Yatra Online, Inc. (YTRA) Q2 2027 Earnings Call Transcript

Hello, everyone, and welcome to Yatra's Second Quarter Fiscal 2027 Financial Results Call for the period ending September 30th, 2026. I am pleased to be joined on this call today by Yatra's Executive Chairman Dhruv Sringhi, CEO Siddhartha Gupta, and CFO Anuj Sethi. The following discussion, including responses to your questions, will reflect the management's reviews as of today, November 13th, 2026. We do not undertake any obligation to update or revise the information. Before we begin our formal remarks, let me remind you that certain statements made on today's call may constitute forward-looking statements, which are based on management's current expectations and beliefs. and are subject to several risks and uncertainties that could cause actual results to differ materially. For a description of these risks, please refer to our filings with the SEC and our press release filed earlier this morning on the IR section of our website. With that, let me turn the call over to Dhruv. Please go ahead.

Thank you, Operator, and good morning, everyone. Thank you for joining us to discuss Yatra's performance for the second quarter and first half of fiscal year 2027. Let me begin with the broader industry backdrop and what it means for Yatra. India's long-term travel opportunity remains compelling. A growing base of consumers, improving connectivity, and participation from smaller cities are expanding the market. At the same time, the continuing shift towards organized and online travel creates opportunities for platforms that combine relevant choice, reliable service, and a strong understanding of consumer needs. However, it is important to distinguish these structural drivers from the operating environment in the current quarter. The near-term picture has been uneven, with demand and growth varying significantly across travel categories, destinations, and consumer segments. The continuing conflict in West Asia has affected parts of the international travel network. Disruptions to connectivity, elevated fuel costs, and higher airfares have weighed on affordability. Well, the depreciation of the rupee has added to the cost of overseas travel. These pressures have been particularly visible in long-haul outbound travel. Domestic aviation has also faced a challenging environment. High fares and constrained capacity have affected passenger volumes, with industry declining approximately 6% in this current quarter. Importantly, however, this should not be interpreted as equivalent to a decline in the broader travel opportunity. International travel also needs to be viewed with greater nuances. Long-haul travel and destinations more directly exposed to geopolitical disruptions remain under pressure, while demand in other markets has been encouraging. The pace of recovery is therefore unlikely to be uniform across destinations or across travel businesses. There are encouraging signs and forward bookings in part of the industry. These suggest that some customers are returning to travel plans that were previously deferred. However, we believe it is appropriate to remain measured. The sense and timing of the broader recovery will depend on connectivity, affordability, and traveler confidence. For Yatra, our approach is to remain focused on the opportunities within our control while maintaining the flexibility to respond as market conditions evolve. In corporate travel, our priority is to deepen relationships with existing enterprise customers and capture a greater share of their travel requirements. We want to be more than a booking channel. Our objective is to be a trusted partner that helps enterprises manage travel effectively, combining convenience for employees with visibility and control for the organization. The opportunity extends beyond conventional business travel. We see scope to increase adoption of employee leisure travel offerings and cross-sell additional travel services to our existing corporate customer base. This allows us to build on relationships we have already established while addressing a broader set of customer needs. Alongside this, we continue to strengthen our SME and mid-market proposition. Our focus is on making organized, technology-enabled travel management accessible to a wider range of businesses with solutions that are convenient for travelers and practical for business owners and administrators. In the MICE segment, which is meetings, incentives, conferences, and exhibitions, we remain constructive on the long-term opportunity, while recognizing that individual programs can be sensitive to travel costs, destination choices, and the timing of corporate decisions. Our focus is on working closely with customers to offer alternatives that meet their objectives and budgets, rather than relying on a particular pace of market recovery. Another important opportunity is the continued digitization of travel. Online adoption is well-established in air-tickering, but remains less developed across parts of accommodation and other travel services, particularly where supply is fragmented. Bringing that supply online requires more than technology alone. It requires supplier relationships, accurate information, dependable fulfillment, and support when plans change. We believe these capabilities will remain central to the value that organized travel platforms like Yatra deliver. Technology and AI are increasingly important as well in strengthening that proposition. Across the industry, the opportunity is moving beyond travel discovery to improving conversion, automating routine service interaction, and increasing operating productivity. For Yatra, our investment priorities are guided by practical outcomes, making travel easier for users, improving visibility and control for enterprise customers, and building a more scalable operating model. We see AI as an opportunity to strengthen those outcomes over time, not simply as an additional interface, but as a tool to improve service quality and the economics of service delivery. As we look ahead, we will balance investment in these capabilities with disciplined execution. Our priorities remain clear. Strengthen our core business, deepen enterprise relationships, increase cross-selling, broaden our SME and mid-market reach, and continue improving the customer experience. The external environment may influence the pace and mix of growth in the near term. Our responsibility is to build a business that can respond to these changes while continuing to strengthen its long-term competitive position. After two decades of building Yatra, our conviction in India's travel opportunity remains strong. Our focus is on translating that opportunity into sustainable growth and long-term value for shareholders. Thank you for your continued trust and support. I will now hand you over to Siddharth to take you through the operating performance and financial performance in greater detail. Siddharth.

