Yatra Online, Inc. (YTRA) Earnings Call Transcript

Thanks, operator, and good morning to all of you. We appreciate your joining us today to go over Yatra's results for the second quarter and the first half of fiscal year 2027. I'd like to start by looking at the wider industry landscape and what that means for Yatra. The long-term travel opportunity in India is still very compelling. A consumer base that keeps growing, better connectivity, and participation from smaller cities are all making the market bigger. Meanwhile, the ongoing move toward organized and online travel opens doors for platforms that bring together relevant choice, dependable service, and a solid grasp of what consumers need. With that said, it's important to distinguish those structural forces from what we're seeing operationally this quarter. The short-term outlook has been mixed, with demand and growth varying widely by travel category, destination, and consumer segment. Parts of the international travel network have been affected by the ongoing conflict in West Asia. Affordability has taken a hit from connectivity disruptions, elevated fuel costs, and higher airfares, and the rupee's depreciation has added to the cost of traveling abroad. Long-haul outbound travel is where these pressures are most evident. Domestic aviation has faced a challenging environment as well. Passenger volumes have been held back by high fares and limited capacity, and the industry was down roughly 6% in the current quarter. Still, we shouldn't take this to mean the wider travel opportunity is shrinking. You also have to look at international travel with more nuance. Long-haul trips and places more directly in the path of geopolitical disruptions remain under pressure, while demand elsewhere has been encouraging. So the recovery probably won't move at the same speed across destinations or across travel businesses. In parts of the industry, forward bookings show encouraging signs. They suggest some customers are returning to travel plans they'd previously postponed. All the same, we believe a measured stance is appropriate. The pace and strength of any wider rebound will depend on three things—connectivity, affordability, and traveler confidence. At Yatra, we plan to concentrate on the opportunities we can control, while preserving our ability to adapt as market conditions change. Within Corporate Travel, our focus is on strengthening ties with current enterprise clients and winning a larger portion of the travel they require; we aim to serve as more than just a place to make bookings. We seek to be a trusted partner that assists enterprises in managing travel effectively, pairing convenience for employees with visibility and control for the organization. And the opportunity reaches past traditional business travel. There's room, in our view, to grow uptake of the leisure travel options we offer employees, and to sell more travel services on top of that into the corporate clients we already serve; doing so lets us extend relationships we've built over time while meeting a wider range of customer needs. At the same time, we keep improving what we offer SMEs and mid-market companies. Our focus is on making organized, technology-enabled travel management accessible to more businesses, through solutions that serve travelers well and make sense to owners and administrators; when it comes to MICE — meetings, incentives, conferences, and exhibitions — we remain upbeat about the opportunity over the long term, though we recognize that individual programs can be swayed by travel costs, choice of destination, and the timing of corporate decisions. Rather than depending on a specific pace of market recovery, we're focused on collaborating closely with customers to provide alternatives that fit their goals and budgets. Continued digitization of travel is another significant opportunity. Online adoption is firmly established in Air Ticketing, yet it's still less developed in parts of accommodation and other travel services, especially where supply is fragmented. Getting that supply online takes more than just technology. It takes supplier relationships, precise information, reliable fulfillment, and support when plans shift. We think organized travel platforms such as Yatra will keep delivering value centered on these capabilities. Technology and AI are also becoming more important in reinforcing that offering. Throughout the industry, the opportunity is shifting past travel discovery toward better conversion, automating routine service interactions, and raising operating productivity; at Yatra, practical outcomes guide our investment priorities, making travel simpler for users, giving enterprise customers better visibility and control, and creating a more scalable operating model; we view AI as a chance to reinforce those outcomes over time, not merely as another interface, but as a means to enhance service quality and the economics of delivering service. Looking forward, we'll weigh investment in these capabilities against disciplined execution. Our priorities stay clear: reinforce our core business, deepen enterprise relationships, grow cross-selling, extend our SME and mid-market reach, and keep enhancing the customer experience. In the short run, outside conditions could influence both our pace of expansion and its sources. Our job is to create an organization that can react to those shifts while continuing to reinforce its competitive standing over the long haul. After twenty years of building Yatra, our belief in India's travel opportunity remains stronger than ever. Our attention is on converting that opportunity into durable growth and lasting value for shareholders. We appreciate your ongoing confidence and backing. I'll hand over now to Siddhartha, who will take you through operating and financial performance in greater detail. Siddhartha.

