Yatra Online : Earnings Document

Company: Yatra

Conference Title: Yatra 3rd Quarter 2022 Financial Results Conference Call Moderator: Manish Hemrajani

Date: Friday, 1st April 2022 Conference Time: 08:30 ET

Operator:Please, stand by we're about to begin.

Good day, and welcome to Yatra 3rd Quarter

2022 Financial Results Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Manish Hemrajani. Please, go ahead.

Manish Hemrajani: Thank you, Jennifer. Good morning, everyone. Welcome to Yatra's Fiscal 3rd

Quarter 2022 Financial Results for the period ended December 31st, 2021. I'm pleased to be joined on the call today by Yatra CEO and co-founder Dhruv Shringi. The following discussion, including responses to your questions, reflects management views as of today, April 1st, 2022.

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 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. These include expectations and assumptions related to the impact of COVID 19 pandemic and the ongoing conflict in Ukraine. For a description of these risks, please refer to our filings with the SEC and our press release.

With that, let me turn the call over to Dhruv. Dhruv, please go ahead.

Dhruv Shringi: Thank you, Manish. And good morning, everyone. Thank you for joining us this morning.

Before I discuss the results, I would like to discuss what we believe will be a major milestone in

Yatra's evolution. As we shared with you last week, we are continuing to work with bankers and lawyers in India to explore our options for an India IPO. To that end, as we shared earlier, we took the first step in the process with the filing of the Draft Red Herring Prospectus with SEBI, which is the main market regulator in India.

Our brand is and continues to resonate positively in India with travelers and our corporate travel business continues to recover strongly. We believe this would translate into a successful IPO that could significantly enhance Yatra's strategic flexibility and act as a catalyst to improve shareholder value going forward.

Benefits of this listing, which would support Yatra's ongoing strategy and value creation opportunities, include access to an additional pool of capital, including retail and institutional investors in India who are already familiar with Yatra's business and brand, but who are currently restricted from participating in the US markets.

Providing a liquid stock that can be used for M&A in India, further capital to strengthen the balance sheet and provide working capital to accelerate growth in both corporate travel and trade business, additional sell site research coverage amongst others. Yatra will begin management roadshows in India towards the end of April, early part of May, and we believe we should be in a position to complete the offering by the back end of summer of 2022.

Now coming on to our December quarter results. Adjusted revenue for the quarter ended

December 31, 2021, came in at INR 1.044.9 million, which is approximately $14 million. This was up 33% Q1Q and 72% year-over-year. We witnessed a strong recovery in travel in the December quarter as leisure travel picked up heading into the critical holiday season.

Air passengers booked were up 40% year-over-year in the December quarter and up 41% sequentially. Our hotel room nights were up more than 72% year over year and about 18% sequentially. Business travel also came back strongly on the back of lower case counts in the early part of the third quarter. I'm happy to share that this was the highest reported quarterly adjusted revenue for Yatra since the onset of COVID 19 in March 2020.

Adjusted EBIDTA also improved by 89% Q1Q to INR 44 million or approximately USD 600,000 for the quarter. Despite the investments that we continue to make in the nascent but rapidly growinglogistics and trade business, as of December 31, 2021, the balance of cash and cash equivalents and term deposits on our balance sheet was INR 1.534 billion. The change in our cash o cash position versus last quarter is largely on account of increase in working capital on account of the recovery in the corporate business.

On a US dollar basis, adjusted revenue for the quarter was 14 million and adjusted EBITDA was about $591,000, which was up 89% sequentially showing the leverage in our business model.

We ended the quarter with a solid balance sheet and a cash balance of approximately $21 million. As I mentioned above, the change in the cash position is largely on account of change in working capital due to recovery of the corporate business.

Please note that while there was some disruption on account of Omicron in December, there was a further impact, which we felt in the month of January. But having said that, recovery has been rapid in both leisure and business travel in Feb and March. And I am pleased to say that we are back to our better than November levels exiting March 2021.

