Yatra Online, Inc. (YTRA) Earnings Call Transcript

Thank you, Ellen, and good morning to all of you. We appreciate your presence on today's conference call, where we'll go over the results for our first quarter that concluded in 2027. You may have noticed through social media and our marketing efforts that we have just marked 20 years of ferrying Indians to their workplaces and bringing them back home again — something we take great pride in. Looking backward, I'd like to touch on several core strengths that have defined Yatra throughout these past 2 decades. To begin with, the confidence placed in our brand by more than 1,000 corporate clients along with millions of retail customers; next, what we can achieve through technology; and finally, how durable our business model has proven. During these years, our name has come to mean online travel throughout India. That confidence has earned us many consumer awards and keeps generating substantial repeat business and direct visits to our platforms. Meanwhile, our roster of corporate clients keeps growing steadily, with retention exceeding 97%; for close to 20 years, technology has sat at the heart of what we do, letting us keep pace with shifting demands from travelers and enterprises alike. Across these years, we have constructed and honed a full-stack travel technology ecosystem spanning booking, travel management, expense management, automation and analytics, which serves over 1,300 large and midsized enterprise clients throughout India. And with our Kanoo Travel partnership now in place, we will expand our footprint into the Middle East too; the capabilities we've developed across the last 2 decades, we believe, offer a solid base for the coming chapter of Yatra's AI-driven expansion, as AI turns into an integral layer throughout our platform — simplifying travel for users, making things smarter for enterprises and boosting efficiency in our own operations. The economics of managed travel, in our view, can be fundamentally reshaped by AI. Routine workflows are being automated by AI, savings opportunities are being surfaced in real time, policy compliance is being improved right at the moment of booking and expense reconciliation is being sped up. Consequently, businesses can process greater transaction volume with fewer manual touch points, cut cost leakages for their customers and achieve superior operating leverage as they grow. Our investments sit squarely in line with these developments. We are weaving AI into search, recommendations and conversational interfaces so that travelers locate the right choices more quickly and with reduced friction, all while remaining within policy. We likewise deploy AI and machine learning to automate service interactions, monitor out-of-policy spends and give travel and finance leaders richer, more actionable insight into their programs. Practically speaking, this means a better user experience, tighter compliance for our corporate clients, a lower cost to serve and a more scalable operating model on our end; in travel management, we believe AI will increasingly serve as a structural advantage for us, not merely elevating the customer journey, but also lifting margins and returns across our businesses. As we continue to build out these capabilities throughout Yatra’s platform, a clear opportunity is visible to us: driving both sustainable growth at the top line and ongoing gains in operating efficiency as time goes on. Now let me shift focus to the travel ecosystem more broadly. Over the past few months, the travel sector has experienced disruption. International travel took a particularly heavy hit, with the West Asia conflict hurting air connectivity and weighing on MICE activity. Meanwhile, the market we operate in is expanding structurally. Over the coming several years, India’s total online travel market is projected to expand at a CAGR in the high single-digit to low double-digit range, faster than many global counterparts, fueled by growing disposable income, swift digital adoption, and better air and rail links across Tier 2 and Tier 3 cities. Despite worldwide challenges, domestic travel has held up well. During the period, air passenger traffic within India rose about 2.3% year-over-year, propelled by a young, increasingly affluent, and mobile population that puts travel and experiences ahead of discretionary goods. We are also witnessing persistent momentum in categories beyond air, like hotels, as travelers seek short-haul getaways and value-for-money choices. Results for outbound and international travel have been more varied. Higher airfares, longer routes, and uncertainty regarding certain long-haul destinations stemmed from the West Asia conflict and flight rerouting, which dampened outbound travel sentiment. Roughly 10% to 15% fewer industry-wide inquiries were recorded for some international destinations during the period. Yet the medium-term picture for outbound travel from India stays strong, with numerous industry reports forecasting low teens growth in