Yatra 2Q27 Earnings Conference Call - YATRA ONLINE INC

Financial Performance:

• Q2 FY27 revenue from operations declined 39% YoY to INR 2,136 million ($22 million), driven primarily by lower MICE volumes; H1 FY27 revenue dropped 28% YoY to INR 4,015 million ($42 million).
• Gross margin remained resilient, staying flat YoY in Q2 at INR 1,255 million ($13 million) and increasing 3% YoY in H1 to INR 2,482 million ($26 million).
• Adjusted EBITDA in Q2 was a loss of INR 32 million ($0.3 million) vs. a profit of INR 212 million ($2.2 million) in Q2 FY26, resulting in a net loss of INR 22.3 million ($0.2 million) for the quarter.
• H1 FY27 adjusted EBITDA fell 56% YoY to INR 184 million ($2 million), with a net loss of INR 180.2 million ($1.9 million) for the half-year.
• Liquidity position is stable with cash, cash equivalents, and term deposits totaling INR 2,304 million ($24 million) as of September 30, 2026.
• Segmental margins showed divergence: Air gross margin improved to 4.45% of gross bookings (up from 3.95%), while Hotels and Packages gross margin moderated to 7.37% (down from 8.86%) in Q2.

Guidance and Future Outlook:

• Management maintains a long-term conviction in India's travel opportunity, citing growing consumer bases and the shift toward organized online travel despite near-term headwinds.
• Near-term outlook is measured; growth pace depends on improving connectivity, affordability, and traveler confidence following geopolitical disruptions in West Asia.
• MICE business shows early signs of sequential recovery (+37% QoQ) and a stronger order book, expected to normalize as corporate programs resume, though recovery is not uniform across destinations.
• Future strategy focuses on disciplined execution, building operating leverage through AI/automation, and expanding addressable markets via Travel Pro (SME) and Recap (expense management).
• International expansion through the Kanu partnership is in early stages but generating positive operating contributions.

Business Segments and Product Lines:

• Air: Outperformed the broader market with gross bookings up 15% YoY and domestic passenger volumes down only 2.4% vs. a 6% industry decline; sequentially, domestic volumes grew ~3% against a 15% industry drop.
• Corporate Travel: Gross bookings rose 18% YoY, with 54% of existing customers increasing spend and 177 new corporate accounts onboarded; strategic focus on deepening relationships and capturing wallet share.
• MICE: Gross bookings declined 63% YoY due to a strong prior-year base and reduced large international programs; however, business mix shifted toward smaller groups with sequential volume improvements.
• Hotels & Packages: Standalone hotel gross bookings grew 20% YoY, driven by expanded inventory in Tier 2/3 cities and improved distribution; overall segment bookings down 21% YoY due to MICE drag.
• New Initiatives: Travel Pro secured 30+ customer closures (INR 825 million annualized potential); Recap secured 25 customer wins with 8 live; Kanu partnership continues to scale.

Market and Competitive Landscape:

• Industry faced significant headwinds: domestic aviation passenger traffic fell 6% YoY/16% sequentially, while international traffic dropped 19% YoY due to high fuel costs, capacity constraints, and a depreciating rupee.
• Domestic average ticket prices rose 26% YoY, and international fares rose 20%, pressuring affordability and demand.
• Yatra is gaining market share in air travel despite the contraction, attributed to a strong distribution network and improved supply capabilities.
• The market is shifting from large international corporate programs to smaller, flexible domestic group travels to manage budget uncertainties.

Risks and Challenges:

• Geopolitical instability in West Asia is disrupting international travel networks, increasing fuel costs, and depressing outbound long-haul demand.
• Macroeconomic pressures including rupee depreciation and high airfares are reducing traveler confidence and affordability.
• Corporate travel budgets are under strain, leading to deferred programs and smaller MICE event sizes, impacting margins.
• Increased "other expenses" of ~USD 2.7 million in Q2, largely due to legal and regulatory costs from an unsolicited tender offer, negatively impacted adjusted EBITDA.

Management Commentary and Tone:

• Tone is measured yet confident; management distinguishes between structural long-term opportunities and temporary operating disruptions.
• Leadership emphasizes resilience, noting that core businesses (Air, Standalone Hotels, Corporate) continue to grow despite industry contraction.
• Management views current disruptions as an opportunity to strengthen the business, citing increased investments in technology, AI, and market expansion during the downturn.
• Focus is explicitly on becoming a trusted partner for enterprises rather than just a booking channel, aiming to deepen relationships and cross-sell.

Analyst Questions and Answers:

• No analyst questions were asked during the Q&A session; the session was closed immediately after the financial presentation.

Other Key Points:

• AI implementation is driving operational efficiency, with chat-handled inquiries up 25% sequentially and cancellations via chat up 67%, alongside a 5% improvement in operating headcount efficiency.
• Investments in GCP technology expansion, Travel Pro, and Recap contributed ~INR 52 million in costs but are expected to drive future operating leverage.
• Management highlighted that the strong Q2 FY26 MICE base complicates year-over-year comparisons, but the sequential growth trajectory is positive.