Thank you very much, Dhruv, and good morning to all of you. Picking up from what Dhruv said, I'd like to take some time to talk through how we performed this quarter, what has shaped those results, and the headway we're making on the strategic initiatives we laid out on our previous earnings call. Let me start with the wider operating backdrop. The travel sector is still working through a difficult stretch, and a number of the macroeconomic and geopolitical headwinds we flagged last quarter have carried over into Q2. The domestic aviation industry especially has seen a sharp contraction in passenger volumes. Domestic air passenger traffic fell roughly 6% year-on-year and close to 16% sequentially. Indian carriers also saw international passenger traffic fall roughly 19% compared with a year earlier. Expensive fuel and persistent strain on airline profitability have led to capacity cuts and higher fares. Average domestic ticket prices climbed about 26% year-on-year, and international fares rose around 20%. Those steeper fares, limited capacity, and continued uncertainty about international travel have all dampened passenger demand; the same conditions have weighed especially heavily on corporate group travel and MICE, since rising travel and lodging costs have influenced how companies set budgets, pick destinations, and schedule their programs. Against that background, let's look at how we did versus the wider market. Even with these industry-wide difficulties, Yatra continued to grow gross bookings. Gross bookings increased roughly 6% compared with a year earlier, reaching INR 21,655 million, or about $226 million. Passenger volumes for air travel declined around 2.4% year-on-year, a better result than the wider domestic aviation market, which fell 6%. Even more significant, on a sequential basis our domestic air passenger volumes climbed about 4%, while the industry dropped nearly 15%. Despite the overall aviation market shrinking, we have continued to reinforce our competitive position and capture additional market share. Revenue from operations in the quarter came to INR 2,136 million, or roughly $22 million, with the year-on-year comparison largely reflecting reduced MICE business volumes. Our gross margin, which we define as revenue minus service costs, remained broadly flat year-on-year at INR 1,255 million, or approximately $13 million. I think that shows how solid our core air and hotel operations really are — ongoing expansion and better monetization there have gone a long way toward countering the drop in MICE volume. For the quarter, adjusted EBITDA came in at negative INR 32 million, roughly negative $0.3 million, compared with INR 212 million, or about $2.2 million, during the same quarter a year earlier. Let me pause here to walk through a few of the underlying trends that drove our results this quarter. What stands out as especially encouraging is how strong our core businesses remained, even with difficult industry conditions around us. Our Air Ticketing business continued to beat the wider aviation market, posting gross booking growth of roughly 15% year-on-year. Also worth noting, air margins widened to roughly 3.95%–4.45%, helped along by better supplier terms and stronger revenue realization. Corporate Travel remains a major growth driver for us: gross bookings rose around 18% year-on-year, fueled by increased business from existing customers as well as the steady onboarding of new corporate accounts. Likewise, standalone hotels delivered roughly 20% year-on-year gross bookings growth, reflecting the strides we're making in bolstering hotel supply and distribution capabilities. Combined, these segments helped hold our consolidated gross margin essentially flat year-on-year at INR 1,255 million, or about $13 million, despite the hit from lower MICE volumes. Compared with a year earlier, our Adjusted EBITDA was held back by an increase of about $2.7 million in other expenses. Legal, regulatory, and professional advisory costs connected to the recent unsolicited tender offer and related matters accounted for close to half of that rise. Most of the