Thank you so much, Dhruv, and good morning, everyone. Building on Dhruv's comments, I would like to spend some time discussing our performance during the quarter, the factors that have influenced our results, and the progress we are making across the strategic initiatives we discussed in our last learning call. Let me begin with the broader operating environment. The travel industry continues to navigate a challenging period. With several of the macroeconomic and geopolitical headwinds we discussed last quarter persisting into Q2, the domestic aviation industry in particular has witnessed a significant contraction in passenger volumes, domestic air passenger traffic declined approximately 6% year on year, and nearly 16% sequentially. International passenger traffic for Indian carriers also declined approximately 19% year on year. Elevated fuel costs and continued pressure on airline profitability have led to capacity rationalization and higher airfares. Domestic average ticket price increased approximately 26% year-on-year, while international fares increased around 20%. The combination of higher fares, constrained capacity, and continued uncertainty around international travel has weighed on passenger demand. These conditions have also had a disproportionate impact on corporate group travel and MICE, where elevated travel and accommodation costs have influenced corporate budgets, destination choices, and the timing of the programs. Against this backdrop, let's look at our performance in the context of the broader market. Despite these industry-wide challenges, Yatra continued to deliver growth in gross bookings. Gross bookings increased approximately 6% year-on-year to INR $21,655 million or approximately $226 million. Our air passenger volumes declined approximately 2.4% year-on-year, outperforming the broader domestic aviation market, which declined 6%. More importantly, on a sequential basis, our domestic air passenger volumes increased approximately 4% against an industry decline of nearly 15%. Even as the overall aviation market has contracted, we have continued to strengthen our competitive position and gain market share. Our revenue from operations for the quarter stood at INR 2136 million, or approximately $22 million, with the year-on-year comparison primarily reflecting lower MICE business volumes. Our gross margin, defined as revenue-less service costs, remained broadly stable year-on-year at INR $1,255 million or approximately $30 million. I believe this reflects the underlying strength of our core air and hotel businesses, where continued growth and improved monetization have substantially offset the impact of lower MICE volumes. Adjusted EBITDA for the quarter stood at negative $32 million or approximately negative. 0.3 million dollars compared with INR 212 million or approximately 2.2 million dollars in the corresponding quarter last year. Let me now spend a moment highlighting some of the underlying trends that have influenced our performance during the quarter. What is particularly encouraging is the continued strength of our core businesses, even against a challenging industry backdrop. Our air business continued to outperform the broader aviation market with gross booking growing approximately 15% year-on-year. Importantly, the air margins also expanded from approximately 3.95% to 4.45%, supported by stronger supplier commercials and improved revenue realization. Our corporate travel business remains an important growth driver, with gross bookings increasing approximately 18% year-on-year, supported by greater businesses from existing customers and the continued addition of new corporate accounts. Similarly, standalone hotels delivered approximately 20% year-on-year growth in gross bookings, reflecting the progress we are making in strengthening our hotel supply and distribution capabilities. Together, these businesses have helped sustain our consolidated gross margin, which remain broadly stable year-on-year at INR $1,255 million or approximately $13 million, despite the impact of lower MICE volumes. Our year-on-year adjusted EBITDA performance was moderated by an increase in other expenses of approximately USD 2.7 million, nearly half of which was attributable to legal, regulatory, and professional advisory costs incurred in connection with the recent unsolicited tender offer and related matters. The remaining increase was primarily driven by higher affiliate commissions arising from growth in our partner business, consistent with our historical accounting treatment. Importantly, this business continues to generate positive contribution margin. We believe this reflects the resilience of our underlying business and the benefits of improving monetization across our core segments. At the same time, we have continued to invest ahead of the anticipated market opportunity, strengthening our technology infrastructure through GCP, expanding internationally through Kanu, and scaling growth initiatives such as ReCap and TravelPro. These investments are at different stages of maturity, with their full revenue potential yet to be realized. During the quarter, we incurred approximately INR $52 million or approximately half a million dollar in costs associated with these initiatives, reflecting our continued commitment to building for future growth. As these initiatives gain scale, we expect