Good day and welcome to the Yatra Fourth Quarter and Full Year 2022 Results. Today's conference is being recorded. And at this time, I would like to hand it over to Manish. Please go ahead, sir.

Manish Hemrajani - Vice President, Corporate Development and Investor Relations

Thank you, Arina. Good morning, everyone. Welcome to Yatra's fiscal fourth quarter and full year 2022 financial results for the period ended March 31, 2022. I'm pleased to be joined on the call today by Yatra's CEO and Co-Founder, Dhruv Shringi.

The following discussion including responses to your questions reflects management's views as of today, June 3, 2022. We don't undertake any obligation to update or revise the information.

Before we begin our formal remarks, allow me to 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. Copies of this and other filings are available from the SEC and also on the IR section of our website.

With that let me turn the call over to Dhruv. Dhruv, please go ahead.

Dhruv Shringi - Co-Founder & Chief Executive Officer

Thank you, Manish, and good morning, everyone. Before I begin, I just want to remind everyone that part of the March quarter, especially the month of January was significantly impacted by Omicron. It seems a long time back now, but I just wanted to put that out and hence we should view the discussion and numbers for the quarter in light of that fact.

During the quarter, we witnessed a swift recovery post an Omicron-induced slowdown in the month of January with both corporate and consumer businesses recovering to an exit run rate higher than a pandemic high in the recently reported December quarter. Despite January being severely impacted by Omicron, which led to a shutdown in various parts of India, our adjusted revenue for the quarter came in at INR980 million, approximately $13 million which is up 1% year-over-year and down only 6.2% Q-on-Q, despite air passenger traffic declining 20% Q-on-Q. This was on the back of strong recovery in business travel, especially in the second half of Feb and the month of March, as the impact of omicron began to subside.

Adjusted EBITDA for the quarter was INR53 million, which is approximately $0.7 million and this includes the investment behind the freight initiatives. So if you exclude that out, our adjusted EBITDA for the travel business would have been INR72 million, which is approximately $0.9 million for the quarter. Both our adjusted revenue and EBITDA came in ahead of consensus [Phonetics]. We saw both business and consumer travel recover quickly through Feb and March and have continued on their upward trajectory in April and May.

In fact, domestic passenger traffic in May 2020 was back to 90% of pre-COVID levels and even our corporate travel business is currently trending at 90% plus of pre-COVID levels. International travel has also begun to recover strongly post the easing of international travel restrictions towards the end of March 2022. The IMF expects India's GDP to grow at about 8.2% in 2022 and 7% in 2023. As it relates to Yatra looking at how the travel industry has unfolded over the past decade, we see that travel tends to grow at a multiple of GDP in developing markets. And recent third party estimates have said the Indian travel sector to grow at a staggering 17.3% CAGR through 2029. We believe we should be able to achieve faster than market growth as we continue to take share in the corporate travel market and as the consumer market continues the secular shift from offline to online.

Now, let me provide you an update on the India filing. As you may recall, our Indian subsidiary Yatra Online Limited filed a draft red herring prospectus on March 25 with the Securities and Exchange Board of India and that's the main stock market regulator in India for a potential initial public offering and listing of equity shares on the Indian stock exchanges. We are continuing to work with the regulator to obtain the necessary clearances for the DRHP. We expect this offering is completed to strengthen our balance sheet and better position us to take advantage of the rapidly recovering leisure and business travel market in India.

The faster than anticipated recovery that we witnessed in corporate travel, fastest strong resurgence in regarding to travel on the leisure side bodes well for our IPO planned later this year. We believe there is significant demand for online travel stocks in India and that the IPO should be well received. While there are worries about recession in the U.S. and Europe, India's economy is growing at a brisk pace as it continues its journey from a developing to a developed nation. The Indian IPO structure also opens up an opportunity for us to explore strategic alliances with partners who might not have been comfortable with an overseas structure.

Now coming to our March quarter results. Adjusted revenue for the quarter ended March 31, 2022 came in at INR980 million, approximately $13 million. This was up 1% year-over-year and down 6.2% Q-on-Q, partially due to seasonality and partially due to the impact of Omicron. Year-over-year, air gross bookings grew 45%, largely on account will increase in yield, while adjusted revenue grew 5% as margins normalize from the abnormally high margin levels that we had seen in the previous year.

