Le Travenues Technology Limited (IXIGO) Q3 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Late Revenues Technology also known as HEXECO, Q3 and F52526, only conference call hosted by Dam Capital Advisors Limited. As a reminder, all participant line will burn the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. I now hand the comments over to Mr. Anmol Dal from Dam Capital. Thank you, and over to you, sir.

Thank you, Dhanesh. Good evening, everyone. On behalf of Dam Capital, I welcome you all to Ixigot Q3FI26, our name's call. We have with us Mr. Alok Badz-Pipe, chairman, MD, and group CEO of the company, Mr. Rajneesh Kumar, director and group co-CEO of the company, Mr. Saurabh Divindah Singh, a group CFO of the company. Now, before I hand over the call to Alok and Saurabh and Rajneesh, I would like to highlight that the Tephabha statement on the second side of the presentation, and it is assumed to be read and understood. I'll hand over now the call to Alok, Saurabh, and Rajneesh.

Thank you.

Good evening, everyone. This is Alok Hedha. Thank you for joining us on our Q3 and 526 earnings call. Q3 was a defining quarter for Xego. Not only did we deliver strong growth and improved profitability, but we also demonstrated the resilience of our platform, the benefits of our diversified multimodal strategy, the strengths of investing in an AI customer experience pack, and most importantly, we lived up to our customer first philosophy during one of the most disruptive periods for the flight industry. Let me start with the headline numbers. We reported all-time high revenue from operations of 317.6 crores, up 31% year-on-year. All-time high gross transaction value or GTV of 4902.9 crores, up 21% year-on-year. And our profit after tax came in at 24 crores, up 54% by-ohy. These results reflect strong execution across our core business and continued operating leverage. What makes this performance particularly meaningful is the context in which it was achieved. During December, following the implementation of revised FDTL norms by the BGC, a leading airline experienced significant operational disruption. Over a 12-day period, there were approximately 4,500 flight cancellations and reschedules, with the impact speaking between December 2 and 8. This period saw a two-fold surge in customer reach-outs and a five-fold increase in usage of our flight-backing products. As soon as the situation escalated, we set up a dedicated cross-functional war room to manage an environment that was evolving daily. We were also the first ODA to announce a proactive, customer-friendly response, refunding not just the full ticket amount, but also convenience fees and exegu-assured fees on impacted booking during the peak disruption window. When we take such calls, the only lens we apply is whether we are doing the right thing for our customers in that moment. Travel is a high-trust category, and moments of disruption are when that trust is most visibly tested. Our approach during this period was multi-prompt, reducing customer anxiety through timely and transparent updates, enabling affected users to quickly receive refunds, or rebook stranded customers using alternate modes of transport, ensuring operational resilience at scale. Despite the severity of the disruptions, our flights business grew faster than the overall market, with flights usually growing at 22% and flight revenue growing at 49% by-oh-y. We gained some market share and a lot of goodwill as a result of our customer-friendly policies in the time of crisis and lived up to our playbook of doing the right thing for the customers in all such times of crisis. Another important highlight of the quarter was the continued momentum in our international flights business. International flight's GTV grew over 50% YOY in Q3 and has now crossed 20% of our overall flight's GTV for the quarter. This growth is no longer restricted to Tier 1 airports. We are seeing strong demand from Tier 2 and 3 cities driven by improving connectivity to Southeast Asia and the Middle East, both through direct routes and efficient one-stop connections. On the supply side, we have strengthened our international coverage significantly. Today, we have dealing with partnerships across Amadeus and Travelport, giving us access to all leading full-service carriers. In addition, we have onbooted 26 airlines on NDC pipes, including marquee Middle Eastern, Southeast Asian, and European carriers. NDC enables access to better fares, richer content, and deeper airline integration, allowing us to build more direct relationships with these carriers to deliver better value to our customers. We are also seeing new outbound On trains, while the business continues to grow well, the mix of trains in our GTV and revenue has reduced as flights and buses grew faster. With flights GTV starting to come in nearly as big as train GTV now in our business. The train segment remains an important pillar of Ixigo's multi-modal strategy, accounting for 43% of GTV and 35% of contribution margin, and growing in the mid-teens. Our leadership here is underpinned by deep product innovation, AI-driven complexity management, and a strong peace of mind stack for train retailers. On the railway policy front, Indian Railways has implemented several passenger-friendly We have seen the changes since July, including mandatory Aadhaar verification and linking during peak booking windows, such as advanced reservation period and Tadkal, in order to curb misuse and fraud. While these changes introduced some friction initially, we were quick to implement them in coordination with IRPPC, and user experience tends to normalize after the first booking. More importantly, we are encouraged by the government's intent to expand capacity. Plans to double originating train capacity across 48 major cities by 2030, along with initiatives such as Vande Bharat Sleeper and Amrind Bharat Express, give us confidence that the capacity growth in subsequent years will be better than in the past. That said, capacity expansion involves long-cycle infrastructure investments, so please do not treat this as guidance. The bus segment continues to be one of our strongest growth engines. Since acquiring Abibas in 2021, a business doing roughly 400 to 500 crore of annual GDV, we have scaled it to over 2,400 crores of GDV in the last 12 months, representing nearly 6x growth, and it continues to compound at 40 to 50% YOY. Our strategy here remains filtered towards growth over margins in the short to medium term, as we continue to invest in penetration, brand recall, and industry-first product innovation. Before I hand it over to Ganesh, a quick word on spiritual tourism and base effects. Q4 FY25 benefited from the Mahakum, which drove extraordinary demand across trains, buses and flights, with mid-to-high single-digit GTV in Q4 last year coming directly or indirectly due to Khum, depending on the vertical. While this creates a base effect for Q4, our Great Indian Travel Index 2025 also shows that spiritual tourism still remains a strong secular trend. Destinations like Varanasi, Tirupati, Prayagra, Jayodhya, and Shirdi continue to see long-term growth, with Gen Z participation rising sharply, particularly through bus and train travel. With that, I will hand over to my friend and co-CEO, Rajneesh, to talk about our AI, products, and new growth strategies.

