Yatra Online, Inc.
Q3 2019 Earnings Call Transcript

Published: 31 Jan 2019

[Operator:]

Good day, and welcome to the Yatra Third Quarter 2019 Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Manish Hemrajani. Please go ahead, sir.

[Manish Hemrajani:]

Thank you, Rachel. Good morning, everyone. Welcome to Yatra's fiscal third quarter 2019 earnings conference call for the period ended December 31, 2018. On the call with me today are Yatra's CEO and Co-Founder, Dhruv Shringi; and CFO, Alok Vaish. The following discussion, including responses to your questions, reflects management's views as of today, January 31, 2019. We do not undertake any obligation to update or revise the information. As always some of the statements made on today's call are forward-looking, specifically preceded by words such as we expect, we believe or similar statements. Please refer to company's filings with the SEC for information about factors, which could cause our actual results to differ materially from these forward-looking statements. Additional information concerning these statements is contained in the Risk Factors section of the company's annual report on Form 20-F filed with the SEC on July 31, 2018. 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, and good morning, everyone. I'm pleased to report healthy financial results in the fiscal third quarter of 2019. Our multichannel approach once again enable us to deliver a healthy growth to the significant improvement in our adjusted EBITDA loss in the quarter. We continue to make strong progress towards achieving operating breakeven in the near-term, and I've taken some concrete steps towards that. And I'll talk about these later in my remarks. Starting off, our business travel platform and consumer business continued to deliver robust adjusted revenue growth, while a combination of improved efficiency in our marketing expenses and optimization of our cost base enabled us to achieve a meaningful improvement in the adjusted EBITDA loss. The integration of the ATB acquisition is striking ahead of plan with almost 90% of their customers expect it to be migrated to the Yatra platform by end of February, resulting in further cost synergies from the next quarter onwards. Looking ahead, we continue to be confident in our ability to meet our growth objective of at least 20% adjusted revenue growth in the current fiscal year and delivering a meaningful year-over-year improvement in our adjusted EBITDA loss. More importantly, we believe we have the right strategy and continue to believe that a unique strategy of creating a symbiotic relationship between business and leisure travel is a powerful one. It enables us to capture the highest spend and loyalty of business travelers as well as to serve the more cost-conscious and opportunistic leisure travelers. We are optimistic about our prospects and we believe we are well positioned to further capitalize on India's rapidly expanding travel industry. This multichannel approach helped grow our adjusted revenue by 16.6% year-over-year. Meanwhile, operating efficiency drove cost savings, enabling us to reduce our adjusted EBITDA loss by 60% year-over-year to $2.2 million in the December quarter. In addition, we've just begun to realize the cost synergies from the integration of ATB and we expect the full impact of the integration to be reflected in the next several quarters. Let me now review key operating highlights of the quarter. I'll start with the general macro environment, then review air, hotel, corporate travel and some of the other initiatives in marketing and technology. We continue to believe the aviation macro trends will remain favorable over the long-term as a result of lower aircraft penetration and government support. Overall air traffic was up 12% year-over-year in the December quarter. Our own air gross bookings were up 13.4%, with air-ticketed passengers up 8% year-over-year. Let me now elaborate on some of the factors that impacted the air gross bookings during the quarter. In the business travel category, we decided to give up some low margin business in order to improve our profitability. We also disengaged with a few ATB where the Goods and Services Tax process did not confirm with the recommendations of our tax advisers. Finally, we lost one large customer account due to a change in their global mandate. Adjusting for these one-time factors, growth in air gross bookings would have been about 250 basis points higher. The impact would be similar on revenue less service costs. Most importantly, however, is the improved profitability resulting from eliminating the low margin business. On the revenue front, air ticketing adjusted revenue posted growth of 5.7% due to lower air take rates of 6.2% in the quarter versus 6.7% last year. And the effect of the one-time factors I just mentioned earlier. The change in take rate was mainly a result of higher yield in the current quarter and a change in mix towards international travel. That being said, our take rate improved sequentially by 50 basis points from 5.7% in the September quarter on account of a higher B2C mix. Part of the decline in air take rate year-over-year was offset by the increase in cross sell revenue. This is reflected on the other income, which grew 109% year-over-year, as we continue to enhance the tax rates for travel insurance and drive up advertising and ancillary revenue. Now let's turn to Hotels. We continue to be the leading platform for domestic hotels and homestay options. I'm