The margins that you're seeing right now, I think are more indicative of the kind of margins that we would expect to see in the near term going forward. Despite the effect of Omicron, year-over-year hotel gross bookings and room nights grew by 7.9% and 7.8% respectively. Adjusted EBITDA of INR52.9 million also improved by 20% Q-on-Q and excluding the investment behind the trade business came in at INR72 million in the quarter. As of March 31, the balance of cash and cash equivalents and term deposits on our balance sheet was INR1.368 billion or $12 million - $18 million, sorry.

The decrease in cash balances from the previous quarter is primarily on account of increase in working capital deployment due to the recovery of the corporate travel business. The recovery has been rapid in both leisure and business travel and I'm pleased to say we are now rapidly heading back to pre-COVID levels and if recovery remains on track, I strongly believe that we should be able to exceed pre-COVID levels in the coming quarters. Gross bookings for business travel where we are the market leaders, grew 161% year-over-year in the March quarter and are trending to exceed 90% of the pre-COVID levels in May 2022, levels not seen since February 2020, and we remain optimistic that it should get back or even exceed pre-COVID levels in the near term.

We believe that the stronger than anticipated recovery in business travel that we have witnessed should put to rest any lingering doubts that people might have had about the future of business travel. It is very evident that human beings are social animals and while online tools upgrade enablers, human being still prefer a face-to-face interaction. We see improving inbound interest and continue to sign new customers at an increasing pace onto our corporate platform. Given the highly fragmented nature of the market, we believe we will continue to take market share going forward and that our corporate business should accelerate growth to levels higher than where they were pre-pandemic as we see an accelerated shift towards online booking, especially when contracts come up to the end of life and rebidding.

We also recently launched a metasearch tool on our corporate platform. This easy to use tool should help us expand our market share in the online bookings of business travel. With the implementation of this option, large corporations who have multiple vendor partners will be able to search across those vendors and display the best available options for their employees on a single screen, along with rates directly contracted by the corporates with airlines and hotels. The addition of this tool to our platform now gives us the ability to expand our corporate travel platform into international markets.

On the hotel front, our strategic partnership with Flipkart-owned Cleartrip to source domestic hotel content from Yatra went live towards the back end of the quarter and we have witnessed a very strong uptake in the subsequent months. We believe that this partnership has the potential to more than double our hotel volumes over the next 12 months. We believe that the incremental volume that we drive through this partnership will not only be accretive from an EBITDA perspective, but will also help strengthen our relationship with our existing hotel partners and lead to better long-term value creation. While the competitive intensity has risen modestly since the last quarter, overall competitive levels remain knowledgeable on the hotel's front and our brand continues to resonate positively with Indian travelers.

Let me now give you an update on upgrade initiatives. As you look towards digitizing the logistics space, our corporate travel relationships with both airlines and enterprise executive management together with our technology capabilities, gives us a significant head start. We have rapidly scaled up this business over the past few months and we believe this business longer term has the potential to be even larger than our corporate travel business. Following a successful Indian IPO, I believe people will be in a position to accelerate growth in freight, which is receiving increasing interest because of the freight and logistics challenges that the world is facing.

We are optimistic about Yatra's continued growth and recovery based on the trends that we are witnessing and believe that our well recognized brand and healthy balance sheet puts us in a position to capitalize as the recovery continues to gain momentum. We believe the opportunity ahead for Yatra is massive and we believe the Indian internet travel will hit an inflection point in the coming years, as we get past COVID. We believe corporate travel where we are the leaders, we'll recover extremely quickly and we've already seen enough and more evidence of the same.

In addition, the efforts we've made during the pandemic to improve operational efficiency will lead to significantly higher levels of profitability and cash flow. So with that, I want to thank all of you once again for your patience and understanding. And I think, our business is today poised to grow and recover very strongly and we've seen enough and more traction today to be confident about the future of business travel.

With that, I'm going to hand it back to Manish to open it up for Q&A.

Manish Hemrajani - Vice President, Corporate Development and Investor Relations

Arina, can you please open up the call for Q&A. Thank you.

Question & Answers

Operator

[Operator Instructions] We'll take our first question from Scott Buck from H.C. Wainwright. Please go ahead.

Scott Buck - H.C. Wainwright - Analyst

Hi. Good morning, guys. Thank you for taking my questions. Dhruv, do you have a dollar amount of the Omicron impact in January in terms of revenue?

Dhruv Shringi - Co-Founder & Chief Executive Officer

I think if you were to look at it and look at this from a linear operating range of about 20% to 25% at least off the quarter on account of that.