Thanks, Anup. Q3 was a real-world stress test of our AI customer experience stack, and I am really proud of how the platform performs in a time of need. The December disruptions on how we handled them underscores the importance of our sustained investment in an AI-led customer experience stack and utility-driven product innovations such as Flight Tracker Pro, which proved critical in managing large-scale disruptions during a period of crisis. We orchestrated a coordinated response that combined the speed and scale of AI with human judgment, deploying both efficiently to support impacted customers. Verified information was continuously sourced from authoritative channels and proactively communicated to users. While very defined SOPs enabled rapid handling of customer queries, multiple proactive touchpoints were initiated to ensure timely defense and smooth rebooking wherever required. We leverage AI-driven outbound calls to proactively inform customers of site cancellations or residues, automatically trigger refunds and alternate bookings, and guide them through next steps. Tara, our AI agent, played a central role by actively assisting customers with refund processes and recommending alternate travel options. In parallel, our AI augmented human support team cooperated extended hours during peak disruption periods, helping us maintain strong customer satisfaction despite elevated volumes that we saw during this period. In the third quarter, the percent of void calls that were handled end-to-end by AI stood at almost 76%, in fact, more than 76%. But what really stood out for me was that in December, when the crisis unfolded, we stepped up proactively, voice calling, and with AI handling a whopping 90% of all calls in December. And that was more than 150,000 calls handled end-to-end by AI during this period. Thanks to this, even though overall customer contact volumes across voice and chat more than doubled, resolution times remained within internal benchmarks that we strive for, and customers had a fashion metric stayed stable throughout the entire period. This is evidenced by our calls answered within 2 minutes metric, which remained over 96.7% despite the elevated volume and our average refund time remaining just 3 hours and 10 minutes. Flight Tracker Pro also saw extensive usage. In fact, it was a godsend product for a lot of users and airline staff. This enabled customers to track real-time flight schedules at airports with multiple instances of positive feedback from both travelers and airlines. Airport staff on its usefulness during these challenging conditions. These moments reinforce our belief that AI is not just a cost lever, but a trust and experience lever, especially in moments of crisis. I'll reiterate that we believe we are living through a once-in-a-lifetime technology transition with AI, even bigger than the emergence of the internet or smartphone. AI has clearly moved beyond experimentation and is now entering a phase of real product market fit across agentic workflows, core infrastructure, We have a junction in history where we'll be judged not by our performance in any one of the quarter or any one year, but by how we were able to lead our industry's AI transformation and demonstrate the results in customer delight with long-term growth and profitability. For the flight business, we also added more inventory, as Alok talked about, launch airport cabs, so that you can seamlessly book taxis to or from the airport right from inside the app. And most recently, we have enabled armed forces fares, which allows those who serve our country to get access to preferred fares from airlines, offering up to 25% of the regular fares. Moving to buses now, the bus category has started seeing more innovation, both for the customer and the operator, partly due to our intense focus on this category over the last four years. If I had to name all the industry-first features AbhiBus has launched since we got involved, the list would be very, very long. Starting from our Abhi-assured service guarantee and full refund for delays and cancellations, the pink seat features for women travelers who wish to be seated next to other women travelers, Bus Insights, where we even tell customers right at the time of booking their exact bus model with license plate number and the age of the vehicle. 360-degree walkthroughs that we have built inside several buses to our customers to see what their seat or sleeper board will look like exactly and many more features. Last quarter, we observed that some bus incidents and breakdowns happened, and then it made us reflect how important safety is for our customers. So, our bus safety reports now cover over 40,000 buses, where our platform validates regularly their permits, their insurance, their RC and fitness certificates. The ready-go platform for bus operators now gives them more real-time insights and control over their operation. And last quarter, we launched an industry-first roadside assistance program offering alternate travel options in case of bus breakdowns or incidents. Moving to the trains business, we have added Mumbai Metro along with Delhi Metro for QR code-based metro ticketing and I've seen decent usage in that. And we also went live with our Confirmed Ticket train ticketing funnel inside the Rapido app. Both Exigo Trains and Confirmed Ticket are now at 4.8 app ratings on Play Store. And that is at a scale of millions of reviews, by the way, reflecting consistently high customer satisfaction. Having lived and traveled globally, I can confidently say these apps work better than any train app I have used, Even in any country outside India. And hence would be the top global train app in terms of product utility and user experience. Now let me talk a bit about hotels as well. We've made several product improvements on hotels that users are complimenting us for, including our AI summaries for hotels and smart banking algorithms. Despite seeing good quote-unquote growth, I would say that we are still not at the product market switch stage on this business yet, Which would involve solving the what you see versus what you get problem that the budget hotel space is riddled with mostly. We now have some deeper learnings on what is broken in this space. And we are building our hypothesis on how those can be solved. We have talked to many customers and hoteliers and also done on-ground market research to test the hypothesis. And we expect to intensify our efforts on both product and supply in the coming fiscal year. Last quarter, we kicked off adding direct hotel supply by tying up first with travel managers who work in multiple hotel chains and many hotels. Through these tech integrations, we can onboard direct supply without deploying a large team on the ground. We're now also adding budget hotel chains and the first set of independent hotels to focus on those segments that overlap with our core user base. Now, going back to my favorite topic, which is AI. Let me elaborate a little bit more on our AI strategy. The disruptive use cases for AI travel needs some key ingredients We have the ability to accelerate ideas and teams. I will find founders at the forefront of AI understanding and building promising products as well, but without enough real-world use cases or enough vertical data or distribution to test, learn, and demonstrate the impact of those ideas. Based on our deep experience with AI over a decade, we have a unique ability We also continue to invest organically within our own AI stack. AI is also already deeply embedded in our products from planning and discovery to predictions, pricing, discounting, customer support, operations, and supply-side efficiency. We use AI practically everywhere. And we are doubling down now on voice and personalization as well. So why now? The current phase of the AI cycle offers early access to exceptional founders, talents, and platforms, which we believe is a durable strategic advantage. We intend to make a small number of focused high-convection investments, partnerships, or acquisitions in the short to medium term, where there is a strong alignment with Exigo's core travel ecosystem, data, and AI's strength and distribution. These investments are not financial returns alone. They are designed to accelerate learning, enable faster internal adoption of AI, and create long-term strategic optionality. And here's another important reason on why the timing is correct. And this is about the slow death of software as we know it. All software will be rewritten, not line by line, but rule by rule, because the assumptions it was built on are breaking. Intelligence no longer needs to live inside hard-coded logic. Interfaces no longer need to be fixed artifacts, and humans no longer need to adapt to machines. In the new model, software infers intent. It remembers context, and it renders itself on-demand, turning applications into temporary projections, CAD, and permanent products. Code stops prescribing behavior and starts defining constraints, data access, and truth, while intelligence lifts above it, adapting continuously to each user and moment. Stability shifts from deterministic output to successful outcomes, and change becomes cheap, local, and constant. Most existing software cannot survive this inversion, not because it's bad, but because it encodes the old rules too deeply. So it will fade into the background as a system of records, while new AI-native layers quietly replace the experience. This isn't just the rewrite of software around humans for the first time. It's also a once-in-a-generation of opportunity for builders, making this the moment to scout relentlessly, back exceptional teams, and place bold, concentrated bets on those shipping what comes next. With that, I'll hand over the call to our friend and group CFO, Saurabh, to talk about the numbers.