their growing contribution alongside continued operating efficiencies to strengthen our operating leverage. Our air business continued to demonstrate resilience during the quarter, despite a challenging operating environment for the broader aviation industry. Gross air bookings increased approximately 15% year-on-year. Importantly, our passenger volumes continued to outperform the broader market, reflecting our ability to capture a greater share of travel demand. We believe this outperformance is being driven by the strength of our distribution network, deeper engagement with existing customers, and continued improvements in our supply capabilities. Alongside this growth, we have also continued to improve monetization. Overall, air margins expanded from approximately 3.95% to 4.4%, supported by stronger supplier commercials, improved revenue realization, and continued focus on optimizing our business mix. I think this is an important reflection of how our air business is evolving. Our focus remains on building a scalable and sustainable air business, supported by stronger customer relationships, competitive supply, and disciplined capital deployment. Moving to hotels and packages, I would like to discuss standalone hotels and mice separately given the operating trends which are very different we are seeing in these businesses. Our standalone hotels business continues to demonstrate healthy growth during the quarter. With gross booking increasing approximately 20% year-on-year, this performance reflects the growing strength of our hotel offering, supported by deeper customer engagement, improved distribution, and our continued focus on expanding the breadth and quality of our hotel inventory. We've also continued to strengthen our supply relationships and improve the competitiveness of our hotel offering. We believe these efforts will help drive greater customer adoption, increase hotel attachment across our platform, and improve monetization over time. Importantly, stand-alone hotels continue to demonstrate growth independent of the challenges we are witnessing in MICE. We remain confident about the opportunity in this business and believe that as we expand our supply capabilities, stand-alone hotels can become an increasingly important contributor to our overall growth and revenue diversification. Coming now to MICE, this business has faced a challenging operating environment, particularly as corporates have adjusted their group travel plans in response to higher travel costs and continued geopolitical uncertainty. During the quarter, we witnessed a shift from larger international programs towards smaller, more manageable groups as corporates sought greater flexibility around travel budgets, destination choices, and potential disruptions. This change in business mix has impacted both volumes and margins, with smaller programs typically attracting greater competitive pressures. The year-on-year comparison also reflects an unusually strong quarter to F526 when we executed several large international corporate programs. Against this backdrop, MICE gross booking declined approximately 63% year-on-year. However, what is encouraging is the sequential improvement we are beginning to witness. Our Mice business grew approximately 37% quarter on quarter, and we enter quarter three with a stronger order book. While margins remain under pressure, the improvement in business volumes and forward bookings provides early indication of a gradual recovery. We continue to believe that the underlying demand for corporate group travel remains intact. Our focus is on rebuilding volumes, maintaining discipline around program profitability, and positioning ourselves to benefit as larger corporate programs return. We believe MICE can provide an additional layer of growth and profitability as the operating environment normalizes. Let me now turn to corporate travel business. Corporate travel remains one of Yatra's most important strategic growth pillars, and we continue to see encouraging progress both in our existing customer relationships and in customer acquisition. During quarter two, corporate gross bookings increased approximately 18% year on year. What is particularly encouraging is the broad-based nature of this growth. Approximately 54% of our existing customers expanded their business with us, while 177 new corporate customers have gone live during the year. I think these are important indicators of the strength of our corporate franchise. Our growth is simply not coming from adding new customers. We are also seeing existing customers increase their business with us as we deepen relationships and expand the range of services available through our platform. This combination of new customer acquisition and increasing wallet share from existing customers continues to be an important driver of our corporate travel business. In our last earning call, I spoke about the investments we are making to expand our addressable market through TravelPro and Recap. Both initiatives continue to make progress. TravelPro, our offering focused on mid-market and SME, continues to build momentum. We secured more than 30 customer closures in quarter two, representing an annual business potential of approximately INR $825 million or approximately $9 million. The mid-market and SME segments represent a significant opportunity for