pleased to report that we now have over 100,000 properties on our platform. Our Hotel and Packages business grew in a rate of 10.5% on an adjusted revenue basis, largely due to net revenue margin improvement of 260 basis points year-over-year to 15.1% despite gross bookings being down 8% year-over-year, largely on account of lower sales of packages. The lower sales of packages was as a result of us closing down loss-making physical retail sales locations and the transitional effect of our call centers being outsourced to a third-party service provider. Both of these one-time structural changes will result in a meaningful improvement in our bottom line on an ongoing basis. The standalone hotel room nights booked were up 19.2% year-over-year. We continue to realize the cross sell benefits in our Corporate business and we expect further progress as we continue to migrate legacy ATB corporate customers onto the Yatra platform. This past quarter, we also signed a partnership with Agoda, which is a part of the Booking.com group, we will power their hotel inventory for domestic India hotels. Agoda is one of the largest global accommodation booking platforms with excellent reach among travelers across the world and in Asia Pacific in particular. We delighted to join forces with them. There is a strong interest from global travelers in visiting India and providing a wide choice of real-time hotel inventory helps ensure a seamless travel booking experience. We believe this alliance will not only prove beneficial for Agoda's customers but also valuable for our hotel partners by providing them incremental global traveler demand. Agoda is expected to go live later this quarter with Yatra inventory onboarded with real time pricing. We view this as a profitable means to leverage our market leading hotel inventory and would be open to other similar deals in the future as well. Let me now talk about our Corporate Travel business. In an emerging market with limited disposable income, business travel is generally the first form of travel undertaken. As a market leader in this segment, we believe that we are well positioned to capture some of the most attractive target group of travelers in India, as they make their first online travel purchase. A further benefit is that corporate travel demand tends to be less price sensitive as well. We believe we are the largest corporate travel service provider in India in terms of gross bookings. We also believe that corporate travel in India, the more exciting and larger opportunity for us. It is projected to grow at an annual rate of over 12% through 2020, this makes India the fastest growing corporate travel market in the world according to industry research. Next, let me cover some recent accomplishments in our Corporate segment. First, we continue to strengthen our presence in this segment. For example, earlier this month we agreed to acquire the Corporate Travel business of PL Worldways Limited, a Chinnai based corporate travel service provider. This acquisition will help us strengthen our foothold in Southern India, by adding over 100 corporate clients to our existing base of over 700 clients. We also recently announced the signing of Axis Bank, India's third largest bank with over 60,000 employees, as a corporate travel customer and we are excited to have them on board. We have created a customized platform based on Axis Bank's compliance policies and approval systems, thereby, ensuring end-to-end fulfillment of their corporate travel needs. Let's now turn to some of the business highlights. As I mentioned earlier, we're pleased with the progress in the ATB integration, about 90% of ATB's customers are expected to integrate to the Yatra platform by February end, enabling us to start realizing cost synergies. Importantly, we believe that there is a large opportunity to cross-sell Yatra's Hotel inventory, to now over 800 strong corporate customer base. Moving on to the Corporate Self Book tool, our legacy customer base crossed the 57% mark on Self Booking, that's an 85% increase in absolute number Self Booking transactions over the same period last year. Our SME platform also continues to scale up strongly and we now have almost 16,000 SMEs using our platform for their travel needs. Mobile traffic continues to garner the largest share of our overall traffic, with 82% of our traffic during the quarter coming from mobile devices. Our organic mobile app downloads are now at about 17 million, as we added just under 1 million new installs in the quarter. On the cost side, while we clearly stand to benefit from cost synergies from the integration of ATB, I would also like to share with you some of the steps we're taking to optimize to our cost structure. We recently outsourced our call center, which we should result in cost savings of around $2 million in the next 12 months. Additionally, we further rationalize our personal expenses, which have declined to about 25.5% of adjusted revenue from 36% of adjusted revenue in the year ago quarter. Our marketing and sales promotion expenses came in at 48% of adjusted revenue versus 52% in the year ago quarter, as we continue to drive towards profitability. In closing, with the strength of our brand, our deep distribution network across India and our leadership position in corporate travel, so we believe we are well positioned to capitalize on this next wave of growth. I'm now going to turn the call over to Alok to walk you through the details of our financial performance. Alok?