Scott Buck - H.C. Wainwright - Analyst

Okay. That…

Dhruv Shringi - Co-Founder & Chief Executive Officer

The way to look at it would be, if you look at December traffic numbers, they were okay in 2 million [Phonetics] and real traffic numbers came in at 6.4 and February was 7.6, just to give you a sense of how those numbers changed over those couple of months.

Scott Buck - H.C. Wainwright - Analyst

Okay, perfect. That's very helpful. And then I was hoping to get maybe a little bit more granularity around travel volumes and demand. I'm just curious, we're almost back to pre-COVID levels, but I'm wondering if the habits of travelers are similar, right? Our fair - average fare is at a similar rate, our people traveling for shorter periods, are they still staying closer to home, what are you guys seeing there?

Dhruv Shringi - Co-Founder & Chief Executive Officer

Sure. So fares have obviously gone up on the back of oil prices going up. And we've seen airfares go up materially Q-on-Q, but that has been deterred the demand. See what we've seen is that on the leisure side firstly, there's been a lot of disposable income that people have saved over the last couple of years and everyone's been waiting to go out and travel and this is literally the first clear window in the summer holiday period that people have had to travel. So we're seeing people traveling in droves in this period. It's still, we've been more focused and more skewed towards domestic as opposed to international. International airfares are relatively higher compared to where they were historically. But domestic has picked up in very large numbers over the course of the last few months.

On the corporate travel side, however, the story is different. There we've seen international as well recovering very quickly, despite the higher airfares. So we are seeing corporate recovery. As I said, we are now at a gross booking levels of almost 90% of pre-COVID levels. So we are seeing very strong corporate recovery also happening.

So in terms of - if I was to pitch a difference between where it was pre-COVID and where it is right now in terms of behavior, the big difference we are seeing is in terms of online adoption, especially on the corporate side. So that's the big change, which is happening. And in terms of the consumer side, the growth is much more broad based across Tier 2, Tier 3 towns as well, rather than being limited to the main eight, 10 city. So online penetration in India seems to truly have deepened during the COVID period.

Scott Buck - H.C. Wainwright - Analyst

Great. That's very helpful color. And then last one from me. I'm just curious, Dhruv, do you have a sense of what maybe your share of the corporate travel market is today versus what it was pre-COVID?

Dhruv Shringi - Co-Founder & Chief Executive Officer

We don't have a scientific number on that, Scott. So, but anecdotally, at least the kind of recovery we are seeing, it seems that our recovery is faster than the market. The feedback that we have from the airlines and from our hotel partners is that recovery, in general, is around the 75% to 80% mark, and we are now trending at about 90%. So I think we are outpacing the industry, but we don't have any scientific way of putting that across.

Scott Buck - H.C. Wainwright - Analyst

Okay. Perfect. Understood. Well, I appreciate the time guys. Thank you very much.

Dhruv Shringi - Co-Founder & Chief Executive Officer

Sure. Thank you, Scott.

Operator

Thank you. Our next question is from Anja Soderstrom in Sidoti. Please go ahead.

Anja Soderstrom - Sidoti & Company - Analyst

Hi. Thank you for taking my questions. So I'm just curious, do you have the passenger traffic numbers for April and May?

Dhruv Shringi - Co-Founder & Chief Executive Officer

Yeah. The passenger traffic numbers for May, we are trending at about 90% of pre-COVID peak.

Manish Hemrajani - Vice President, Corporate Development and Investor Relations

And April is 10.5 million.

Anja Soderstrom - Sidoti & Company - Analyst

Okay. Thank you. And also in terms of the Indian IPO and the timing, how do you see the evaluation being affected by the pullback in the market in the U.S.? You alluded to that India has not been as bad, but what do you see in terms of how that might affect the valuation of the listing in India?

Dhruv Shringi - Co-Founder & Chief Executive Officer

See we think we are significantly undervalued in the U.S. right now. And our peers continue to trade at much higher multiples. Even if we were to look at a pullback, right, which has been there in India at very modest levels unlike the U.S. where it's been very stock, it would still put us at a very, very healthy premium where we are currently trading.

Anja Soderstrom - Sidoti & Company - Analyst

Okay. Thank you. That was helpful. And then in terms of the freight business, you gave some color on that, that's trending very strongly for you. But how do you - how does that sort of performing compared to your expectations and do you think that might be even coming stronger in the - how much revenue did it contribute this year and how do you think that going to be contributing for the next year, compared to what you had expected before?

