Yatra(YTRA) - 2019 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adjusted revenue grew by 16.6% year-over-year to INR 2.3 billion or $33.5 million [28] - Adjusted EBITDA loss improved by 60% year-over-year to INR 154 million or $2.2 million [35] - Cash position as of December 31, 2018, was INR 3.8 billion or approximately $54.5 million [36] Business Line Data and Key Metrics Changes - Air Ticketing adjusted revenue increased by 5.7% to INR 1.5 billion or $20.8 million, driven by a 13.4% increase in gross bookings to INR 23 billion or $333 million [29] - Hotels and Packages adjusted revenue grew by 10.5% year-over-year to INR 483 million or $6.9 million, despite gross bookings decreasing by 8% [31] - Standalone hotel room nights booked increased by 19.2% year-over-year [28] Market Data and Key Metrics Changes - Overall air traffic was up 12% year-over-year, with air gross bookings up 13.4% [10] - Corporate travel in India is projected to grow at an annual rate of over 12% through 2020, making it the fastest-growing corporate travel market in the world [19] Company Strategy and Development Direction - The company aims for at least 20% adjusted revenue growth in the current fiscal year and a meaningful year-over-year improvement in adjusted EBITDA loss [8] - A unique strategy of creating a symbiotic relationship between business and leisure travel is emphasized to capture higher spending and loyalty from business travelers [8] - The integration of ATB acquisition is progressing ahead of plan, with expectations of cost synergies starting next quarter [7] Management's Comments on Operating Environment and Future Outlook - Management is optimistic about the prospects in India's rapidly expanding travel industry and believes they are well-positioned for growth [8] - The aviation macro trends are expected to remain favorable due to lower aircraft penetration and government support [10] - Management acknowledges that while profitability is a focus, achieving positive free cash flow may take longer, potentially into 2021 [45] Other Important Information - The company signed a partnership with Agoda to power their hotel inventory for domestic India hotels, expected to enhance global traveler demand [16] - Marketing and sales promotion expenses decreased to 48% of adjusted revenue from 52% in the previous year [25] Q&A Session Summary Question: Can you provide insights on profitability goals for the next 12 to 24 months? - Management indicated a focus on improving the bottom line and expects to be closer to breakeven or marginal profitability in 2020, with free cash flow profitability anticipated in 2021 [45] Question: Did your corporate travel segment outgrow the industry? - Management clarified that the 12% growth rate is a projection for the industry, and while current growth may have been impacted by one-time factors, underlying growth rates would be healthy [46] Question: How do you plan to leverage marketing expenses in the leisure travel environment? - Management expressed confidence in leveraging marketing expenses through repeat buying patterns and converting corporate travelers into leisure travelers [50] Question: What is the expected impact of the PL Worldways acquisition? - Management expects the acquisition to be accretive from day one, with operating margins between 35% to 50% [55] Question: How is the Agoda partnership expected to impact EBITDA? - Management confirmed that the partnership would positively impact the bottom line from day one, with expectations of healthy volume growth [57] Question: Can you elaborate on the decision to outsource the call center? - Management explained that the decision was based on the development of automation tools and tight monitoring with vendors to ensure service quality [66] Question: What was the rationale behind dropping certain low-margin customers? - Management indicated that the decision was based on compliance with tax regulations and the desire to avoid carrying tax liabilities [72] Question: How has the partnership with OYO impacted growth? - Management noted that the impact on leisure travel from the partnership has been marginal, with limited incremental growth observed [89]