Thanks, Rajesh. At the end of last year, I had two choices. One was to go to my IT Rally 25-year reunion, something I've been looking forward for months. The other was to use the days off slightly differently. Almost on a whim, I packed a couple of Exego Grander T-shirts and decided to take a simple trip, part flight, part bus, part train, starting at Ayodhya Airport and ending up at Barana City in the station. Now, I won't lie here. I did miss meeting a lot of old friends, getting silly drunk, and also the networking that comes up with reunion of this kind. But, alternating between Exigo, Confirm Ticket, and Aviva T-shirt, I realized something I haven't fully appreciated for a long time. The impact we, as Exigo, are having on people's lives. Everywhere I met, people came up to me, smiled, shared their little Exigo stories. Moments where our brand had quietly become a part of their journey. Some simply said thank you. Others told me how we'd make travel a little easier, a little less stressful. And some even took time to offer suggestions. Not as customers, but almost as partners who genuinely wanted to, wanted us to do better. In those moments, it all makes sense. Now, I can talk about that for hours, but this is a one-hour call, and I have an obligation to top numbers. So, let's discuss the numbers. As always, all the numbers are in rupees crores, unless stated otherwise, and year-over-year comparisons are Q3FY26 against Q3FY25. Our gross transaction value stood at 4902.9 crores, up 21% from 4036.3 crores last year. Revenue from operations came in at 317.6 crore, a 31% YOY increase. Contribution margin was 115.3 crore, up 12% YOY, with contribution margin percentage at 36%. Adjusted EBITDA to that 30.8 crores compared to 24.3 crores in Q3 25, a growth of 27%. PAC was up 64% at 24 crores vs. 15.5 crores. Now these numbers include some one-offs that I will discuss closer to the end. Moving on to the business segment overview. On train style concepts, I regularly try to get invited to train team meetings. Because for me, they are a masterclass in focus. What I liked most this quarter was the team's agility at this game, adapting quickly and benefiting from the changes Alok alluded to earlier. In trades, we booked 26.12 million trade segment up 8.8% YOY. GTV was 2095.5 up 15%. Revenue spread at 134.1 up 12%. Contribution margin was 40.6 up 2% with a contribution margin percentage 30%. Trades contributed 35% to the OOCM. In flights, it was a tough quarter and our response to that. Those 12 days in December reflected years of customer obsession and technology-led execution. We booked 2.8 million flight segments up 15.2%. GTV was 2055 crore up 22%. Revenues stood at 102.4% up 49%. Contribution margin for flight rose 45% to 39.4% at a contribution margin percentage of 39%. Flight contributed 34% of growth's total client. Burses continued on the growth trajectory and there's still plenty of growth ahead. Passenger segments grew 33% YOY to 6.73 million with revenue comp operation up 47% to 75.6%. GTV was 36% to 671. Contribution margin was down 1% to 34 crores and at a 45% contribution margin. Bosses contributed 30% of the total fear. Now, as promised, let me highlight the key one-offs and call-outs in the current quarter. The one-off and call-outs in FI 26 Q3 included share of loss from Petspass, an associate company, of 2.9 crore, 2.8 crore one-time impact due to the new label code. For Q3 FI 25, the one-off and call-out comprise of share of loss of Petspass of 1.9 crore. Now, apart from this, the disruption in the flight operations during December, arising from operations challenges faced by a leading operator, including the impacts of loss booking and cancellation, would have resulted in an approximate adverse impact of 2 crore in our EBITDA in Q3 and 5.26. On the AI Investments Rajneesh talked about, I want to reiterate that when we raised the preferential issue last quarter, we had earmarked 25% of the proceeds for inorganic growth opportunities and 25% for organic growth initiatives. Going forward, we will continue to deploy capital only into high-impact opportunities that align with our strategy and offer clear synergies, whether through AI, travel tech, or exceptional talent that fits into our long-term vision. To maintain prudence, we have constituted an investment committee to evaluate and approve such investments and acquisitions where we will benefit from the deep expertise of two of our board members, Mr. Shailesh Lakhani, formerly a managing director at P15 and widely recognized for backing some of India's most successful ventures, and Mr. Rajesh Lakhani, the founder and CEO of GSF India, a serial entrepreneur and active investment in Indian I'll end with an anecdote. When we started preparing for this learning call, our design and branding team was running on a packed schedule. And I had just come back from my Varanasi trip. So by the time we got on to kick off the meeting, it was very close to the result. As they walked me through the concept, they spoke about the perspective and the depth, the isometric language of the rituals, the tiny details that they wanted to add on the runway, on the Presentation size covers and the discipline of keeping it all consistent across every page. Seeing how much they already had on their plate, I tried to make things really easier for them and asked, why do we really need to spend so much time on the design template of an inventory deck? Last quarter's template could work. They looked at me, with a tear usually reserved for an unwanted rodent, about to divorce its favorite sheet, and then the The design head said something that stays with me. It's never about taking an easy path. It's always about doing what is right. We do it for the craft, because that is what we are. And when I think about it, it captures what Exigo has always been about. And we will always be. We do it for the craft, because that's who we are. And with that final thought, I'll pass it on to the moderator for Q&A.