outbound spend across the next decade, as more and more Indians head overseas for leisure, business, and education. As visa rules loosen, connectivity gets better, and new destinations increase targeted campaigns aimed at Indian travelers, we perceive a long runway for growth in this segment. Our talks with foreign tourism boards reinforce this perspective, with those boards eagerly waiting for the situation to normalize so they can launch joint marketing campaigns to stimulate demand. Because our business mix leans more heavily toward international travel and MICE, these near-term headwinds have hit our business disproportionately; even so, drawing on past cycles and what the market is already showing us, we anticipate a swift recovery once the macro environment settles. As observed before, revenge travel after disruption has proven very strong and prompt, both in India and around the world, and we expect the same now; indeed, early signs of this are already appearing in our own numbers. During the first half of the current quarter, our MICE bookings are running about 50% above the first quarter. Crucially, setting aside these temporary factors, the fundamental travel opportunity in India keeps getting stronger. Higher disposable incomes, better airport and road infrastructure, and a rising desire for experiences are all fueling stronger demand for domestic tourism, while ongoing economic activity and investments are underpinning corporate mobility. Crucially, the migration from offline to online travel remains far from complete. Business travel still represents just a modest share of online channels, and those channels are poised to expand substantially quicker than the wider market in the years ahead. It is against this backdrop that our Q1 results demonstrate the durability of our franchise and the advantages of our diversified model. Even with a difficult external environment, gross bookings rose 16.3% year-over-year to INR 21,007 million, or approximately USD 222 million. Gross margin climbed 6.1% to INR 1,227 million, or approximately USD 13 million. Total transactions were up 11%, and air passenger volume rose 4.8%, roughly twice the industry growth rate, which reflects our continued market share gains. Our corporate business likewise keeps showing strong traction. In the quarter, we brought on 53 new corporate customers with an expected annual billable potential of INR 2.2 billion, or approximately USD 23 million; this gives us a healthy pipeline of incremental business as those accounts progressively ramp up; we believe this is precisely where Yatra's differentiated positioning matters most. Our diversified business model spanning corporate and consumer travel, air, hotel and other travel services, together with our strong corporate relationships, extensive domestic hotel supply and technology-led platform, provides a solid foundation for capturing India's growing travel opportunity. As the market keeps shifting toward organized and online travel, and as outbound demand normalizes from current geopolitical disruptions, we believe we are well placed to benefit from the structural transition and to deliver sustainable, profitable growth. With that, I will now hand things over to our CEO, Siddhartha Gupta, to take you through the quarter's performance. Sid?

Thanks a lot, Dhruv. To add to what Dhruv said, I'd like to take a few minutes to talk about something that's been core to Yatra the whole way through — our capacity to innovate, adapt, and keep rethinking the way travel ought to function. Over the past 20 years, the travel sector has been transformed again and again. Every time disruption hit, we didn't just react to the problem right in front of us. We took those moments to challenge the way things had always been done, revisit the basics of our business, and prepare for a future that's more resilient. That way of thinking has been with Yatra since day one, and I believe how we're handling today's conditions is yet another illustration of it. Turning to Q1, the big-picture takeaway is that Yatra kept up strong underlying growth even with a tough macroeconomic and geopolitical backdrop for travel. Gross bookings rose 16.3% year-on-year to INR 21,007 million, roughly USD 222 million, and total transactions were up 11%, backed by solid growth in both air and hotel segments. Gross margins climbed 6.1% year-on-year to INR 1,227 million, around USD 13 million. Revenue from operations came in at INR 1,879 million, roughly USD 20 million, a decline of about 10% year-on-year, largely because of a weaker MICE top line in the quarter. That's the group corporate travel piece. Adjusted EBITDA was INR 216 million, around USD 2 million, versus INR 206 million a year earlier, an increase of nearly 5% year-on-year. Two key things drove that movement. The first was how temporary macro geopolitical disruptions affected MICE group corporate travel and corporate travel. The MICE top line came to about INR 300 million, roughly USD 3 million less year-on-year, mostly from