us. Historically, much of our corporate business has been concentrated among larger enterprises. Through TravelPro, we are building a differentiated guru market approach that allows us to serve a much broader segment of corporate customers, supported by our existing technology, supply, and service infrastructure. What is encouraging is that we are able to leverage capabilities that we have already built for our enterprise customers to address a significantly larger market opportunity. While still at early age. The customer response gives us confidence in the potential of this initiative. Our expense management offering recap also continued to gain traction. We have secured 25 customer wins with 8 customers already live and another 5 approaching implementation. We continue to invest in strengthening the product and technology capabilities behind recap. We believe that expanding our proposition beyond travel booking into the broader travel and expense management ecosystem can deepen our relationships with enterprise customers and create additional opportunities for growth. Importantly, TravelPro and Recap represents two complementary opportunities. TravelPro allows us to expand our reach into new customer segments, while Recap enables us to broaden our engagement with customers beyond travel booking. Together, these initiatives are helping us expand our addressable market by leveraging the technology, supply, and operating infrastructure we've built over the years. Another initiative we discussed last quarter was extending our corporate travel capabilities beyond India through our partnership with Kanu Travels. During the quarter, we continued to strengthen the technology, service infrastructure, and operating capabilities to support this partnership. While still at early stage, the partnership has begun generating revenue and is already making a positive contribution at the operating level. We believe this provides an opportunity to leverage our existing capabilities across new geographies alongside an established regional partner. And as we continue to build a scalable operating model for the long term, we continue to strengthen our hotel supply capabilities as well through deeper relationships with hotel chains, expanding our inventory with special attention to tier two and tier three cities in India, and improving technology integration with aggregation platforms. Our focus is on offering a broader range of hotels at competitive prices, improving customer experience and increasing hotel attachment across our corporate and consumer businesses. With a significant base of existing air customers, we see an opportunity to capture a greater share of their accommodation spend. The continued growth in standalone hotels reinforces our confidence in this opportunity. The final area I would like to touch upon is technology and operational efficiency. As discussed in our last earning call, we believe AI and automation can fundamentally improve the economics of managed travel. Our focus is on automating routine workflows, improving service qualities, and enabling higher transaction volume more efficiently. We are making progress across several initiatives including AI-led voice quality monitoring and automation of corporate servicing workflows. We are also seeing increasing customer adoption. Chat handled by our AI assistants grew approximately 25% sequentially while cancellations processed through chat increased by 67%. Beyond customer-facing applications, technology and automation are helping us improve the efficiency of our underlying operations. This is reflected in an approximate 5% improvement in our operating headcount efficiencies year over year, even as transaction volumes in our core corporate business continue to grow and additional teams being built for future growth initiatives. As our businesses scale, we believe these efficiencies will increasingly translate into stronger operating leverage. Looking ahead, we remain constructive about our growth opportunities despite the uncertainty in the broader operating environment. Our air business continues to outperform the market, standalone hotels are gaining traction, and corporate travel remains a key growth driver, supported by deeper customer engagement and our expansion into the mid-market and SME segments. Importantly, the investments we discussed last quarter, including TravelPro recap and our international expansion, are beginning to translate into tangible commercial progress. Alongside this, our continued focus on AI automation and operational efficiencies is helping us build a more scalable business. We are also seeing encouraging signs of recovery in mice, supported by sequential improvement and a stronger order book. We view this recovery as an additional opportunity rather than something our broader growth strategy depends upon. I want to reiterate something I mentioned in my last running call. Periods of disruptions have often been when Yatra has done some of its most important building. This time has been no different. Our priorities remain clear. Deepen our corporate franchise. Strengthen distribution. And hotel supply and expand into new markets and build a more efficient and scalable yatra. Thank you, everyone. And I'll now request CFO Anuj Sethi to bring you on the financial performance for the quarter under review. Over to you, Anuj.