Thank you so much, sir. Ladies and gentlemen, we'll begin with a question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch on telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles.

Our first question comes from the line of Mr. Unmold Girl from DAP Capital.

Please go ahead.

Yeah, hi. Thanks for the opportunity, and congratulations on a good set of numbers in our tough quarter for flights. I have a couple of questions. Firstly, on our bus business, while the growth here remains very strong, but we have seen that almost in a year, there is a 20 percentage point in the contribution margin in this business. So, how should we think about more sustainable contribution margins in this business in more medium to long term?

Yeah. Hi, Anmol. This is Alok here. I think we have been calling out for at least three, four quarters that we have been seeing the opportunity to push the pedal on growth on buses, Given how low the penetration of digital booking is in the country, and it's still in the low 20s, the other thing we've seen is the ability to, you know, cross-fill and up-fill buses, you know, to a large part of our funnel, and of course, products like Travel Guarantee have actually aided the growth of some of that, right, because if a train ticket is wait-listed, you know, you get the option to actually buy the bus almost for free, given you get 3x back. So what we've chosen to do over the last few quarters is deliberately chase growth over purely chasing more profits, because I think there is a phase of the business where this strategy makes more sense, just like we've done in other phases. Like if you asked me about flights four or five years ago, I would have said the same thing. But now, you know, flights have reached a certain scale and therefore producing a certain margin. In fighting on buses, the idea is to, now we are in the 40s, right, on contribution margin. I mean, our intent would be to stay somewhere, you know, in that sort of range and not go down too much from here. I mean, the idea is if there is an opportunity we see in a certain quarter where we want to invest in brand or in performance because we see more returns from it, I think we will not be shy of doing that. And just to add, you know, like what Rajneesh had mentioned about these new products that we've launched, right? So I'll just give you one example. We launched an industry-first product where if your bus breaks down, we will arrange an alternate mode of transport to take you to your destination. Now, these products involve a cost, right? And, you know, if we are doing this for our customers, we're doing it to improve customer experience. This is not very different from our playbook on flights where products like flight tracker are based at a certain cost. And, you know, they involve a certain cost even in operating them. But we do it because that's the right thing to do for the customers at that moment, right? So I think the way you will see the rewards coming back is in not just growth, but better NPS and better stickiness over time. And just to start a guidance, but I think we'll be comfortable to operate even a couple of percentage points, one or two percentage points lower than this, even there. But we would not want this to go into the thirties, just to give you some comfort on that.