disruption in international group travel; that hit our gross margins by approximately INR 30 million, or about USD 0.3 million. On top of that, the move from international to domestic group travel ramped up competitive pressure, costing gross margins another roughly INR 30 million; so let me repeat that we see this INR 60 million drop in gross margins as a short-term, transitory matter rather than a structural shift in the business, and we expect it to normalize ahead as travel patterns have already begun to steady. Corporate travel demand also took a hit from elevated fares, and the timing of airline incentive programs added a further near-term headwind in the quarter. The second factor, though, is one I want to dwell on a bit longer, since it reflects a deliberate choice on our part. We've kept investing and building throughout this turbulent stretch. Instead of letting short-term disruption set our priorities, we've spent this time putting money into capabilities and capacity that we think can meaningfully widen Yatra's future growth opportunity; we've pursued this via a 3-pronged approach. First, strengthening and scaling our core B2B business. We've kept putting money into Travel Pro, which is our offering for small and medium enterprises, and that includes developing the staff, technology, and sales capabilities needed to widen our footprint in the corporate segment; we're already seeing signs that this spending is paying off early. Out of the 53 new corporate clients we brought on in Q1, more than 30 — accounting for roughly INR 800 million, or USD 8.5 million — arrived via Travel Pro. Though it's still early days, this makes us confident about what the new go-to-market engine built around our core corporate offering can achieve. Second, we're widening our addressable market with RECAP, our solution for expense management. We've brought on over 20 clients since it launched. We keep putting resources into the product and technology powering RECAP and think it can become yet another meaningful growth engine as we bring the proposition to scale. Third, we're extending our corporate platform past India. Across the last 2 quarters, we've put money into getting our technology ready for global use, which includes the product infrastructure solutions and teams needed for international deployment. Thanks to our partnership with Kanoo Travel, we have a chance to bring capabilities that were built and honed over many years in India into a sizable adjacent market in the Middle East, working with a seasoned and well-regarded regional partner that has deep customer relationships and market knowledge. Although the region is going through some near-term disruption right now, we think the long-term opportunity is very significant. Crucially, with all 3 initiatives, we've been adding capacity before the revenues we expect them to bring in as they scale. Even though this investment shows up in our cost base at present, we believe it substantially enlarges the future earning capacity of the business. Turbulent stretches have frequently been when Yatra has done some of its most important building. We think this stretch will be the same. Now let me move to the individual businesses. Our Air business posted healthy growth for the quarter at INR 16,579 million, roughly USD 175 million. Higher average ticket price supported our growth, together with ongoing expansion across our distribution channels. Crucially, air passenger volumes rose about 5% year-on-year, almost double the industry growth rate. Even with capacity constraints, elevated fares and a softer demand environment, we keep growing passenger volumes well ahead of the market, which produces further market share gains. Air margins stayed under pressure for the quarter. Our focus is still on building a healthy and sustainable air business, with ongoing discipline around unit economics and the quality of growth. Turning to Hotels and Packages. The segment posted gross booking growth of about 13% year-on-year. Inside this segment, our stand-alone hotels business kept performing especially well, with gross bookings up approximately 34%, revenues up by about 62% and room nights up approximately 30% year-on-year. This performance strengthens our conviction that our investments in expanding hotel supply represent the right strategic priority. We are observing that these investments are generating increased demand throughout our operations, while also boosting the contribution from hotels—a segment with higher margins that is becoming a more significant component of Yatra's overall business. Regarding MICE corporate group travel, as I noted before, this segment encountered a very difficult operating climate in Q1 because of its larger exposure to international and discretionary travel. Geopolitical instability caused corporate decisions to be postponed, and in multiple instances, a move away from international programs toward short-haul and domestic locations occurred. As previously discussed, the mix of reduced top line and