Yatra Online, Inc.
Q4 2021 Earnings Call Transcript

Published: 8 Jun 2021

[Operator:]

Good day and welcome to the Yatra Fourth Quarter and Full Year 2021 Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Manish Hemrajani. Please go ahead.

[Manish Hemrajani:]

Thank you, Shelby. Good morning everyone. Hope everyone and their families is safe and healthy. Welcome to Yatra's fiscal fourth quarter and full year 2021 financial results for the period ended March 31, 2021. I'm pleased to be joined on the call today by Yatra's CEO and Co-Founder, Dhruv Shringi. The following discussion, including responses to your questions, reflects management's views as of today, June 8, 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 today 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. These include expectations and assumptions related to the impact of the COVID-19 pandemic. For a description of these risks, please refer to our filings with the SEC and our press release from this morning. Copies of this and other filings are available from the SEC and on the Investor Relations section of our website. With that, let me turn the call over to Dhruv. Dhruv, please go ahead?

[Dhruv Shringi:]

Thank you Manish. Good morning everyone and thank you for joining us. I hope that you and your families are safe as we continue to navigate our way to what we hope is going to be last significant wave of the pandemic especially in India. As you all have been aware subsequent to the closing of our March quarter, India suffered a severe setback by the second COVID wave hit the country with case counts peaking into 400,000 a day range. And many regions once again began to curb travel. Many of our friends and colleagues have been unfortunately impacted by this second wave and our thoughts and prayers are with them and their families. Thankfully since peaking on May 6th case counts have sharply declined and India has reported 86,000 cases. That is a significant drop from the peak. Our number of states and cities have started easing restrictions with effect from 1st of June and more are expected to do so by the middle of this month. This easing of the curves combined with the vaccination program has begun to show some early green shoots of recovery in travel with our domestic travel bookings almost doubling between last week of May and first week of June. India has managed to administer over 230 million vaccine doses till date and the government has committed to fully vaccinating all citizens before the end of 2021. In fact the Prime Minister yesterday laid out a new roadmap for a more streamlined and accelerated vaccination program starting June 21st. We expect the vaccination drive to gain even more traction in July and August as more vaccines become available and expect travel to recover alongside it. As part of our helping the community initiative, you will recall that last year we had arranged transport supply thousands of stranded migrant laborers back to their hometowns across India during the lockdown. This time around we launched a COVID connect platform on our site. This platform is supported by a number of volunteers including our employees, enabled people to get verified information on COVID-19 resources such as availability for oxygen, hospital beds, ambulances, medics, test centers, etc. And all of these things are in extremely short supply during the peak of the pandemic in the month of May. As we continue to navigate our way through this pandemic, I am very proud of the dedication and efforts exhibited by my Yatra colleagues both internally and towards the larger community during these challenging time. While travel demands are more subdued due to high case counts and partial lockdown across the country, I'm very confident that the industry will inevitably recover and we have begun to see early signs of that in the past few days. As we look forward to the end of this pandemic, which we believe will be driven by the pace of vaccination in the coming months, we believe travel should recover strongly as evidenced by the strong recovery post the first phase.

[Manish Hemrajani:]

Thank you Dhruv. Shelby, can you please open up the call for Q&A.

[Operator:]

. We'll take our first question from Scott Buck with H.C. Wainwright.

[Scott Buck:]

Hi, good morning, guys. Thank you for the time. I jumped on the call a little bit late. I was hoping maybe you could provide a little bit of color around bookings in terms of are we back to booking habits that look pre-pandemic or are we still looking at a lot of kind of closer in type of bookings?

[Dhruv Shringi:]

So, in terms of bookings in the fourth quarter, obviously saw very strong recovery in the bookings. We were sequentially up 62% in terms our revenue Q-on-Q. So we saw good revenue growth quarter-on-quarter but with the second wave of the pandemic, which began towards the last two weeks of March and then continued into April and May, we saw a meaningful slowdown. But in the last two weeks, ever since lockdown restrictions have begun to get eased and case counts have come down, we've seen very steady recovery. In fact, we reported recovery in the number of bookings. So our sense is that as vaccination continues to take a stronger foothold across the country and the case count continues to come down, we should see travel recovering quite strongly in the coming quarters.

[Scott Buck:]

And I guess in terms of that visibility, what's your level of confidence as you look out the first couple of quarters of the fiscal year versus the back end at this point?

[Dhruv Shringi:]

I think I look at how things spanned out in the first wave. So after the first wave the recovery on the domestic side in Q3 and Q4 of the fiscal year was quite strong. And we think a similar story is going to play out this time around as well with the added advantage that a number of people are beginning to get vaccinated. So, we've spoken to customers and anecdotally the feedback that we have from people who've been vaccinated, it seems those people are willing to travel a lot more. There is internal talk as part of a task force discussions with the government as well. And there is talk that people who are fully vaccinated might be allowed to travel freely within the country as well. If that comes through over the next couple of weeks, that should definitely lead to a significant uptick in the number of people who are traveling.

