Earnings Call Transcript - YTRA Q4 2025

Operator, Operator

Hello everyone and welcome to the Yatra 4Q’25 and FY’25 earnings conference call. My name is Ezra and I will be your coordinator today. I will now hand you over to your host Manish Hemrajani, VP, Investor Relations, to begin. Manish, please go ahead.

Manish Hemrajani, VP, Investor Relations

Thank you. Good morning, everyone, and welcome to our fourth quarter and full year FY’25 earnings conference call for the period ended March 31, 2025. I'm pleased to be joined on the call today by Yatra’s CEO and Co-Founder, Dhruv Shringi; and CFO, Anuj Sethi. Before we begin, I would like to remind you that certain statements made on today's call may constitute forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to various risks and uncertainties that could cause actual results to differ materially. For a detailed discussion of these risks, please refer to our filings with the SEC and the press release we issued yesterday, which is available on the IR section of our website. With that, I'll turn the call over to Dhruv. Dhruv, go ahead.

Dhruv Shringi, CEO

Thank you, Manish. Good morning, everyone, and welcome to our fourth quarter and full-year fiscal 2025 earnings conference call for the year-ended March 31, 2025. I'm pleased to be joined on the call with my colleague, Anuj Sethi as well, who is our CFO. As we reflect on fiscal year 2025, I'm thrilled to present our performance that demonstrates a story of resilience, strategic growth, and unwavering momentum that solidifies Yatra's position as India's premier corporate travel service provider. For FY’25, we are pleased to report annual revenues of INR7.9 billion, which is approximately USD93.1 million, up 90% year-over-year. Our full year revenue reflects the momentum we have built across our corporate travel and MICE businesses, we have been pivotal in navigating a competitive landscape. Notably, our profitability metrics underscore our disciplined execution. Adjusted EBITDA for the year was up 28% and adjusted profit was up 106.5% year-over-year to INR24 million. On a quarterly basis for the March quarter, we reported revenues of INR2.2 billion, which is approximately USD25.7 million, up 114% year-over-year, driven by the growth in our MICE business and the inorganic contributions from the Globe Travels acquisition. Our revenue less service cost for the quarter came in at INR1.1 billion, approximately $12.8 million, up 34% year-over-year. Adjusted EBITDA of INR90 million, approximately $1.1 million, was up 23% year-over-year. Now let's take a broader view of the landscape in India. India's travel industry is in a transformative stage. IMARC forecast corporate travel in India, which is currently at $42 billion, will hit $80 billion by 2033, driven by globalization of business operations, which has encouraged multinational companies to expand their businesses in India. Add to that rising investments by public and private agencies for improving travel infrastructure and growing online penetration. Other factors include rapid digitization, the rising partnership between businesses and airlines, the increasing trend for business leisure travel, continuous improvement in the airline, hospitality and tourism industries, and the developing meetings, incentives, conferences, and events segment. These are all positive influences which are helping the Indian market grow exponentially. India's GDP also is valued at almost $4 trillion now, making it currently the fourth largest economy, and it's on track to become the third largest by 2028. This economic ascent is boosting individual prosperity, with GDP per capita reaching $2,700 in 2024, which is a six-fold increase over the past 2 decades. Rising incomes are unlocking new opportunities for travel as more Indians prioritize leisure and business travel. Our corporate travel business remains a key growth engine for us. In Q4, we added 35 new corporate clients contributing to INR1.4 billion in expected annual volumes. For fiscal year 2025, we secured 148 new clients contributing to INR7.5 billion in expected annual volumes, reinforcing our market partnership. We continue to expand our corporate sales team across India, targeting high growth sectors like IT, manufacturing, FMCG and consultants. This effort has quadrupled our sales pipeline, reflecting strong momentum. Our MICE business has emerged as a standout performer with significant growth and margin expansion in the fourth quarter, building on the strong foundation laid throughout fiscal year 2025. Globe has long been recognized for its deep domain expertise and