[Alok Vaish:]

Thank you, Dhruv, and hello to everyone. As Dhruv mentioned in his opening remarks, we are very pleased with the performance during the quarter ended December 31, 2018. Let me provide the key financial highlights, starting with the income statement. Our adjusted revenue grew by 16.6% year-over-year to INR 2.3 billion or $33.5 million. Gross air passengers booked were 2.5 million that represents the year-over-year growth of 7.8%. Standalone hotel room nights booked were 600,000, representing an increase of 19.2% year-over-year. Adjusted revenue from our Air Ticketing business increased by 5.7% to INR 1.5 billion or $20.8 million in the quarter. This growth was driven by a 13.4% increase in gross bookings to INR 23 billion or $333 million. Gross bookings growth was offset by a decline in our net revenue margins to 6.2% versus 6.7% in the year-ago quarter, due to relatively higher airfares and the change in mix towards international flights. I would also like to highlight that our net revenue margin for air in the December quarter increased from 5.7% margin in the sequential previous quarter, and from 5.2% margin for the three months ended June 30, 2018. For Hotels and Packages, our adjusted revenue for this segment was up 10.5% YOY to INR 483 million or $6.9 million in the current quarter. This growth was driven largely by a net revenue margin improvement to 15.1% from 12.5% in the last year's corresponding quarter, while gross bookings decreased 8% due to our decision to shut down our physical retail sales locations and outsourcing of customer contact centers in a drive towards profitability. Our net revenue margin in the December quarter increased from 13.7% margin in the sequential previous quarter and from 12.9% margin for the three months ended June 30, 2018. Other revenue including other income grew by 109% to INR 400 million or $5.8 million from INR 192 million in the same period last year. This increase in adjusted revenue was primarily due to increase in attach rates for travel insurance, advertisement and ancillary income. Moving onto expenses. Marketing and sales promotion expenses decreased by 84% to INR 166 million or $2.4 million in the quarter from INR 1 billion or $14.8 million in the prior year quarter. Adding back the consumer promotions and loyalty program expenses, which were reduced from revenue according to IFRS 15, our marketing spend would have been INR 1.1 billion or $16.2 million, which is 48.3% of adjusted revenue in the current quarter, down from 51.5 [Audio Gap] decrease 17.5% to INR 594 billion – sorry INR 594 million or $8.5 million flows at the December quarter [Audio Dip] or $10.4 million our last year's quarter. This decrease was primarily due to a decrease in employee share-based payment expense to INR 33.8 million or $0.5 million in the current quarter from INR 132 million or $1.9 million in the prior year's quarter and due to outsourcing of customer contact centers. Personnel costs as a percentage of adjusted revenue declined to 25.5% in the quarter versus 36% in the same period last year. Other operating expenses increased by 3.7% to INR 798 million, or $11.5 million in the quarter from INR 770 million, or $11.1 million in the prior year's quarter. The increase is primarily due to increase in payment gateway expenses and call center outsourcing expenses, this was partially offset by decrease in IT communication expense, travel expense and provision for doubtful debts. Based on these factors and operating efficiencies, adjusted EBITDA loss has improved by 60% year-over-year to INR 154 million or $2.2 million in the quarter from INR 388 million or $5.6 million last year on the corresponding quarter. Turning to liquidity, our cash position remains strong. As of December 31, 2018, the balance of cash and cash equivalents and term deposits on our balance sheet was INR 3.8 billion or approximately $54.5 million. We have also recently entered into advertising achievement with Times of India group, India's leading media business house for advertising campaigns, which are to be conducted over period of five years. Pursuant to the terms of the deal, we have made large payments, which are to be used for the cost of the advertising campaigns. Under the agreement, some of the advertising costs will be adjusted to the advance extended by us, while the rest of the advertising costs will be paid incrementally at the time of advertising campaigns. As a part of the deal, the Times group has also [indiscernible] non-convertible debentures having a phase value of INR 195 million or $2.8 million in our Indian subsidiary. These [indiscernible] redeemed that the value of INR 215 million or $3.1 million at the end of the five-year maturity, reflecting simple fixed interest of 10% for the entire term of NCDs. Now let me conclude with our guidance for fiscal 2019, as Dhruv noted, we remain positive on the Indian macro environment, we see attractive growth potential in air and hotels industry and believe we're in a very strong leadership position in the corporate travel [indiscernible]. We reiterate our guidance of over 20% growth in adjusted revenue, with a meaningful improvement in our adjusted EBITDA loss for fiscal year 2019, driven by operating leverage and efficiencies. This concludes our prepared remarks. And we can now open up the line for Q&A. Back to Rachel.