[Scott Buck:]

Yeah, that's very helpful. And then last on the corporate travel side, I'm curious what the competitive landscape looks today versus what it maybe looked like six months ago at the height of the pandemic, are you starting to see some of your competitors in this space get more aggressive in the way they're pricing or anything along those lines, that kind of color would be helpful?

[Dhruv Shringi:]

I think on the corporate travel other side, we think the competitive landscape actually is tilting even more in our favor. The more this has jagged out, the harder it’s become for the smaller and mid-tier players to operate in this segment. It just continues to put additional pressure on them. Even some of our larger competitors have been fairly quiet over the last quarter or so. So I think from that perspective, we are very well placed to take advantage of the situation and it's reflecting in the number of new customer wins that we've had in the last quarter.

[Scott Buck:]

Great. That is very helpful. I appreciate the time guys, congrats on the quarter.

[Dhruv Shringi:]

Sure, thank you.

[Operator:]

. We'll take our next question from Matthew Galinko with Sidoti.

[Matthew Galinko:]

Hey, thank you for taking my questions. And I apologize, I dialed in late so possibly this is already covered in the prepared remarks, but I'm curious how the changes we saw recently fare bands I think the lower end of the fare bands might impact demand for air travel and if that will have any influence over the next few quarters for you?

[Dhruv Shringi:]

Sorry Matt, I was struggling to hear the question. The voice was getting a bit distorted. Manish were you able to get the question.

[Manish Hemrajani:]

No, Matt, can you please repeat that?

[Matthew Galinko:]

Alright. So we saw some changes to fare bands, I think, for air travel in India announced in the past week. So I'm curious if you see those impacting demand for air travel as the COVID wave wanes and air travel starts to recover, is that going to shift more demand back towards rail or how do you see that shaping up?

[Dhruv Shringi:]

Sure, I got it Matt. So in terms of the fare band change which is there now, those are essential limits which are recommended by the government, but the airlines continue to price like in line with where the market demand is. And today, what we've seen is that the market demand has largely shifted from being travel between the metro cities to travel between metros and tier two and tier three travels. And the airlines are very aware of this change in buying pattern, and we haven't really seen any significant price changes being affected by the airlines. If anything, I feel prices and we've looked at this data continue to remain soft and to that extent, we expect demand to recover quickly. Even from a customer's point of view who's traveling from a tier two town, even if rail travel is slightly cheaper, those who can afford air, even if it means stretching a little bit are doing so because a) the availability of trains is also limited and b) air is viewed as a much more safer means of travel than rail transportation. So given that I think this trend, which we've witnessed over the last year or so of increasing amount of traffic originating from tier two, tier three towns, I think that's here to stay. We don't see that reversing anytime in the near future.

[Matthew Galinko:]

Got it. Thanks. And then in terms of the freight strategy, I think you mentioned you have about 100 people working on that strategy today, and I think you fleshed out some expectations around revenue in the near-term. At what point you think that strategy hits a accretive level or do you expect it to be profitable, what's the breakeven point for that service?

[Dhruv Shringi:]

So actually, interestingly enough even the last month that business managed to get to break even in the last month itself. So we expect it to be accretive in the very near-term. We don't expect that business to be a drag on earnings in let's say, for an extended period of time. There might be a quarter or so of the impact, where we are ramping up the teams but what we've seen in terms of results on this have been very encouraging. Our customer wins have been pretty rapid on this and we expect that trend to continue. So we might see some ramp up costs coming in, which might impact us for the quarter because typically it's taking maybe about two to three months for new sales teams to come in and get fully productive. But that's about it. So I don't see a long gestation period for this.

[Matthew Galinko:]

Got it and last question for me, just I guess, big picture around the at least what you saw in Q4 in terms of offline versus online bookings in the market, do you think that heavily skewed online at this point or how much mix shift is left in the Indian market?

[Dhruv Shringi:]

Again, this is based on discussions with the airlines, but the airlines have seen very significant shift in their booking pattern towards the online players versus the offline players. Now obviously, corporate travel is at a very low ebb, right. So that is contributing to a part of that reason. But stripping aside the corporate travel as well, the airlines have seen a very meaningful and more than a double-digit shift towards the online players.

[Matthew Galinko:]

Got it, thank you.

[Dhruv Shringi:]

Sure, thanks Matt.

[Operator:]

We have no more questions in the queue at this time. That concludes today's question-and-answer session. Speakers at this time, I will turn the conference back over to you for any additional or closing remarks.

[Manish Hemrajani:]

Thanks, Shelby. Thank you everyone for joining the call today. We are as always available over the phone and email. Please feel free to reach out to us. Thank you.

[Dhruv Shringi:]

Thank you, stay safe everyone. Thank you.

[Operator:]

This concludes today's call. Thank you for your participation, you may now disconnect.