Yatra 2Q27 Earnings Conference Call - YATRA ONLINE INC

Financial Performance:

• Q2 FY27 Revenue: Operations revenue decreased 39% YoY to ₹2,136 million ($22M); driven by lower MICE volumes.
• H1 FY27 Revenue: Operations revenue declined 28% YoY to ₹4,015 million ($42M).
• Gross Margins: Remained resilient; Q2 gross margin flat at ₹1,255 million ($13M); H1 gross margin increased 3% YoY to ₹2,482 million ($26M).
• Profitability: Adjusted EBITDA in Q2 was negative ₹32 million ($0.3M) vs positive ₹212 million ($2.2M) prior year; H1 Adjusted EBITDA was ₹184 million ($2M), down 56% YoY. Net loss in Q2 was ₹22.3 million ($0.23M); H1 net loss was ₹1,802 million ($18M).
• Segment Margins: Air business margin improved to 4.45% (up from 3.95%) with 15% gross booking growth; Hotel/Packages margin moderated to 7.37% (down from 8.86%) due to volume decline.
• Liquidity: Cash and cash equivalents plus term deposits stood at ₹2,304 million ($24M) as of September 30, 2026.
• Cost Drivers: Q2 adjusted EBITDA decline attributed to ₹2.7M increase in other expenses, including legal/regulatory costs from unsolicited tender offers and higher affiliate commissions.

Guidance and Future Outlook:

• Market Recovery: Anticipates a non-uniform recovery across destinations and segments; cautious on near-term timing pending affordability and connectivity improvements.
• MICE Sector: Expects gradual recovery indicated by sequential growth (37% QoQ) and a stronger Q3 order book; views this as an upside opportunity rather than a dependency.
• Growth Strategy: Priorities include deepening enterprise relationships, cross-selling employee leisure travel, expanding SME/mid-market reach via "Travel Pro," and scaling expense management via "Recap."
• Operational Efficiency: Plans to leverage AI and automation to improve service quality and operating leverage as transaction volumes scale.
• Long-term View: Conviction remains strong on India's travel opportunity despite structural headwinds; focus on building a scalable business to translate opportunity into sustainable shareholder value.

Business Segments and Product Lines:

• Air Travel: Core strength; gross bookings grew 15% YoY, with passenger volumes declining only 2.4% (outperforming 6% industry decline). Revenue realization and supplier commercials drove margin expansion.
• Standalone Hotels: Demonstrated healthy 20% YoY growth in gross bookings; expanding inventory in tier 2/3 cities and strengthening supply chains independent of MICE trends.
• Corporate Travel: Gross bookings increased 18% YoY; 54% of existing customers expanded spend, and 177 new corporate accounts added in the year.
• Travel Pro (SME/Mid-market): Secured >30 customer closures in Q2 with ₹825M ($9M) annual potential; leveraging existing infrastructure to capture new market segments.
• Recap (Expense Management): Secured 25 wins (8 live, 5 implementing); aims to deepen enterprise relationships by expanding beyond booking to full expense ecosystem.
• MICE: Gross bookings declined 63% YoY due to larger corporate program deferrals and shift to smaller groups; however, sequential growth of 37% signals early recovery signs.
• International Expansion: Partnership with Kanu Travels initiated; partnership is revenue-generating and contributing positively at the operating level.

Market and Competitive Landscape:

• Industry Headwinds: Domestic air traffic declined 6% YoY; international passenger traffic for Indian carriers fell 19% YoY due to capacity rationalization and higher fuel costs.
• Pricing Pressures: Domestic average ticket prices rose 26% YoY; international fares rose 20%, impacting consumer affordability.
  Geopolitical Factors: West Asia conflict, currency depreciation (INR), and elevated fuel costs negatively impacted long-haul outbound and MICE segments.
• Competitive Position: Yatra outperformed the broader domestic aviation market in passenger volumes; gaining market share through distribution network strength and supply capabilities.

Risks and Challenges:

• Geopolitical & Macroeconomic: Ongoing conflict in West Asia, currency volatility, and elevated airfares continue to weigh on demand and traveler confidence.
• Operational Disruptions: Connectivity issues and capacity constraints affecting passenger volumes and travel itineraries.
• Corporate Budget Constraints: Higher travel and accommodation costs forcing corporates to adjust budgets, destination choices, and program timing, specifically impacting MICE.
• One-off Costs: Legal and regulatory expenses related to recent unsolicited tender offers impacted near-term profitability.
• Market Volatility: Uneven recovery pace creates uncertainty regarding the timing and mix of growth across different travel categories.

Management Commentary and Tone:

• Tone: Measured yet confident; management acknowledges near-term industry contraction but emphasizes structural strength and resilience in core businesses.
• Strategic Focus: Emphasis on "building during disruption," prioritizing disciplined execution, scalable infrastructure, and deepening enterprise relationships over short-term market timing.
• AI Adoption: Views AI not just as an interface but as a critical tool for improving service economics and automation efficiency.
• Customer Centricity: Commitment to moving beyond booking channels to become a trusted partner offering visibility, control, and comprehensive travel solutions.

Analyst Questions and Answers:

• Status: No questions were asked during the Q&A session.

Other Key Points:

• Technology Investment: Continued investment in GCP cloud infrastructure and AI-driven workflows; AI-handled chats up 25% sequentially; cancellations via chat up 67% sequentially.
• Efficiency Gains: Operating headcount efficiencies improved by ~5% YoY despite growth in core business volumes and new team additions.
• Supply Side: Ongoing efforts to digitize fragmented accommodation supply in India to improve reliability and fulfillment capabilities.
• Accounting Treatment: Affiliate commission costs are recognized consistent with historical treatment and the business continues to generate positive contribution margins.