[Operator:]

Thank you. [Operator Instructions] We will now take our first question from Jed Kelly with Oppenheimer. Please go ahead, sir.

[Jed Kelly:]

Great, thanks. Thanks for taking my question. Couple of if I may – Hello?

[Alok Vaish:]

Yes.

[Jed Kelly:]

Hello? Can you hear me?

[Manish Hemrajani:]

Yes, we can hear you Jed.

[Jed Kelly:]

Okay, great. Yes, so thanks for taking my questions. A couple, it seems that your profitability came in what we were forecasting. Does this kind of time to give you a confidence that you sort of can accelerate your profitability goals into next year and maybe – you could generate positive EBITDA in the 2020 or positive free cash flow, just how should we think about profitability going forward over the next 12 to 24 months?

[Dhruv Shringi:]

Hi, Jed. This is Dhruv. Question of profitability, we clearly changed our focus for a certain extend in ensuring that we improve the bottom line [indiscernible] question, which was asked by investors. And I think the steps that we've taken should highlight to investors the ability of the business to be able to turn around and quickly get to profitability in near term. There are some other levers as well that we touched upon, which are around the ATB integration. We think that there's some further upside on the back of that. We continue to focus on driving healthy growth as well. So trying to balance both healthy growth and profitability and we feel there is some upside which is there. To address the other part of full year of profitability of 2020, while that's an endeavor. I think we're definitely working towards that. We think we should still be – we might be closer to breakeven or marginal profitability in 2020 and look to enhance on that profitability more than 2021. Our free cash flow profitability might be a bit longer, especially, we're looking at 2021 for free cash flow profitability, because there is incremental working capital that gets deployed as a corporate travel business grows. The cash flow profitability, it might take another few quarters from the time we get to operating breakeven.

[Jed Kelly:]

Okay. And then you said the corporate travel agency industry in India grew 12% this quarter. Can you kind of – did your corporate travel segment outgrow the industry?

[Dhruv Shringi:]

So the growth of corporate travel was not specifically for the quarter. That's the growth rate at which industry supports our projecting the industry to go between 2017, I think in 2020. So that's the CAGR. In the current quarter, we took some steps as a [Audio Dip] these are more one-time in nature to restructure parts our corporate travel business as well. There were some ATB customer, who was good at services tax position by the customers was not confirming to the advice of our tax advisors and we let go those customers. And if there was some low margin accounts as well that we let go off. So while, on an overall basis the growth might have been less than 12%, if I was to adjust for these one-time factors, then growth rates would be healthy.

[Jed Kelly:]

Okay. That's helpful. And then, marketing and sales promotion, it continues to be your largest expense although. Clearly, the focus is on corporate travel. I mean, can you talk about the ability to sort of really leverage this expense item over the next 18 months and how you're thinking about competing in the leisure travel environment?

[Dhruv Shringi:]

Sure. On the marketing and sales promotion side, we've see a [indiscernible] 52% to 48%. And we think there should be further opportunities as well as we continue to build on repeat buying patterns and also converting part of our large corporate travel base into leisure travelers on the platform. So combination of those two gives us at least strong belief that we should be able to see more leverage on sales and marketing spend over the course of the next 18 months.

[Jed Kelly:]

Okay. And then on your cash balance, your net cash balance, I said, my math is about around for $38 million. I mean, are there any earn outs from ATB or any other acquisitions and how do you feel your capitalized to do further acquisitions in the corporate travel space?