So, just one more thing there, Anmol. As we mentioned in the FAQ, that last quarter, there was also we've chosen to double down on marketing activities and promotions. And it would have had a bigger impact, was it not for the additional safety inspections that led to grounding of some suppliers in November. But we will discuss your question also in detail as question 3 in the FAQ.

Sure. And is there any one-off in this margin? You know, you indicated that some part of the Exigo Assured and the Convenience Pee was also returned to the, you know, was returned back. So, is there any kind of impact because of that?

So, as I mentioned, so, if you take a combination of the convenience fee, and as I mentioned as a one-off this time, which I did in the end of the speech, if you take both of these, plus what he estimated as the lost bookie, it would be around 2 crore, which would have been the effect of those 12 days.

Which is already fully absorbed in the QT.

Which is already, yeah.

Understood. Understood. Secondly, in our comments, we indicated that we are adding direct supply in the hotel business. So, do we want to scale up this business organically or are we, you know, planning to, you know, go through an acquisition route to add more direct supply into this business?

Yeah, so see,

what Redneesh talked about was the fact that we have kicked off direct supply addition predominantly through the channel managers route to begin with, and by tying up with certain budget hotel chains, which we can tie up directly through either these channel managers or otherwise. And at this point, you know, it's not a people-intensive way of adding this supply that we are sort of pursuing as a strategy. The reason is that I think that's still the product market fit that Rajesh talks about, that we are at this point, you know, where we want to be in product market fit on what you see versus what you get, right? I think that's an exercise happening in parallel with a bunch of interactions with customers as well as, you know, hoteliers to figure out, you know, what's the way we could solve for on-the-ground issues where the budget hotel promises something and does not deliver it. I think once we have a better handle on that, is when you will see us scaling up supply even faster, right? And both these exercises are happening in parallel. And like Saurabh alluded to, you know, there is a point where you step up those investments to build that even faster, but I don't think we are sort of saying that we are in a hurry on this, right? So, the idea is to have better NPS in whatever we have, selling directly, which means that customers are satisfied with whatever we are able to do, and of course, there's a great expansion you can go to when you go direct. But beyond that, you know, it's not something that we need to build overnight. The reason is that both these exercises have to happen in parallel.

Anwar, though, I would just add one theme on hotels. Look, in case we find, in case the conviction increases, and I'll request Raheem to talk about where our conviction is, but in case our conviction increases, as our conviction increases, we will put in more resources and capital behind this idea as our conviction increases, but I will pass it on to Raheem to talk about.

Yeah, I mean, so I think just reiterating what Alok said, but I think there are two key points to understand here that we are still in the built-out phase and we are still in the product-market-fit phase. That means if you look at our obsession in the past on building for consumers, we have never gone out and spent too much money on a product which hasn't reached product-market-fit because that's how product-led growth happens. And so, once that point doesn't reach, we won't be burning a lot of money on this vertical. It would mostly be on spending money on scaling up the team, supply, and, you know, bringing about the product market fit, et cetera. Having said that, on the inorganic side, you know, we are always on the lookout for great teams and great products. If we do find something, we will always be on the lookout. And if we find something, we'll, you know, that always goes without saying, irrespective Whether it is hotels or buses or any vertical platform, Intra, or AI for that.

Sure. Thanks, guys. Just one last question from my end. We have seen, you know, very strong growth in our flight business despite weaknesses in the sector particularly. So, is this largely driven to our own platforms or is there any increase in volumes to our partner platforms as well during the quarter?

Yeah, so I'll take that, I think this was asked last morning as well, but just to reiterate this again, the fastest growing channel for growth on all three lines of businesses are organic for us.

In fact, I would say that if you look at if we were declaring just organic, the growth would have been faster, be faster. That's another way to think about it.

Thank you, guys, for answering my question. I will join back in the queue.

Thank you. Our next question comes from the line of Swapnil Podduke from JM Financial. Please go ahead.

Hi everyone. Thanks for the opportunity. My first question is with respect to some announcement which had you had done on the BSE regarding a Singapore subsidiary. Can you elaborate a bit more on what you intend to do over there and which the kind of engagement you

So, Swapil, as we mentioned during the preferred day, that if we are, and even Raneesh talked about, during his section about how we are looking for ideas, looking for great teams, looking for great companies. So, Singapore subsidiary in some sense would be a channel for the overseas investment that we would be doing. And as we said, and we have defined how and why we would be doing the investment through the park. So, it is that channel that we are looking for and setting it up for.

So, will it be fair to say that these investments that you do will be for localized travel in those countries' geographies and targeted towards the local?

As we just said, Swapman, as Ravish just said, so it could be a range of things. It could be technology, it could be travel, it could be anything that's adjacent to us. What the key always has to be is, it has to be a great synergy, it should be a great team, it should be in some sense like what we have done with either Confirm ticket or Abhibas. Rajesh, could you talk about the AI part which you mentioned, could you just touch upon that?

