunity that exists today between the prices of the two indexes.

India, being the home market is trading at a very different price point compared to where the US is trading. But in terms of fungibility, I think that's all unfortunately that I can share at the moment..

Thank you. I appreciate the added color and congrats on the results, guys..

Thank you..

[Operator Instructions] We have no further questions in the queue, so I will hand back over for any closing remarks..

Thanks Drew. Thank you, everyone for joining the call today and as always, we are available for follow-ups. Thank you..

That concludes today's Yatra Online, Inc.'s fiscal third quarter 2024 earnings conference call. You may now disconnect your line..