[Alok Vaish:]

Yes. So I think, the number that you're talking of is probably netting off the amount that requires, yet to be paid out from the ATB acquisition, which would probably happen sometime in this quarter. We believe it's still adequately capitalized from our cash point of view. Given the backdrop of reducing losses and some efficiencies in working capital as well. So we believe we are a bit okay there. Whatever acquisitions we might look at would be small tuck-in incremental kind of acquisition without requiring a huge amount of capital. But we were okay now, based on the current capital base that we have right now.

[Dhruv Shringi:]

But just adding to that. On the capital side, the once we continue to look out for this interesting acquisitions. So there are some, which require us to look at other means of capital rising. We would be open to doing that. I think some of these acquisitions or the most of the acquisition that do generate positive cash flow, some flexibility of looking at interesting finance for these acquisitions as well. But as Alok said, all are tuck-in ones, we've got enough on the balance sheet to do it ourselves, if there is something more material then we'll continue to evaluate other means as well.

[Jed Kelly:]

All right. Thank you.

[Operator:]

Thank you. We will now take our next question from Vijit Jain of Citi. Please go ahead.

[Vijit Jain:]

Yes. Hi, Dhruv. How are you guys? So my question is – yes, so my question is about the PL Worldways acquisition. Could you give us a sense of what kind of revenue earnings, EBITDA impact you're seeing or expecting from this acquisition? Will this be accretive from day one?

[Dhruv Shringi:]

This should be accretive from day one. So while we haven't really – the absolute numbers, the way we are looking at some of these acquisitions and this trend would have follow in others as well that we do. What we are doing is taking on the business and taking on only a certain amount of support staff necessary. So from day one, businesses come to us with between 35% to 50% kind of operating margin. That's the way we are looking at this. So it should be accretive from day one.

[Vijit Jain:]

I see. And how about the Agoda partnership, so that should direct just flew into your EBITDA, right? Because I'm guessing, it's a relationship where you just provide them access to your database and they pay you certain fees. Is that's correct assessment and how big could that be I guess, if you could give a sense of how big could that be? Because I think other people, other players in the space have also highlighted international incoming as one of the major growth areas. So we're just getting us – trying to get a sense of whether you think this could be a material impact on your path to achieving adjusted EBITDA breakeven?

[Dhruv Shringi:]

This will definitely be positive on the bottom line from day one, as you rightly highlighted from our operating model point of view. And there is a little marginal cost that we incur on this. So whatever contribution, net contribution we retain all flows through to the bottom line. In terms of the volume of business, while, we've had some dialogue with Agoda around this, we would want to wait for a quarter or two to see what kinds of trends are [Audio Dip] on this before we start putting out some number guidance to this. But needless to say, Agoda is one of the largest players in the Southeast Asian market for sure. So we do expect very healthy volume to come from there. But as I said, we'll just wait and watch for a quarter or two before we start releasing more numbers around that.

[Vijit Jain:]

Thank you. And I have just one last final question. So you mentioned, you've added Axis Bank as one of your corporate clients this quarter. Could you give us a sense of how many large account do you have in your corporate space right now? I don't know, maybe as a percentage of your overall corporate client book or maybe as a percentage of your revenues. Thank you. So large accounts that is…

[Dhruv Shringi:]

Okay. What we quantify it is about 800 large corporate customers. Now all of these might not fall in the same bucket. But the definition that we have is on the SME side, we've got SMEs who spend less than $10 million, sorry, INR 10 million rupees a year. So below that categorization as SME, above that we started qualifying them for large, but on average, our large customers of ours, we'll spend about $1.5 million a year on business travel.

[Vijit Jain:]

I see. And how many of those will you have right now? I mean…

[Dhruv Shringi:]

So as of today we have about 800.

[Vijit Jain:]

Right? So 800 of them, which pay $1.5 million a year or which to business of $1.5 million a year, is that right?

[Dhruv Shringi:]

No. So the 800 would not average $1.5 million, I'm just saying bit circumspect right now, because if I give you an average, then you just – you can backtrack into the volume of corporate sales, which is something that we don't put out at the moment.

[Vijit Jain:]

Sure, sure. Okay. I understand.