Yeah, I mean, see, the adjacencies in travel, of course, that goes without saying, and, you know, global markets are, you know, great as well. So adjacencies anywhere, any market is always good. Like I said, we always keep looking out for great teams, great products, right? They could be anywhere. So that's one. Second is the adjacency with respect to how obsessed we are with AI and how it's going to change the world, how transformative it is as a once in a lifetime opportunity. That's the other aspect that we are very closely looking at. And you can see that the opportunity that it presents, like I think globally, all smart textbooks right now, they are all kind of looking at, you know, building something big in this, in the next two to three years, because there's a massive amount of opportunity that AI presents, not just for the fact that, you know, software is dying and it's going to be completely rewritten. It's also because across not just the compute layer, but beyond services, compute, things like life sciences, quantum, etc. And even in the foundational layer as well, below the AI vertical native layer, all of those present massive amount of opportunities, and I think every smart person on the planet sees that. And so there will be like a flurry of, you know, really smart people assembling smart teams and building AI native products in the next two to three years. And I think one of the goals for us also is to kind of scout for such teams and invest in them.

Yes, thanks. Thanks, Rajneesh, for that answer. And pardon me for proving you a bit more on this piece. And the reason I am doing it is because there was a mention of some organic inbound traffic that you are targeting. And in the past, we had instances where some of the Indian OPAs built some platforms specifically for Indian diaspora in Middle East kind of . Do we have So, I think just to

answer this directly, this is Alok here. See, there are two kinds of things here. One is, you know, something which could be within travel outside which excites us, but like Ridley said, it has to fit into a broad lens through which we look at, you know, team, technology, synergies, etc. But it could also be just, you know, something which is more AI-led and where we believe that there is a way in which, you know, we can benefit from it in the long term as well, right? And I think that's the broad way we are thinking around it. At this point, we don't have any, like, as and when we have any specific investments or acquisitions to announce, obviously, we will come to the market with. But at this point, like Regin said, we are living through a moment in history where, you know, in the next couple of years, the kind of things we will see out there will be unprecedented, right? And so if we don't, as a company that is at this scale, that understands technology and AI and has a massive user base, if we are not able to take older bets at this time, when will we take them, right? So, I think that's the broadest thought process behind why we want to look at both organic and inorganic strategies for making these kind of investments.

Perfect. I got it. My second question is with respect to the operating degree, which is visible in your business in a way, your contribution margin growth has been significantly slower, but you have been able to deliver a very strong EBITDA growth. And I can see that, you know, mainly that is coming from employee costs, which seem to have been coming down on a quarter-to-quarter basis, like 46 crores in one queue to 41 crores now. I just wanted to understand, is this also because of some AI investments that you have done, or there are some other reasons why our, you know, employee expenses, especially the fixed costs side, have been coming down on a quarter-to-quarter basis? It's a decent decline that has happened over the last couple of quarters.

Look, two parts, please. Remember that employee, as we increase the vertical, there will be costs. So, again, remember, as Ranish mentioned to Anmol's question, if the product market fit starts connecting, starts working, that will be there. On technology part, remember, we were always working on technology. So, in that sense, nothing has really changed because if you see, even on customer service use case, Kara has been there forever now. So, it's been there since the Google Transformer model age. So it's not something new to us. Everything that we are doing right now has a technology layer in between. Again, on a personal level, I love getting into Rajneesh meetings or calls just to see where the world is changing, what's happening, the new thing which is happening.

And we've always seen that, but I won't call it something very differentiated.

It was something that was there from the start for us.

And the other way to see this is that on the mature businesses, right, you start seeing operating leverage come in, but on new businesses, you know, you are still investing, right? So when we talk about growing hotels, there will be a stage once you have product market fit where you think that expanding that team for direct supply or for whatever you want to do on the ground, I think makes more sense. So I think there are phases for this. Last one year, you know, obviously on our mature businesses, we started to show that there is operating leverage coming in and part of it obviously is because of all the things Rajneesh talked about that if you don't need to deploy 100 more people to service peak time calls, I think that shows up also on the bottom line in some sense, right? So, I think that's a mix of both, but don't think of it as, like, we'll not be shy of, let's say, investing and putting more people at work in areas where we believe that, you know, it's required. But on the core business, when you talk about mature categories like train, right, we have seen that operating level is coming in. On flights, you can see it coming in. On buses, we are investing like we have always been calling out. I think it just makes sense to invest in the categories at 20s penetration. Hotel category is at 20s penetration. So, you want to grow more new users from it. So, these are areas where we will not be shy of investing. Yeah.

Okay. Is there any EBITDA margin in your mind that you work with or, you know, the range that you are targeting? Right now, you are at around reported basis, around 8% margin, but do you have any plans to go to, you know, low teams kind of a number, and is there any thought process on that side? I understand that there could be investments on hotels in between, but still, directionally, how do you look at the margin expansion for work?