remainder came from higher affiliate commissions generated by growth in our partner business, consistent with how we have historically accounted for them. Importantly, this business continues to produce positive contribution margin. In our view, this demonstrates both the resilience of our underlying business and the gains from better monetization across our core segments. Meanwhile, we have continued putting money into areas ahead of where the market is expected to go—bolstering our tech foundation via GCP, extending our reach abroad with Kanoo, and growing programs like RECAP and TravelPro. Each of these sits at a distinct point on the maturity curve, and the revenue they can ultimately generate has not yet fully materialized. In the quarter, we took on roughly INR 52 million—about half a million dollars—in expenses tied to these efforts, a sign of our ongoing dedication to investing in tomorrow's growth. As these efforts expand, we anticipate their rising contribution, together with sustained operating efficiencies, will reinforce our operating leverage. Even with the broader aviation industry facing a tough operating environment, our Air Ticketing business stayed resilient this quarter. Gross air bookings climbed roughly 15% compared with a year earlier. And notably, our passenger volumes continued to beat the wider market, which shows we can capture a larger share of travel demand. We think that outperformance comes from the strength of our distribution network, deeper engagement with existing customers, and ongoing gains in our supply capabilities. Beyond that growth, monetization also kept getting better. Air margins overall widened from about 3.95% to 4.4%, helped by stronger supplier commercials, better revenue realization, and a sustained focus on optimizing our business mix. I believe this says a lot about the way our Air Ticketing business is changing. We continue to concentrate on creating an air business that is scalable and sustainable, underpinned by stronger ties with customers, competitive supply, and disciplined deployment of capital. Turning to Hotels and Packages, I want to address standalone hotels and MICE one at a time, since the operating trends we are seeing in these two businesses differ considerably. In the quarter, our standalone hotels business continued to deliver healthy growth, with gross booking rising approximately 20% year-on-year. That result reflects the increasing strength of our hotel offering, which rests on deeper customer engagement, improved distribution, and our continued effort to expand and enhance the quality of our hotel inventory. We have continued to reinforce our supplier partnerships and to make our hotel product more competitive. In our view, these initiatives should encourage greater customer uptake, increase hotel attachment throughout our platform, and enhance monetization as time goes on. Notably, standalone hotels continue to expand even with the difficulties we are encountering in MICE. We are confident about the opportunity in this business, and we believe that as we broaden our supply capabilities, standalone hotels can play a growing role in our overall growth and in diversifying revenue. Moving on to MICE, this business has been operating in a challenging environment, particularly as corporate clients have revised their group travel arrangements in reaction to elevated travel costs and ongoing geopolitical uncertainty. In the quarter, there was a move by corporates from bigger international programs to smaller groups that are easier to manage, as they sought greater flexibility regarding travel budgets, destination selection, and potential disruptions. Both volumes and margins have been affected by this shift in business mix, because competitive pressures tend to be stronger on smaller programs. The year-on-year comparison is also up against an unusually strong Q2 FY 2026, when we operated a number of large international corporate programs. Set against that, MICE gross booking dropped by approximately 63% year-on-year; what is encouraging, however, is the sequential improvement that we are beginning to see.