short-term margin pressure produced an impact of roughly INR 60 million year over year on MICE gross margins in that quarter. What matters, though, is what we are observing as we move into Q2. The MICE pipeline for Q2 is considerably more robust than Q1 and features a far healthier margin profile. Given the visibility we currently possess, we think the Q1 effect was short-lived, and we are noticing positive indicators that the MICE business is getting back into a growth phase. Turning next to our corporate travel business. Corporate travel continues to be one of Yatra's main strategic growth pillars. In spite of higher fares and disruptions affecting international travel, the fundamental business stayed resilient and the momentum in acquiring customers remained robust. As I stated earlier, in Q1 we brought on 53 new corporate customers; these additions give us visibility into additional volumes as customers are onboarded and gradually ramp up. In addition to acquiring new customers, we stay focused on growing wallet share among our current customers and broadening the variety of services they use via the Yatra platform. The structural opportunity is still substantial since online penetration within India's managed corporate travel remains comparatively low. We think our scale, technology platform, extensive hotel supply, and long-standing enterprise relationships put us in a strong position as the market keeps digitizing. Looking ahead, we have multiple reasons to be optimistic. MICE is experiencing a stronger pipeline and better margins. Corporate travel is bouncing back. Air margins are on the rise and hotels continue their robust growth path. Simultaneously, our investments are widening our growth opportunity. Travel Pro is reinforcing our B2B go-to-market. RECAP is unlocking a new customer segment and the Kanoo partnership is broadening and extending our corporate capabilities outside India. With these factors converging, we anticipate that the operating capacity we have already established will sustain a much larger revenue base, generating operating leverage and restoring EBITDA margins to 20% plus. As corporate travel stabilizes and our growth initiatives expand, we think this EBITDA margin can move into the 30%-plus range over time. The macro environment is still uncertain, but the fundamental opportunity has not shifted. India remains among the world's most appealing long-term travel markets, and Yatra today possesses a wider set of growth opportunities than at any moment in our recent history. Our priorities, consequently, stay clear: reinforce the core, broaden our addressable market, extend our capabilities into new geographies and keep leveraging technology, AI and automation to create a more scalable Yatra. That's the way we've handled times of upheaval across the 20 years we've been in business, and that's the way we plan to shape what comes next as Yatra grows. Thanks to all of you. At this point I'd like to ask Anuj Sethi, our CFO, to walk you through how we did financially during the quarter.

Thanks, Siddhartha, and good morning to all of you. During Q1 of FY 2027, looking at our numbers on a consolidated basis, revenue from operations fell 10.4% compared with the same period a year earlier, landing at INR 1,879 million, which works out to roughly USD 20 million. Gross margin — which we define as revenue minus service cost — climbed 6.1% year-on-year, reaching INR 1,227 million, or about USD 13 million. Adjusted EBITDA was up 4.9% versus a year ago, hitting INR 216 million, approximately USD 2 million, which translates into 17.6% adjusted EBITDA to gross margin. Consequently, profit after tax stood at INR 41 million, the equivalent of USD 0.4 million. Turning to how each segment performed: air ticketing passenger volume rose 4.8% from a year earlier, totaling 1,264,000. Gross air bookings were up 17.6% year-on-year, at INR 16,579 million, or approximately USD 175 million. Gross margin for that segment gained 8% year-on-year to INR 699 million, though margins slipped from 4.6% to 4.2%. Within hotels and packages, hotel room nights expanded by close to 30% compared with last year, reaching 5,48,000. Gross bookings were 13% higher year-on-year at INR 3,876 million, equivalent to USD 41 million, and gross margin there grew 24% year-on-year to INR 386 million, roughly USD 4 million, as margins improved from 9.05% to 9.95%. On the liquidity side, cash and cash equivalents plus term deposits totaled INR 2,162.8 million, equal to USD 22.8 million, as of 30th June 2026. With that, I'll turn things back to the moderator and begin the question-and-answer portion. Thank you.

Much appreciated. On behalf of everyone at Yatra, I want to express gratitude to each of you for being with us on today's call. My hope is that we provided sufficient insight and managed to respond to every question you may have had. Should anything else come to mind, our investor relations partner at ICR Inc. is available to help. Thanks again for taking part in this call.

Thank you.