So, think of it in a very different way, and again, I am not giving you a quarterly guidance, because as I have always said with you right from the start, the first time we talked, that especially in our stage of business, a quarterly guidance doesn't mean, and specifically in the growth stage, having said that, think of it this way. I, as of right now, am not declaring what is widely considered as the highest margin business, just because I am investing in that business. So, if you believe like I do, that we will succeed in it, and I am not saying we will succeed tomorrow, I have always said it is a long term vision, but we believe where we are right now, we are at par or probably better than what we expected ourselves to be when we started this journey. But that is the highest margin business. So you can see that, you can see that growing over the next five years. And I believe, as you can see from every business segment that we have, once we get the segment right, we do give a higher margin than what anybody else can get in that segment. And trains are the proof of the pudding that I'm able to give the contribution margin for trains because I've got it as a profitable business. While, again, I don't know other numbers because people don't give it out, but I will be very surprised if anybody can match our margins in that kind of a business. What I am saying is, if you look at it in the long run, it will improve. On a quarter-on-quarter basis, on the investment phases, as in due to competition reasons or due to reasons why we are building it up, you might visually see number varying, but visually, if we don't invest, we will never make a great business.

So, I think the answer to this question will be more obvious, let's say in a 3 to 5 year time frame, rather than in a, let's say 6 to 12 month time frame, that's the way to think about it, which is why we are not guiding on any sort of margins formally to the market.

Got it.

I know, I don't have to answer your question, but that's the rule.

Yeah, that's fine. Now, just a quick question, sir. One, on your hotel business, any sense as to how much your business in that side is happening on the direct side, given that you have already started getting some supply usage through channel managers?

He'll probably come back with it over the future call.

We are not going to put the cart before the horse. We have to be a little patient for the answers to these questions.

What I would recommend though is we should use our app and continue using it and you will keep on seeing the difference in the product as it comes about. I have seen some of the updates that we are planning and you should just keep on using the product and you will get an idea around it.

Just the last one, you did highlight that there could be some base impact with all of KUM, but you didn't happen to quantify those numbers in your letter. If you can quantify some impact on the base that we should work with.

Yeah, I believe I did talk about it, but just to reiterate what I said, last year, Skoomp was a mid-to-high single-digit GTV contributor, right, so in the Q4 numbers for last year, and remember because of that there were secondary effects like higher average transaction value, you know, like we, I still remember we even sold buses in, You know, 10,000, 14,000 sort of ticket price range, you know, so I think we have to see how this year pans out, but basically for most travel companies, right, not just for us, I would say for the whole industry, all OTAs, all airlines, buses, etc., you will see a base effect because of the comb factor.

Okay, hello. Thanks for taking your questions.

Thank you, sir. Thank you. Thank you. Our next question comes from the line of Pankaj, Mahindrita from Boca. Please go ahead.

Thank you. Good evening, management. I just have one question around your hotel strategy. So just some big picture, you know, thoughts around how do you think about the product market fit? So for example, if the penetration in hotels is already at about 20 odd percent, let's say 5 years, 10 years down the line, And if that number doubles or 1.5x, what would it mean for you to achieve it? Is it, let's say, discounting, lower take rates, or getting some sort of supply which is not out there on other platforms? And what does it take to convert those guys which are not already online? So, just wanted to understand, how do you define what sort of properties do you already have live on your platform? And incrementally, what is it exactly that you are looking for?

Yeah, so I

think in terms of inventory, there is more or less parity in the industry, right? I mean, because the way people source it. I mean, one thing is that if you have direct relationship, you will have better takers, which is obvious. So, we are investing on that side, but in terms of very, very unique inventory, as of now, that's not really something that we will be able to focus on, because right now, our bigger focus area is on creating product market fit by very, very deeply looking at customer pain areas and solving for them, right? One of the things that we keep talking about is what you see versus what you get, especially in the budget category, right? I mean, if you happen to walk into a five-star hotel, I mean, the pictures would look worse than the hotel actually is if you go and see that. But if you look at the budget category, then the picture is completely different. Like, it's completely the opposite. Like, pictures look way better than the hotel actually. And that leads to a lot of, you know, difference. So there are these kind of pain areas that customers have, or, you know, customers ending up at a hotel only to find that their booking is not in the system, or there's no room left, or, you know, patrol to some walk-ins, or, you know, those are the kind of pain areas that are, like, much, much bigger pain areas. And also the fact that consumers who are still walking in and booking offline still do not have the confidence to cannot book online. So we are entirely focused on these kind of, you know, customer pain areas and how to solve them with product solves and AI and technology in the context of the customer base and customer cohort that is most relevant for, you know, people who visit or frequent our platform. And that's the thing about creating this product market fit. The reason it takes time is that if tomorrow I need to figure out a way in which, you know, which are the hotels which have consistently given good experience or which are the hotels which have consistently given bad experience, etc., this will also depend on a lot of data that we are collecting as of now in the form of AI reviews and AI calls, transfer check-ins and stuff like that, Which over a period of time is getting baked into the algorithms as well, right? And this is how we are trying to create a product which is going to create product-led growth and not rely too much on marketing expense. Having said that, the fact that, you know, the brand, even if it's so built organically, it has always been built with transportation as the primary focus, and a lot of people who kind of know our brand or name, they only relate to us as a brand which does flight booking or a train booking or a bus booking. And so, at some point of time, when we are concerned about our product market space and the product and the experience, we would obviously definitely want to create that perception that, you know, we also stand for hotels in the brand.