On the MICE side, volume was up roughly 37% from the prior quarter, and we’re heading into Q3 with a healthier order book. Margins are still pressured, but higher business volumes and forward bookings give us an early signal of a gradual recovery, and we remain of the view that underlying demand for corporate group travel is intact. We’re focused on rebuilding volumes, staying disciplined on program profitability, and positioning ourselves to gain as larger corporate programs come back. We think MICE can add another layer of growth and profitability once the operating environment normalizes. Turning now to Corporate Travel. Corporate Travel remains a key strategic growth engine for Yatra, and we continue to see positive momentum both in deepening relationships with current clients and in winning new ones. During Q2, gross bookings in the corporate segment increased roughly 18% compared with the same period last year. What stands out is how widespread this expansion has been. Roughly 54% of our current clients grew their business with us, and 177 new corporate accounts went live over the course of the year. Those figures, in my view, are meaningful signals of the strength of our corporate franchise. The growth is not solely a function of signing up new clients. Our existing customers are also expanding their business with us as we strengthen relationships and broaden the set of services offered through our platform. The mix of bringing in new clients and expanding the share of spend we capture from those already with us continues to be a key force behind our Corporate Travel segment. During the previous earnings call, I talked about the money we are putting into widening our addressable market via TravelPro and RECAP. Progress is ongoing on both fronts. TravelPro — the product we offer to the mid-market and SME segments — continues to gain traction. In Q2 we signed over 30 customers, which carries an annual business potential of roughly INR 825 million, or about $9 million. Mid-market and SME represent a substantial opportunity for us. In the past, a large portion of our corporate business was focused on bigger enterprises. With TravelPro, we're creating a distinct way of going to market that enables us to reach a far wider group of corporate clients, supported by the technology, supply, and service infrastructure we already have. The encouraging part is that capabilities we've already developed for enterprise customers can be applied to go after a substantially bigger market opportunity. It's still early days, but the way customers have responded makes us confident about what this initiative can achieve. RECAP, our expense management offering, also kept building momentum. We've notched 25 customer wins, with eight already live and another five nearing implementation. We're continuing to put investment into making the product and the technology behind RECAP stronger. Our view is that if we widen what we offer past booking trips and move into the larger travel and expense management ecosystem, we can strengthen ties with enterprise clients and open up further growth opportunities. It's important to note that TravelPro and RECAP are two opportunities that complement each other. Through TravelPro, we reach new customer segments, and through RECAP, we engage customers more broadly than just booking travel. Together, these efforts help us serve a larger market by leveraging the technology, supply, and operating infrastructure we've built up over time. Another initiative we discussed last quarter was extending our Corporate Travel capabilities beyond India through our partnership with Kanoo Travel. Throughout the quarter, we kept bolstering the technology, service infrastructure, and operating capabilities needed to back this partnership. Although it remains at an early stage, the partnership has started bringing in revenue and is already contributing positively at the operating level; we think this offers a chance to apply our existing capabilities in new geographies together with an established regional partner, and to keep building a scalable operating model for the long term. We are also continuing to reinforce our hotel supply capabilities by deepening relationships with hotel chains, growing our inventory with particular emphasis on tier II and tier III cities in India, and enhancing technology integration with aggregation platforms. We want to offer more hotel choices at attractive rates, improve what customers experience, and increase how often hotels get booked through both our corporate and consumer operations. With a large existing customer base for Air Ticketing, we have an opportunity to win a bigger share of what those customers spend on lodging. Continued expansion in standalone hotels gives us greater confidence in that opportunity. Technology and operational efficiency is the final topic I'll cover. During our prior earning call, we noted our view that AI and automation can meaningfully improve the economics of managed travel. We are focused on automating everyday workflows, lifting service quality, and supporting more transactions with greater efficiency. We're making progress on several fronts, including AI-driven monitoring of voice quality and automating workflows for corporate servicing. Customer uptake is also increasing. The volume of chats our AI assistants handled grew about 25% compared with the prior quarter, and cancellations completed via chat increased 67%. Outside of customer-facing uses, technology and automation are helping us improve the efficiency of our underlying operations. You can see this in roughly a 5% improvement in operating headcount efficiencies versus a year ago, even while transaction volumes in our core corporate business continue to grow and we're building additional teams for future growth initiatives. As our businesses scale, we expect these efficiencies to translate increasingly into stronger operating leverage. Going forward, we stay constructive about our growth opportunities notwithstanding uncertainty in the broader operating environment. Our air business keeps outperforming the market, standalone hotels are building momentum, and Corporate Travel remains a key growth driver, backed by deeper customer engagement and our expansion into the mid-market and SME segments. Crucially, the investments we mentioned last quarter, among them TravelPro, RECAP, and our international expansion, are starting to turn into tangible commercial progress. Alongside that, our ongoing emphasis on AI automation and operational efficiencies is helping us build a more scalable business. We are also observing encouraging signs of recovery in MICE, backed by sequential improvement and a stronger order book. We view this rebound as just another opportunity rather than the cornerstone of our broader growth strategy. Allow me to repeat something I mentioned on the last earnings call. Whenever there's been disruption, Yatra has often used that time to accomplish some of its most important foundational work; the current situation has played out the same way. Our focus remains unchanged: we'll strengthen our corporate business, bolster distribution and hotel supply, and expand into new markets, all while making Yatra more efficient and scalable. Thanks to all of you. I'll now hand things over to CFO Anuj Sethi, who will take you through the financial results for the quarter we're reviewing. Anuj, the floor is yours.