strong client relationships in the MICE sector. By leveraging our expanded capabilities and globe's expertise, we've captured a larger share of this high margin segment, positioning Yatra as a dominant player in India's MICE market. The globe acquisition also expanded our reach into a diverse and largely non-overlapping client base, enhancing our exposure across multiple industries. This broader portfolio opens up meaningful cross-sell opportunities across our hotel inventory and expense management solutions, allowing us to deliver more integrated and customized travel programs to corporate customers. In just the last nine months of fiscal year 2025, our combined MICE platform handled over 600 trips and served more than 80,000 travelers, a testament to the growing demand and our ability to execute at scale. The Indian MICE market is estimated at $3.3 billion in 2023 and is expected to grow to $10 billion by 2030, representing a CAGR of 18%. We see a significant runway ahead and remain fully committed to aggressively expanding our presence in this high growth segment. When we set up our MICE business about 15 months ago, we set ourselves the target of becoming one of the top three players over the next three years in this segment. I'm happy to share that I strongly believe that on current run rate, Globe and Yatra combined, will become one of the top three players in this fast-growing segment in the current fiscal year itself. On the expense management side, our expense management platform, RECAP, continues to gain traction with multiple customers now live and actively using the solution. Early feedback has been very encouraging, validating RECAP’s relevance as a contemporary offering to our core travel services. We see strong cross-sell potential within our existing client base and the broader opportunities in the expense management space remain significant, both in India and selected international markets, as adoption scales, RECAP is poised to drive deeper customer engagement while building meaningfully to our margin profile. We are focused on accelerating this momentum and building RECAP into a core pillar of our enterprise offering over the coming years. I'm also pleased to share that in FY '25, Yatra became one of the first travel management companies in India to integrate the new distribution capabilities that the airlines are offering. This transformative technology developed in conjunction with IATA, provides more flight options and better pricing for corporate travelers. You would all have seen a trend over the last few years that increasingly, airlines are only sharing the cheapest fare on certain exclusive channels, including their own websites. The NDC is one such channel that allows you to access these special fares, which might otherwise not be available in traditional distribution platforms. The real-time seat availability and dynamic pricing is a key enabler for cost savings for large corporate organizations. This also allows us to offer more personalized and richer content, ensuring tighter policy compliance. This includes options like third seating, extra baggage, and bundled offers being presented to corporate travelers through our technology solution. This smoother and more transparent booking experience enhances Yatra's self-booking tool, aiming to provide a more seamless and transparent booking experience to our clients. Overall, Yatra's move to integrate NDC with its self-booking tool for corporate travel aims to enhance the booking experience, improve cost efficiency, and streamline travel planning even further for our customers. In our B2C Air business, we were able to address some of the decline in gross bookings. In Q4, our gross bookings saw only a 6% decline. The silver lining is that we've seen stabilization in our B2C Air business despite facing competitive headwinds and the stabilization in Q4 was achieved through optimization of our discounts, SEO improvements, and increased personal travel attach rates to our corporate channel. Based on the current trends, we expect to start seeing gradual growth in B2C starting in the second quarter of the current fiscal year. This would likely have been the situation in the current quarter as well, had it not been for the disruption cost for about 10 to 15 days due to the tense situation in India. Thankfully, things have normalized quickly and business is back on track. On the AI front as well, we continue to embrace AI, enhancing our customer experience, both on the corporate and the consumer side. On the corporate front, last quarter, we introduced our AI-enabled low fare finding, a smart