Yeah, I would just add to what Rajiv said, and I'll take a small anecdote. So Varanasi gets about 140 million footballs a year. That's about 3,80,000 people landing there in a day. Not all of them may need a hotel or a room. But even in a small town, you know, you can imagine that a large part of that demand is still not being tapped into online. And we saw this last year during Home as well, that, you know, offline and just walk-in remains a dominant channel. The interesting thing is that if you look at our user base and if you look at the number of segments that we are doing today, they are very close to 4 lakh segments a day now. And these passengers, you know, a lot of them who actually need hotels today, their behavior is actually to just land in those cities and look for a hotel. I think we are talking about changing that behavior through superior product experience Thank you. And we are fortunate to have the right audience, where once you solve that problem, you can see growth in booking very, very rapidly, right? So look at the train vertical. Before we got in, the OTA business, you know, would have been around 14-15% of the overall train ticket sold. We got in and, you know, today it's closer to 20%. And we are the leaders there. On the bus side, we have grown the market after we entered it. I think on the hotel side, we expect to do the same.

Understood. And just one quick follow-up on that, when I browse the app and website, on some of the hotels, especially in a few cities, I saw something called the best price guaranteed applicable for the hotel. So on a real-time basis, how does the team essentially ensure the pricing which is available to an execo user is probably one of the cheapest or cheaper out there compared

I'll just start with the first part and then I'll pass it on to Rajesh.

If I had a moot which was very clearly defined and public right now, I would have been putting it out as a separate LOP. As I've always said, and you can read through my past FAQs, I believe that we are in the process of defining what it will be, and that is why we don't break it out. But I'll pass it on to Rajesh for the other part of the question.

Yeah, I mean, of course, there's a certain percentage. I mean, we use a lot of data science to figure out, you know, what we have in terms of deals and, you know, pricing and commercial relationships where we can actually afford to do that. There is also, remember that this is a build-out phase, and I think you will never be able to figure out whether there's a product market fit if consumers don't even know about your product or haven't used it once. So, there's obviously a cost of kind of acquiring a first-time customer, and I think some sort of inducement of the customer side, discounting side, et cetera, is needed to get customers to come on board and use the product for the first time. These are strategies on the same lines. There's nothing new that we're doing here that has not been done before. So, yeah, I mean, what was the second part of your question? Sorry.

No, you know, Alok, Rajneesh, I just basically wanted to understand that, you know, is pricing the lever right now for users to come in and let's say try and book?

Pricing will always be a lever, not the only lever though, okay? But like I said, if you are looking at building a great product, I mean, if customers don't come, for example, if somebody has never booked a flight on Exego, They would never understand the kind of post-booking experience that we offer, right, in the form of the ability to get refund instantly or to be able to check in, get checked in automatically or to be able to kind of track flights with the flight tracker, which provides, you know, predictive AI-based, you know, alerts and predictions on flight status. Nobody will get exposed to that kind of a user experience unless you've not booked the flight first, right? And obviously, there's a word of mouth that could be taken after that. So, some form of customer engagement cost will always be incurred in order to kind of scale the product in the beginning. There are very, very few products in the world which have been able to scale purely by word of mouth and, you know, the chat DVD kind of success. I mean, that's very, very rare, right? Maybe one in a million products, right? But otherwise, you know, for a normal human being, there will always be a combination of a great product and some sort of marketing spend in the form of discounts, etc.

Understood. Yeah, that's helpful.

Thank you, Sumit, and all the best for future quarters.

Thank you. Our next question comes from the line of Vinamra Hirawat from Jefferies. Please go ahead.

Hi, sir. I'm an audible.

Yes, sir, you are.

Also, congrats on a good set of results. Just a couple of your financial bookkeeping questions. Your other income for the quarter has basically doubled or more than doubled. So, what is the reason for that? It's simple, right?

Last year, last quarter, we raised primary capital. It's the interest on that.

Okay, okay. Got it. And your revenue versus contribution margin, what are the costs, basically, that, you know, you take out from your revenue to reach your contribution margin?

So, last quarter, we have talked about it in detail in the FAQ and earlier too, but let me still give it out. So, what I do is, we would take out any directly attributable cost, which would include performance marketing. It's a classic sale too. It's partner expenses, payment gateway expenses, performance marketing, any kind of distribution. Everything would be included. Anything that can be directly attributable. Got it, got it. That's it for me. Thank you. So, in the case of, remember the other thing that you should realize is that we have a large amount of what we call the piece of point stack, which is our value-added services stack. And if you see, we attach it about 29-30%. And that's the cost of that product also gets deducted at this level.

Understood, sir. Thank you.

Thank you.

Ladies and gentlemen, due to interest of the time, that was the last question for today. I would like to hand the conference over to management for the closing comments. Thank you, and over to you, sir.

Thank you, everyone, for joining our Q3 earnings, and once more, wishing you a Happy New Year, and see you all in the next quarter.

Thank you, sir. Ladies and gentlemen, on behalf of some capital advisors who made it, that concludes this conference. Thank you for joining us, and you may now listen to your hands.