[Dhruv Shringi:]

But nice try, Vijit.

[Vijit Jain:]

Thank you. Those are my question.

[Operator:]

Thank you. [Operator Instructions] We will now take our next question from Jon Hickman of Ladenburg.

[Jon Hickman:]

Hello. Thanks for taking my question. Could you talk to me about the outsourcing of your call center? Since you're – they're not in your direct control. Is there any kind of risk there that those people aren't going to do what you exactly what you want them to do? Or they're not meeting as well trained issue had previously, when you had complete control?

[Alok Vaish:]

Sure, Jon. And that's a very good question, Jon. And that's been a primary concern of ours over the years and that's the reason why we haven't done this sooner. So while the cost opportunity has been there for awhile in terms of cost savings. But what has given us the confidence to do this, this time around is the fact that we've been able to build out a certain number of online automation tools and call center automation tools during the course of the last 12, 18 months. And [indiscernible] has helped us streamline the processes, standardized them to a pretty meaningful extent and that confidence to outsource and obviously there's a lot of tight monitoring happening around this. There are tight SLAs that we have in place with the vendors. So the combination of technology plus tight SLAs and monitoring with the vendors now gives us the confidence. But it's largely on the back of the automation that we've been able to do and streamlining the workflows that's now given us the confidence to go out and outsource.

[Jon Hickman:]

And you think that's going to save you $2 million over the course this year.

[Alok Vaish:]

That's right. That's right. So just in terms of absolute headcount costs that should save us $2 million.

[Jon Hickman:]

Okay. Then the other thing is could you go over again, I know you said this a couple of times. But I just want to make sure I understand. So, you consciously got rid of some low – high cost, low profitability customers in your corporate travel side. And then you eliminated some others because of their – you didn't like their accounting. And then you also got rid of your physical stores and that caused a decline in what otherwise would have been a stronger growth quarter. Do I have that right?

[Alok Vaish:]

That's right, Jon, yes.

[Jon Hickman:]

Okay. Can you elaborate on, what didn't you like about like, I don't think I've ever heard of somebody dropping a customer because they didn't like their accounting. But can you elaborate?

[Dhruv Shringi:]

No, Jon it wasn't really – Jon, it's not the accounting, but it's the tax position. So in India, just to give you a bit of background, there was a new Goods and Services Tax, which was introduced in July of 2017 and there was certain grayness around that tax in how companies need to account for and transact between each other. So it's talking more about the agency and principal relationship between customers and the airlines. So it's around that where the tax position taken by these companies was not in compliance with the tax position, which was recommended to us by our auditors and by our tax consultants. So if we were to adopt the tax position, which these companies we're adopting, we would have had to create an incremental charge in our P&L for the differential arising on account of these two tax treatments. So it was on account of that that we decided not to pursue these businesses because we obviously don't want to carry the tax liability and also you don't want to risk running a foul with the government. So we worked with some of the big four tax advisers in India and we decided to take a more conservative approach, which has been outlined by them from a tax compliance point of view.

[Jon Hickman:]

Okay. And then the fat around giving up your physical locations. Why did you do that?

[Alok Vaish:]

The physical location actually has been something that we've been evaluating now for the last couple of years. More and more customers are researching online.

[Jon Hickman:]

Yes.

[Alok Vaish:]

And there is very limited walk-in now happening from even a holiday purchase point of view. So what actually happens now is customers research online and then they do large part of the fulfillment also online. But things like the document collection, foreign exchange, visa, for those people [Audio Dip] to do stuff like that. You don't really need to be in high street stores, you can service those document requirements from an back office as well. And we've got in different parts of our business, we've got some back office locations in pretty much most of the metro cities and some of the Tier 2 towns in India. So we thought there was a way for us to just move from a high street retail location and save the cost and combine our workforce into the back office locations or at least a part of the workforce. What we did end up losing was a little bit of sale, which used to happen in these high street locations. There were still some sale, which was happening, but this legacy sale was not enough to cover the cost structure now of the high street locations. So that was the reason for taking that call. We've lost a bit of holiday package sales, which used to happen from these locations, but we are fairly confident that that can be picked up in a matter of a quarter or so from the online channels themselves.