Thank you, Siddharth. Good morning, everyone. For the second quarter of financial year 2027, on a consolidated basis, our revenue from operations decreased 39% year-on-year to INR 2136 million, approximately $22 million. Our gross margin defined as revenue-less service cost remained flat year-on-year at INR 1255 million, or approximately $13 million. Adjusted EBITDA decreased 115% year on year to a negative INR 32 million, approximately a negative of $0.3 million, translating to a negative 2.57% adjusted EBITDA to gross margin ratio. As a result, the company reported a net loss of INR 22.3 million or approximately $2.3 million. Moving on to our financial performance for the first half of FY27, revenue from operations declined by 28% year-on-year to INR 4015 million or approximately 42 million. However, our gross margins defined revenue as service cost remained resilient and increased by 3% to INR 2482 million or approximately $26 million. The adjusted EBITDA stood at INR 184 million, approximately $2 million, down 56% year-on-year, translating into an adjusted EBITDA to gross margin ratio of 7.4%. Consequently, the company reported a net loss of INR 182 million, approximately $2 million for the first half. Now coming to the segmental performance for the period under review. During Q2 F527, our air ticketing business witnessed a 2% year-on-all decline in passenger volumes to 1 to 9,000. However, gross air booking grew by 15% year-on-year to INR $1,7006 million or approximately $177 million. While air gross margin increased by 29% year-on-year to INR $757 million. Approximately $8 million. Our gross year margin as a percentage of gross bookings also improved to 4.45% compared with 3.95% in the corresponding quarter last year. Reflecting improved monetization. In the hotels and packages segment, the hotel room nights declined by 3% year-on-year to 490,000. Gross bookings decreased by 21% to INR 4054 million, or approximately $42 million, while gross margin declined by 34% to INR 299 million, approximately $3 million. Consequently, the gross margin is a percentage of gross bookings moderated to 7.37%, compared with 8.86% in the corresponding quarter last year. During the first half of the financial year, 2027, our air ticketing passenger business volume grew marginally by 1% year-on-year to 2,562,000. Our gross air bookings grew by 16% year-on-year to 3,3585 million, or approximately $350 million. While gross air margin increased 18% year-on-year to an R1455 million, approximately $15 million. Our gross air margin improved to 4.33% from 4.26%. In the hotels and packages segment, the hotel room nights increased by 12% year-on-year to 1038,000. Gross bookings decreased by 8% year-on-year to INR 7930 million or approximately $83 million, while gross margin declined by 11% year-on-year to INR 684 million or approximately $7 million. Consequently, gross margin moderated to 8.6% compared to 8.94% in the corresponding half last year. On the liquidity front, cash and cash equivalents and term deposits stood at INR 2304 million, or approximately 24 million, as of 30 September 2026. With this, I would like to hand it back to the moderator and open up for question and answer session. Thank you.

We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. Please limit yourself to one question and one follow-up. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. There are no questions at this time. I will now turn the call back to Drew Shringy for closing remarks. Thank you.

Thank you, moderator. And we would like to thank everyone who's participated in the call today and thank all our shareholders for their continued support of Yatra. And as always, we are all available. If you have any follow-up questions, you can reach out to us through our IR team or reach out to us directly as well. Thank you for your time. Thank you, moderator. Thank you. Thank you.

This concludes today's call. Thank you for attending. You may now disconnect.