Yatra Online, Inc. (YTRA) Earnings Call Transcript

Thanks, operator. Hello, everyone, and good morning. We're glad you could join us for this call covering the third quarter and the nine months that closed out fiscal year 2026. To start, I'll take you through the events of the quarter and what they've meant for the industry, and then Siddhartha Gupta, our CEO, will give you a closer look at how we performed operationally as well as financially. In India, the third quarter is typically a strong period for leisure travel, and this time we saw solid demand alongside < > restrictions, which left the airlines facing operational challenges and triggered a nationwide jump in cancellations. Market data shows that domestic < > recovered in the second part of the month, and those trends continued rising into January and after. What stood out most during this stretch, however, was how differently domestic and international travel behaved. While domestic travel hit some near-term obstacles in December, international travel remained strong, delivering solid gains both year over year and quarter over quarter. That supports the view that outbound and long-haul travel is in a structural upturn, which is good for organized travel platforms like Yatra because of its powerful corporate and international travel franchises; on top of that, the recent union budget sends a clear and encouraging message about the government's long-term dedication to the travel and tourism industry. The policy framework treats tourism as a strategic engine for growth, one connected to job creation, foreign exchange earnings, and regional development — a shift away from one-off support and toward a more structural, sustainable ecosystem for the country's travel and hospitality industry. One key measure: tax collection at source on overseas tour packages gets rationalized to a uniform 2% rate, which lowers upfront cost and improves the outbound segment. On top of that, there's greater emphasis on domestic connectivity via infrastructure investments, including high-speed rail corridors, waterways, and regional access — among the initiatives aimed at enhancing hospitality capabilities through a National Institute of Hospitality and large-scale skilling programs, which expand the talent pipeline for the tourism sector. Indian organizations increasingly want assistance moving travel procurement online, and they're looking for AI-powered systems that deliver full automation, self-service booking capabilities, and expense management in one place, with compliance and savings as top priorities. Through demand forecasting, cost optimization, policy enforcement, and real-time risk handling, platforms built on AI and predictive analytics streamline how travel is purchased. With AI-enabled self-booking, travelers get instant policy compliance verification, alerts about things such as disruptions or itinerary review, and tailored trip plans that include safety information. Generative AI marks a move away from auditing after the fact toward anticipating spending, which reduces administrative headaches and drives greater efficiency in procurement. Yatra is at the forefront of this change in industry dynamics, thanks to its corporate self-booking platform, which is backed by an AI bot along with a more comprehensive expense management solution. Now let me turn to our quarterly business in greater detail. When it comes to our B2C business, just as we had forecast previously, it continues to expand while remaining profitable. On top of that, our corporate and MICE segments were firmly on course to make this our best third quarter to date. Leaving aside the inflationary pressures observed of late when considering our operational results for the quarter, we remain strongly supported by our continued effort to expand the Corporate Travel business. Corporate bookings are rising steadily, and with a growing share coming from hotels and MICE, which carry higher margins, we're well positioned for lasting margin improvement and better profitability over the long run. That said, I'd like to now bring in Mr. Siddhartha Gupta, who has come aboard recently as our new CEO. Siddhartha carries a deep reservoir of experience throughout the B2B SaaS sector, and in the position he held before, he served as President of Mercer Consulting in India and additionally led their SaaS-based talent acquisition operation worldwide. Even earlier, Siddhartha occupied leadership posts at major tech and SaaS organizations such as SAP and HP. So, let me pass things to Siddhartha. Sid, the floor is yours.