post-booking fare optimization tool that underscores our continued investment in customer-centric innovation. This tool, using machine learning algorithms, continuously scans for fare drops even after a customer has completed their booking. If a lower fare becomes available on the same flight up to six hours before departure, the system automatically alerts the traveler, giving them the option to rebook at a reduced price. This delivers tangible value to the customer while reinforcing trust in our platform by integrating real-time pricing intelligence into the post-purchase experience. We are not just helping users save money; we are also using technology to redefine what proactive travel service can look like. We have also been building intelligent bots to automate customer service queries and calls. These bots will continue to improve as the language models evolve at a rapid pace, allowing us to significantly drive down the cost of servicing in the near-term. I'm pleased to highlight a few recent accolades that Yatra has received from international airlines and our supply partners. This underscores the strength of the brand and the relationships we've built. Singapore Airlines recently recognized Yatra as its top travel partner in India, acknowledging our strong booking volume, efficient operations, and alignment in the region. Air Canada honored Yatra with its prestigious Circle of Excellence award, and we received similar accolades from Etihad Airways, recognizing us as one of the top partners in the Asian region. These recognitions reflect our ongoing commitment to delivering value not only to our customers but also to our partners. They reinforce our position as a preferred travel platform in the eyes of leading global airlines. Now let me update you on the convertibility of the shares. We've made substantial progress on our path to convertibility into Indian shares. We have defined a structure that we believe works and allows for this convertibility. While there are still some hurdles to overcome, we are confident in the structure's viability. We are now focused on navigating the necessary processes and procedures across multiple jurisdictions. Given the complexity involved, we can't commit to a specific timeline, but rest assured we are dedicating all our efforts to making this a reality. This transition is a critical step for Yatra and our shareholders, aligning us with the market and unlocking value. We'll provide updates as we continue to make progress. As we look ahead to fiscal 2026, we are encouraged by the momentum across our business. Strong corporate client acquisition, continued growth in our MICE segment, and ongoing investment in our proprietary technology platform, including AI-powered personalization and booking tools position us well for the next phase of growth. For FY '26, we're introducing preliminary guidance of 20% growth in revenue less service cost or gross margin, and 30% adjusted EBITDA growth driven by three pillars: expansion in corporate travel; continued scaling of MICE and hotels; and full cost synergies from Globe Travel. I would just like to highlight that the MICE business does have a certain amount of seasonality with fiscal Q2 being the strongest quarter, followed by Q3, Q4, and then Q1. So the margins and the profit will get appropriately seasonalized as well. But on the whole, we are confident of achieving the guidance that we are setting for ourselves. Before I close, I also want to provide a quick update on recent geopolitical developments that deeply impacted travel demand in India. April began on a strong note for us. But following the unfortunate incident in Pahalgam, one of India's key summer travel destinations, and the subsequent escalation of tensions between India and Pakistan, we experienced a temporary disruption in travel activity. This led to a short-term dip in both leisure and corporate travel, particularly in the northern part of India. During this period, we worked proactively with our airline and hotel partners to support customers through flexible cancellation and rebooking options. I'm pleased to report that with the situation now stabilizing and a ceasefire in effect, we've seen a strong recovery in booking volumes across the country, excluding the directly impacted areas where demand is gradually expected to normalize. In closing, we believe Yatra is well positioned for sustained success. Our emphasis is on high-margin growth, operational excellence, and strategic innovation. Thank you for your support, and I'll now request our CFO, Anuj, to brief you on the financial details. Anuj, over to you.