Thanks, Siddharth, and good morning to all of you. Taking our consolidated numbers for Q2 of FY 2027, revenue from operations declined 39% year-on-year, coming in at INR 2,136 million, which is about $22 million. Gross margin — revenue minus service cost, as we define it — was flat versus last year at INR 1,255 million, roughly $13 million. Adjusted EBITDA fell 115% year-on-year, ending at negative INR 32 million — around negative $0.3 million — and that puts the Adjusted EBITDA to gross margin ratio at negative 2.57%. Consequently, the company recorded a net loss of INR 22.3 million, or about $2.3 million. Now turning to how we performed financially in the first half of FY 2027: revenue from operations declined 28% year-on-year to INR 4,015 million, approximately $42 million. That said, gross margins — defined as revenue less service cost — held up and increased 3% to INR 2,482 million, roughly $26 million. Adjusted EBITDA stood at INR 184 million, about $2 million, down 56% year-on-year, giving us an Adjusted EBITDA to gross margin ratio of 7.4%. As a result, the company posted a net loss of INR 182 million, approximately $2 million, for the first half. Moving now to how the segments performed during the period under review. In Q2 FY 2027, passenger volumes in our Air Ticketing business declined 2% year-on-year to 1,298,000. Gross air booking, though, rose 15% year-on-year to INR 17,006 million, or approximately $177 million. Air gross margin grew 29% year-on-year to INR 757 million, approximately $8 million. Gross air margin as a percentage of gross bookings also improved, coming to 4.45% against 3.95% in the same quarter a year earlier, reflecting better monetization. In the Hotels and Packages segment, hotel room nights fell 3% year-on-year to 490,000. Gross bookings declined 21% to INR 4,054 million, or approximately $42 million, while gross margin dropped 34% to INR 299 million, approximately $3 million. Consequently, gross margin as a percentage of gross booking moderated to 7.37% from 8.86% in the corresponding quarter last year. During the first half of financial year 2027, volume in our Air Ticketing passenger business edged up 1% year-on-year to 2,562,000. Gross air bookings increased 16% year-on-year to INR 33,585 million, or approximately $350 million. Gross air margin rose 18% year-on-year to INR 1,455 million, approximately $15 million. Our gross air margin improved to 4.33% from 4.26%. In the Hotels and Packages segment, hotel room nights grew 12% year-on-year to 1,038,000. Gross bookings declined 8% year-on-year to INR 7,930 million, or approximately $83 million, while gross margin fell 11% year-on-year to INR 684 million, or approximately $7 million. As a result, gross margin moderated to 8.6% compared with 8.94% in the corresponding half last year. On liquidity, our cash and cash equivalents plus term deposits totaled INR 2,304 million, which comes to roughly $24 million, as of 30th September 2026, alongside approximately $0.5 million, 103,000 INR, 145 million, 2,526,000 INR, 454 million INR, 706 million INR, 730 million, and 8.4%. Having said that, I'll hand it back over to the moderator so we can get the Q&A started. Thanks.