Yatra Online, Inc.
Q3 2021 Earnings Call Transcript

Published: 4 Feb 2021

[Operator:]

Ladies and gentlemen, good day, and welcome to the Yatra Third Quarter 2021 Conference Call. Today's call is being recorded. And at this time, I would like to turn the call over to Manish Hemrajani. Please go ahead, sir.

[Manish Hemrajani:]

Thank you, Abby. Good morning, everyone. Wishing you all a happy New Year, and I hope everyone is safe and healthy. Welcome to Yatra's fiscal third quarter 2021 financial results for the period ended December 31, 2020. I'm pleased to be joined on the call today by Yatra's CEO and Co-Founder, Dhruv Shringi. Following discussion, including responses to your questions, reflects management's views as of today, February 4, 2021. We do not undertake any obligation to update or revise the information. Before we begin our formal remarks, allow me to remind you that certain statements made during the course of the discussion may constitute forward-looking statements, which are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially, including factors that may be beyond the company's control.

[Dhruv Shringi:]

Thank you, Manish. Good morning, everyone, and thank you for joining us this morning. Let me start by wishing everyone a safe and healthy New Year, and I hope that you and your families are safe as we continue to navigate our way to what we hope is the last leg of the pandemic. While unfortunately much of North America and Europe is still facing a tough winter surge, recent data from India suggests that the worst of the pandemic is behind us. The number of daily cases in India continue to decline. And from a peak of about 98,000 back in the middle of September, they have come down to about 11,000 yesterday. Additionally, an India-wide vaccine rollout has also started last month, and the daily vaccination count continues to rise gradually. We believe this bodes well for India as a whole and especially for the travel sector as this trend continues. We finished 2020 on a strong note as our adjusted revenue increased 61% sequentially from the prior quarter, a clear indication that travel in India is well on its way to recovery. Although this is coming off a small base, hotel bookings were particularly strong with room nights growing over 400% sequentially. This growth in revenue, further combined with strong cost controls, enabled us to reduce our adjusted EBITDA loss to INR 36 million, which is approximately USD 500,000, down from INR 125 million in the September quarter. So in USD terms, that's down from about $1.7 million in the previous quarter to about $0.5 million in the current quarter. We exited the year with over $33 million in net cash and are well on our way to profitability, we believe, in 2021. As you look to the year ahead, we see 2021 as the year of recovery as vaccine distribution takes hold and travel restrictions lift gradually. The domestic aviation market in India continues to be resilient and is well poised on its path to recovery. Q3 passenger traffic was up 113% on Q2 and December 2020 traffic now stands at about 56% of December 2019 levels. In terms of capacity, we are back to approximately 80% of pre-COVID levels, and passenger load factors continue to improve gradually and are currently approximately 70%, 72%. We believe the capacity could reach close to 100% of pre-COVID levels by the middle of this calendar year.

[Manish Hemrajani:]

Thanks, Dhruv. Operator, please open up the call for Q&A.

[Operator:]

We will take our first question from Matthew Galinko with Sidoti.

[Matthew Galinko:]

So a couple of questions for you and then I will go back in the queue. First is, I think you mentioned 10 new corporate customers signed this quarter. Can you give a sense of maybe what the size distribution there was? Were there any sort of type or blue-chip type companies? Is it predominantly smaller? What are we looking at there?

[Dhruv Shringi:]

So in terms of the customer distribution, these are all reasonably large organizations. There is one which would stand out and be in the top 15 customers of ours, but the others would all be reasonably large midsized corporations, and they would include some blue-chip international MNCs as well.

[Matthew Galinko:]

And -- again, I think we talked about this last quarter, but what was the #1 feature that sort of came up or if there was one that got new wins?

[Dhruv Shringi:]

I don't think it's one feature, Matt. I think now it's a comprehensive solution that we are offering to customers, and it's the combined offering of the products and the service delivery, which is getting us these customer wins. There is a more secular trend about customers wanting to adopt digitization and we are the leading player when it comes to a digital platform for business travel management in India. So that definitely gives us an edge. But over and above that, it's now the comprehensive product solution that we've built.

[Operator:]

. We will take our next question from Scott Buck with H.C. Wainwright.

[Scott Buck:]

I'm curious if you've seen any meaningful changes in the way people are booking? Are you seeing more close in travel or people booking further out in the future, anticipating vaccination rollout? And any expectation around kind of permanency around any of these changes?

[Dhruv Shringi:]

Scott, one of the changes that we are seeing in terms of trends is we are seeing more shorter, higher frequency holiday travel, especially when it comes to near-term destination. So people aren't taking long-haul breaks. So they're traveling near to their destination, near to their home town, but there is a higher frequency. The durations have come down. We aren't seeing that many 7 days and above kind of breaks happening. So we are seeing more like 3, 4 night kind of breaks, but we are seeing it happening at a much higher frequency. The other trend which is also there is that -- and this is maybe still a bit more limited, is people working from these kind of leisure destinations. So people renting out home space, renting out alternative hotel accommodations for an extended period of time and working from there. So that's a more newer trend. But the more general trend that we are seeing is shorter frequency and -- sorry, shorter duration and higher frequency. And the category of hotels also that people are preferring, it's more 4 and 5 stars. So we've seen people upselling in terms of their preferences and going towards higher category hotels.

[Scott Buck:]

That's helpful. Also hoping maybe you could provide a little bit more color around what you're seeing in corporate travel market in terms of activity and potential time line to recovery. Should we think about corporate travel as being 3 months, 6 months behind leisure? Or do you think the Zoom calls and then videoconferencing is going to last meaningfully longer than that?

[Dhruv Shringi:]

[Scott Buck:]

Yes. That's great. Last one for me. I'm curious, these potential air bridges or travel bubbles, how useful have you guys seen them to be in driving some at least regional international traffic? And would you expect to see more of these kind of travel arrangements between countries here over the next 6 to 12 months?

[Dhruv Shringi:]

Sure. I think that's a very -- that's something that we are watching very closely, Scott. And I think when these travel bubble agreements come into play, we do see a spurt of traffic. Dubai -- so India and Dubai is an example of that, where we've seen a fair degree of traffic happening over the past few months between India and Dubai on account of the travel bubble that's been operating over there. We have seen a similar trend now for Maldives. We expect Sri Lanka in the near-term to also go through a similar process. But having said that, a word of caution on this is also necessary given that the new strain of the virus seems to be appearing in some of the countries. So India, U.K., for example, was a fairly high-traffic corridor, but come early January, there have been significant restrictions which have come into play given the new variant of the virus in the U.K. So I think the bubbles are definitely very helpful, but we need the bubbles to last consistently. In India, there is talk of herd immunity coming out, and that definitely bodes fairly well for India. So I think domestic will recover and continue to recover at a faster pace. International, unfortunately, will have these fits and spurts, given what's happening in different countries.

[Operator:]

And there are no additional questions. So I would like to turn the call back to Manish Hemrajani for any additional or closing remarks.

[Manish Hemrajani:]

Thank you, Abby, and thanks, everyone, for joining the call today. We look forward to speaking to you during the course of the quarter. Thank you, guys.

[Dhruv Shringi:]

Thank you.

[Operator:]

Ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.