Anuj Kumar Sethi, CFO

Thank you, Dhruv, and good morning, everyone. Let me brief you on our financial performance for the period under review. For the fourth quarter of financial year 2025, revenue from operations grew 114% year-on-year to INR2,192 million, approximately USD25.7 million, driven by a 54% increase in hotels and packages growth in MICE and inorganic growth contributions. More notably, our gross margins, revenue less service costs jumped 34% year-on-year to INR1,094 million, approximately USD12.8 million, driven by our focus on higher-margin areas like Corporate Travel and MICE. Adjusted EBITDA was up 28% year-on-year to INR90 million approximately USD1.1 million, yielding an 8.2% adjusted EBITDA to gross margin. For the annual results of financial year 2025, the revenue from operations grew by 90% year-on-year to INR7,957 million, approximately USD93.1 million, fueled by stellar growth in overall Corporate Travel business. Adjusted EBITDA rose 28% to INR344 million, approximately USD4 million. Net profit turned positive, reaching INR24 million, approximately USD0.3 million, a 106.5% improvement from last year. Looking at liquidity, the cash and cash equivalent and term deposits stand at INR1,960 million, approximately USD23 million as of March 31, 2025. While gross debt reduced from INR638 million, approximately USD7.5 million as of March 31, 2024, to INR546 million, approximately USD6.4 million as of March 31, 2025. This strong financial foundation provides us with ample flexibility to pursue growth initiatives and strategic investments. Dhruv, handing back to you.

Dhruv Shringi, CEO

Thank you, Anuj. And we would now like to open the call for questions.

Operator, Operator

Thank you very much. Our first question comes from Scott Buck with H.C. Wainwright. Scott, your line is now open. Please go ahead.

Scott Buck, Analyst

Hi, good morning guys. Thanks for taking my questions. Dhruv, if the situation were to further deteriorate along the Pakistan border, how much of the business has historically been tied to that region?

Dhruv Shringi, CEO

Yes, Scott, the northern part of India accounts for almost 25% to 30% of our overall business volumes. But what ends up happening is that while that might be the origination of the business, it is also the travel endpoint for travelers coming into this region. So on an overall basis, I think it's safe to say that over 30% of the business would get impacted if something were to escalate further.

Scott Buck, Analyst

Okay. That's helpful. And then I understand it's a little early given your prepared remarks, what can you tell us about the proposed corporate structure? And what does that mean for share fungibility?

Dhruv Shringi, CEO

As I mentioned in my remarks, we've got a structure in place that we believe works given the time it has taken to develop this structure across multiple jurisdictions involved. I think that itself is a key achievement. Now it's about ensuring that all the procedures associated with this structure are put in place over the next couple of months.

Scott Buck, Analyst

Yes. Okay. And we should get even more clarity over the next 2, 3, 4 months.

Dhruv Shringi, CEO

That's right. Yes.

Scott Buck, Analyst

It sounds like. Yes. Perfect. Perfect. I appreciate that. And then on MICE, you guys have made some really nice progress there. Are there acquisition opportunities out there that could help you even accelerate that further?

Dhruv Shringi, CEO

Sure. We continue to evaluate those opportunities. We've done one about six months ago, and we are in the process of fully integrating that. I think that should get done in the current quarter itself, which will then free us up to start looking at other opportunities going forward.

Scott Buck, Analyst

Yes, that's helpful. And then last one for me. The guidance for fiscal year '26 suggests some operating leverage, but how much capacity do you have for future revenue growth before you have to make some significant investments in OpEx? I guess, can you grow the business 50% from here without having to add meaningfully on the cost side?

Dhruv Shringi, CEO

We believe we can grow by at least 30% to 40% without needing to change the cost structure significantly. That level of growth should be achievable given that the escalation in operating costs is primarily due to legal and professional fees associated with the structure we are working on. Otherwise, our cost structure has remained fairly constant year-over-year.

Scott Buck, Analyst

Yes. Perfect. I appreciate the added color guys. It's very helpful.

Dhruv Shringi, CEO

Thank you.

Operator, Operator

Thank you very much. We currently have no further questions. So I will hand back over to Manish for any closing remarks.

Manish Hemrajani, VP, Investor Relations

Thank you, Ezra. Thank you, everyone for joining the call today. As always, we are available for follow-ups. Thank you.

Anuj Kumar Sethi, CFO

Thank you.

Dhruv Shringi, CEO

Thank you.

Operator, Operator

Thank you very much, Manish, and thank you, Dhruv, and Anuj for being today's speakers. That concludes our conference call. We appreciate everyone for joining. You may now disconnect your lines.