Business travel impact where we are the market leaders is trending to exceed 75% of its pre-

COVID volumes in March 2022, levels not seen since March 2020. And we remain optimistic that it should get back to close to pre-COVID volumes in the June 2022 quarter. When the competitive intensity has risen moderately since the last quarter, overall competitive levels remain benign on the hotels front, and our brand continues to resonate positively with Indian travelers.

Just like business travel, Omicron negatively impacted volumes in January but Feb onwards we've seen strong recovery happening and March has been even stronger. And overall, industry volumes for travel, for domestic air travel in March exceeded 83% of pre-COVID volumes. So we are seeing strong recovery happening from March leading into the key summer travel months of

April, May, June across both leisure and business travel platforms.

On the hotel front as well, we signed a strategic partnership with Flipkart or Cleartrip who will now source domestic hotel content from Yatra. We believe that the incremental volume that we drivethrough this partnership will not only be accretive from an EBIDTA perspective but will also help us strengthen our relationship with our existing hotel partners and lead to a better long-term value creation.

India's mass vaccination program has truly been remarkable. And as of this week, over 825 million people, or 60% of the population have been fully vaccinated, and close to a billion people have received at least one dose. As a result, India opened up for international travel on a full schedule from March 27th onwards. We are seeing good early traction on the international travel front as borders continue to open up globally. Because of these positive signals and the traction we are gaining in our digital initiatives, we believe we can expect to see a quarter that meets or exceeds our pre-COVID levels sometime this calendar year.

Let me now give you an update on our freight business. As we look towards digitizing the logistics space, our corporate travel relationships with both airlines and enterprise executive management, together with our technology capabilities give us a significant head start. We have rapidly scaled up this business over the past few months, and we believe this business longer term has the potential to be even larger than our corporate travel business. We expect 2022 to be a year of rapid expansion for this business, and we believe that we should be able to achieve revenues of $45 million from this business in fiscal year 2023.

Following a successful Indian IPO, I believe we will be in a position to accelerate growth in freight, which is receiving renewed interest across the globe because of the freight and logistic challenges that people are facing. We are optimistic about Yatra's continued growth and recovery based on the trends that we are witnessing and believe that our well-recognized grand and healthy balance sheet puts us in a strong position to capitalize as the recovery continues to gain momentum.

While we are not completely out of the woods, I'm optimistic that based on recent trends the worst of the pandemic is now behind us. And the levels of vaccination in India has lowered case count to a level low enough to encourage strong recovery in travel, both business and leisure, aswe have seen in the months of Feb and March. We believe the opportunity ahead for Yatra is massive.

We believe Indian international travel will hit an inflection point in the coming years as we get past

COVID. We believe corporate travel where we are the leaders we'll also recover quickly. In addition, the efforts made during the pandemic to improve operational efficiency will lead to significantly higher levels of profitability and cash flow.

I want to thank our shareholders once again who've stayed by Yatra through these trying times. I am hopeful and honestly believe it's only a matter of time before your patience and understanding are rewarded.

With that, let me hand it back to Manish. Manish.

Manish Hemrajani: Jennifer, can you please open up the call for Q&A? Thank you.

Operator:Yes. If you'd like to ask a question on today's call, that is star one on your telephonekeypad. And we'll go first to Scott Buck with HC Wainwright.

Scott Buck: Hi. Good morning, guys. Thank you for taking my questions. First one for me, I'm

curious if you're seeing some of the benefits of the market share gains you've made on the corporate side of the new contracts you've signed on the corporate side during COVID now that recovery or activity levels are starting to come back or is it still too early for that?

Dhruv Shringi: I think we're beginning to see early signs of that, Scott. Firstly, as I mentioned, we've

seen corporate travel volumes touch about 75% of pre-COVID levels in the month of March. It's relatively early to comment on it, but there have been days in the month of March where our daily volume has exceeded our pre-COVID levels. So from that perspective, I'm quite hopeful that as we go into April, May, June and as corporations reset their budgets, we should end up seeing a

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