Many thanks, Dhruv. Operator, I trust my voice is coming through clearly. Dhruv, I appreciate your opening remarks about how we performed this quarter and where the industry is heading. Good morning, everybody joining us. To build on what Dhruv said, even though the airline industry faced widespread turbulence during this quarter, Yatra kept producing results in Air Ticketing, lifted by B2C travel demand that was seasonally robust. Air Ticketing gross bookings rose 22% compared with a year earlier, helped by a 14% rise in air passengers, which is well above the roughly 1% expansion the industry saw. Take rates likewise strengthened, moving from 6.2% to 7.1%, since this quarter leaned more toward B2C; within Hotels and Packages, results for the quarter stayed solid overall. That said, we experienced a short-lived effect on the MICE and Corporate Events subsegment, as certain bookings were pushed out because of flight disruptions. Let me remind everyone listening that this was the schedule disruption at IndiGo Airlines in India; it produced a limited one-time hit to the quarter, and we anticipate that a portion will carry into quarter 4, aided by ongoing vigor in underlying Corporate Travel demand. Segment gross bookings climbed 20% versus a year ago, once you set aside the deferral impact from the MICE business. On a stand-alone basis, Hotels would have expanded beyond 30%, driven by robust gains in our corporate business as well as our affiliate business. Although gross take rates eased somewhat, dipping from 12.2% to 11.7% compared with last year due to a shift in business mix, gross margins strengthened again, going from 9.7% to 10.2% year-on-year, which mirrors disciplined discounting in B2C and improved margin capture from suppliers on corporate hotels. Our B2B to B2C split came to roughly 60 to 40 this quarter, against the 9-month average of 65 to 35 weighted toward B2B. Momentum remains powerful in our Corporate Travel business. During this quarter we brought on 40 new corporate clients, together contributing an annual billing potential of INR 2.2 billion. As I noted before, the disruption struck in the extremely productive first 2 weeks of December, the window when Corporate Travel typically reaches its peak ahead of the holidays. We observed MICE travel being deferred into Q4, and after that a handful of groups shifted into Q1 of the following financial year, stemming directly from uncertainty surrounding travel at that time. This disruption did more than hurt our operating performance — it also forced additional working capital deployment, since advances had already gone out to vendors for MICE Groups. Those effects stayed mostly confined to December, and the business has recovered. In the Corporate business, there is even more cause for optimism. The initial reaction to our expense management solution has been extremely, extremely positive, and we now have 8 customers onboarded onto our expense management platform. This early traction demonstrates that Yatra has a finger on the pulse of what our corporate customers require. This offering has evolved into more than just something that unlocks new client relationships — it also creates substantial room to expand business within the customers we already serve. Let me share a few points about what lies ahead for Yatra in the coming quarters. Our consumer-facing business segment is back on a growth trajectory, and margins are improving at the same time. That came about through disciplined execution paired with effective use of partnerships and affiliates to bring in demand; soon, you'll be hearing additional details about organic demand generation initiatives that are gaining traction and will help this business segment push margins even higher. There remains considerable untapped opportunity within our corporate offering. Roughly 23% is the current level of online penetration, and we've built a solid base from which to pursue that opportunity. We've refined how we approach the market by setting up distinct teams — one focused on large enterprises, another on small and medium ones. A newly formed inside sales team is now boosting demand generation, and it has begun supporting the work of our field team. The initial indicators look quite encouraging. In addition to bringing in new clients, our farming team secured multiyear renewals this quarter from several of our biggest customers, which demonstrates that corporations are looking for dependable partners capable of delivering value. It goes without saying that how quickly we bring technological innovation to market is tightly linked to our success. The early money we put into bringing more talent onto our product and tech team is beginning to pay off. You should expect that we will widen the distance between ourselves and whatever else the market has to offer. Hopefully that gives you a sense of our direction. At this point, I would have stopped and turned things over to Anuj Sethi, our CFO, to walk you through the financial results for the quarter being reviewed. He is dealing with a medical emergency. So I'll cover the financial performance too, and afterward Dhruv and I will handle questions jointly. Turning to the financials, for the third quarter of financial year '26, on a consolidated basis, revenue from operations rose 10% year-on-year to INR 2,577 million, or roughly $29 million, powered by consistent demand across our main segments along with strong growth from the air ticketing business. Looking at segment performance, Air Ticketing passenger volume climbed 13% year-on-year to 1,491,000; however, gross bookings were up 22% year-on-year at INR 16,931 million, or $188 million. And Air adjusted margins increased 40% year-on-year to INR 1,195 million, or $13 million, while the adjusted margin percentage went from 6.2% to 7.1%. Within the Hotels and Packages segment, hotel room nights rose 22% year-on-year to 508,000. Gross bookings were up 20% year-on-year to INR 4,306 million, or close to $47 million, and adjusted margins grew 15% year-on-year to INR 502 million, or $6 million. Regarding liquidity, cash and cash equivalent plus term deposits totaled INR 2,042 million, or $23 million, as of 31st December 2025. Our gross debt figure moved up only a little, going from INR 546 million on 31st March 2025 to INR 583 million, which equals $6 million, on 31st December 2025. That covers 1,491 thousand. Having said that, I'll turn things back over to the moderator so we can begin the question-and-answer portion.

To start with, I'd like to know whether the slowdown in revenue growth this quarter is partly structural? Or do you see it entirely as simply the normal ups and downs of dealing with some of the macroeconomic difficulties that exist right now?

Scott, for the most part this is a seasonal matter. As you may remember, Quarter 3 ranks among the weakest quarters for corporate travel, because of the holidays we observe for Christmas, New Year, and also Diwali and Dussehra, both of which fall in this quarter. So in effect, 1 month out of the 3 is lost to holidays; and this year that was made worse by the flight disruptions that took place during the first 2 weeks of December. So this is not a structural change. It is merely a one-off, caused by the disruption the industry experienced.

All right, that seems reasonable. Now, for my second question, I'd like to touch on the MICE segment. Have any of those broader macro pressures—tariffs or similar factors—started to affect that part of the business? I'm aware the quarter did include a few headwinds.

No, honestly, that hasn't really affected us at all, particularly things such as tariffs. In fact, since a fresh trade agreement is now established involving India and the EU, along with India and the U.S., our expectation is that corporate travel will grow even more for journeys connecting Europe and the U.S.; however, we aren't truly experiencing any headwinds as such because of these. Sid, would you like to share anything further on this?

Okay, so the MICE segment has grown, and we have a ton of room to expand inside it. If you look back three to four years, that market was really broken up. But over the past two years, Yatra has turned into one of the top three companies working in this area in India. Also, India's economy is one of the fastest-growing ones out there. That means you've got a bunch of industries where companies are sending people on trips, both domestically and internationally. So there's a massive amount of room to grow. And what we've noticed is that this whole segment is becoming more structured. Corporates used to rely on tiny operators to run these events, but they now would rather work with sizable suppliers such as us; so in my view the opportunity here is enormous, and we aren't seeing any kind of upheaval in this area whatsoever.

Excellent; that gives me useful context. So here's my final question, folks. You keep doing a genuinely impressive job bringing new corporate partners aboard on the travel side. What I'd like to know is, how many of those fairly evident or easy-win possibilities remain available? And will there come a moment when you have to alter or shift your approach to pitching certain of these clients so you can keep adding that Corporate Travel business?