[Jon Hickman:]

Okay. Thank you. Appreciate it.

[Operator:]

Thank you. We will now take our next question from Gaurav Rateria from Morgan Stanley. Please go ahead.

[Gaurav Rateria:]

Hey, Dhruv, congrats on good execution on profitability part. Firstly, a question on the domestic air aviation market. You talked about the overall growth in the sector at around 12%. As a company you would have maintained your share, you would have gained share in the domestic air market. Any sense on that will be great.

[Dhruv Shringi:]

In terms of our consumer direct business, we would have gains in overall market. On an overall basis this time around, I don't think we've got any market share gain in this quarter on the back of those one-time things that we just outlined. But if you do, ignore the effect of the one-timers then obviously there is market share gain, which has happened both in our consumer business and [indiscernible] basis in the other parts of our business.

[Gaurav Rateria:]

Okay. And what's your sense on this overall trend going forward? Do you think this volume growth could remain subdued for some time at least in the first half of 2019 given the volatility in the market because of what's happening with the airlines?

[Dhruv Shringi:]

If you look at the volume trends right now and we think the industry growth rate in the early teens should be sustainable. It might not be the 20% number that we were witnessing in the early part of 2018 calendar year. But we do expect growth to still be in the teens from the basis of new capacity expansion, new route expansion that the airlines are undertaking. It's also being aided by the fact that fuel prices have come off from the higher rates they were in the month of September and October. So that's giving the airlines a bit of flexibility from a pricing standpoint as well.

[Gaurav Rateria:]

Right. What's your sense on like the yields are – are they moving up and is that impacting the volumes or is there something else?

[Dhruv Shringi:]

The yield is definitely moving up. We've seen huge move up in this quarter as well compared to the previous quarter. So there is definitely some upward movement of the yield. And on the back of that upward movement in the yields, we've seen some volume come off, but that volume is now being more than made up by the increase in the gross booking value because of the higher yield.

[Gaurav Rateria:]

Okay. One question on the domestic standalone hotel room nights. The growth was little slower this quarter. If you'd be able to provide some color the slowdown was led by which particular segment, the mid segment, the budget segment or the high segment? Any color on that will be very helpful.

[Alok Vaish:]

Yes. So on that side as well, we got impacted by one corporate customer, where on account of low margin business. So we decided to give up on that corporate customer. The decline or the relative slowdown is coming on the back of that. Had it not been there and then the impact would have been about, I think I'm just trying to do a rough math right now, about 200 to 200 – about 200 basis points higher. But from an overall industry point of view, we don't see a meaningful slowdown out here. I think, next quarter onwards it should pretty much be back on track the 25% to 30% numbers that we were looking at earlier.

[Gaurav Rateria:]

Okay. And any color, like the 25%, 30% is driven majority by the budget segments or the high segment. Like where have you been getting more traction if you were to divide it into two or three broad segments of high end, mid end and the budget?

[Dhruv Shringi:]

See, our growth is coming from the budget and the – sorry, the mid and the high end and more limited from the budget. The budget segment is the one where price group awning and competition continues to be intense. And given that we are driving cross sell from a corporate travel base, the corporate [Audio Dip] is most skewed the mid segment and the high end.

[Gaurav Rateria:]

Fair enough. Last question from me. Dhruv, on the budget segment, you guys had done a tie up with the aggregator like OYO. Any color on how that partnership has been panning out? And has it been net-net accretive to your overall growth or how have you been looking at that? Thank you.

[Dhruv Shringi:]

The impact of that on the leisure side has been marginal. I don't think it's really had a very significant impact because the supply does tend to be a certain – to be fungible to a certain extent. And the net incremental of that is still fairly limited for us. So I'm not seeing in that category a tremendous amount of lift coming on the back of having one particular operator on the platform.

[Gaurav Rateria:]

All right. Thank you so much.

[Dhruv Shringi:]

Sure.

[Operator:]

[Operator Instructions] We have no further questions at this time. I'd like to hand the conference back to our host for any additional or closing remarks.

[Dhruv Shringi:]

I think we're good then.

[Manish Hemrajani:]

Yes. Thank you guys for joining the call today.

[Alok Vaish:]

Thank you, everyone.

[Operator:]

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