Dhruv Shringi - Co-Founder & Chief Executive Officer

See for the trade business, we said it will contribute between $4 million and $5 million in the coming fiscal year, right, which is the period from April 2022 to March 2023. We are very bullish on this business because what we've seen is that the supply chain disruption that has happened last year, the kind of price increases that companies have seen across the board, they've made them really realize that they need to adopt technology to be able to get a better handle on freight. And that's here bear good and rich fruit for us right now. Because we don't have to do a very hard sell, right? Companies themselves today are looking for technology solutions that brings some transparency into this whole big industry. So we are seeing very good traction at this point in time and we remain very bullish on the kind of numbers that we've put out for this business.

Anja Soderstrom - Sidoti & Company - Analyst

Okay. Thank you. That was all from me.

Dhruv Shringi - Co-Founder & Chief Executive Officer

Sure. Thank you.

Operator

[Operator Instructions] And our next question is from Lisa Thompson at Zacks Investment Research. Please go ahead.

Lisa Thompson - Zacks Investment Research - Analyst

Good morning. just to get a little deeper on the freight question. Can you just kind of describe what's your pitch to a customer when you show them what you're offering and what are they doing now that you're going to change for them?

Dhruv Shringi - Co-Founder & Chief Executive Officer

Sure. So today how freight is booked is that customers will typically reach out to the various freight liners, ocean liners and in the case of air freight to the airlines or to intermediaries, they will then get one or two responses from these guys. And on the basis of that they will then form an opinion of which one to choose. What we are looking at doing so.

Firstly, this is a very time consuming process where there are multiple emails, which are being exchanged between people, multiple phone calls being exchanged between the customer and either the intermediary or the ocean liner and this will typically result in one query will have anywhere upwards of 15 to 20 emails being exchanged because there are so many variables in this. What we are looking at doing is putting together a technology platform where on a single screen once you've entered your input criteria, on a single screen you will be able to see all the options of various ocean liners and on another screen all the airliners, which are available to the customer. And this instantly brings more transparency into the market.

Today, when we speak to the CFOs of the purchasing heads of some of the large customers that we work with, their constant drive is that they don't have transparency on what options exist for them. They don't know if their you guys have reached out to - it's a five ocean liners, who are operating on that route or there is only one operating, right? And they don't know whether the guys have reached out to all five or they've just being lazy and reached out to only one or two. So there is no way for them to know whether they've got the best deal available.

By having this platform in front of them, it will bring instant transparency to the booking process. So that's what we are trying to solve for and move to the power literally from the intermediary as a platform bring the park to the hands of the consumers.

Lisa Thompson - Zacks Investment Research - Analyst

All right. So are you getting paid as a subscription service? Or do you get a piece of the transaction?

Dhruv Shringi - Co-Founder & Chief Executive Officer

So at this point in time, it's more based on the piece of transaction, but yes, longer term, we expect this to become more of a subscription service. But today because we're coming from a relatively low base and we think there's a lot of growth opportunity out here, it's more revenue accretive we think to be linked to a transaction value, which is being processed through the platform.

Lisa Thompson - Zacks Investment Research - Analyst

All right. Good. Going back to international travel. So India has opened up somewhat to that, has anymore country has been opened up since the quarter ended and which ones are left that are meaningful that you would like to see open?

Dhruv Shringi - Co-Founder & Chief Executive Officer

See today we are at a stage where pretty much everything is open. There are very limited restrictions. There still are some restrictions around people needing to have booster shots in place when they're traveling to certain countries in Europe or needing RT-PCR test to be done. But otherwise, most countries are today open. So that way, we are seeing very strong recovery happening in international travel.

One of the reasons why I said international travel is still at a lower level compared to domestic, it's because the international air fares are still quite high. International airlines flying from India, especially westbound have to avoid flying over Ukrainian airspace or Russian airspace, so that had extends the flying time and hence the price of the ticket. But the lag, which is there in consumer spend, typically that we would have seen on international travel is being made up today by business travelers. So out of India is today virtually impossible to get a seat to Europe or the U.S. in front of the aircraft, so business class, first loss recovery over there has happened at a much faster pace than economy travel out of India to Europe and U.S. and that's been driven largely by recovery in the business travel side of things.

Lisa Thompson - Zacks Investment Research - Analyst

Okay. Great. Thank you. That's all my questions.

Dhruv Shringi - Co-Founder & Chief Executive Officer

Sure. Thank you.

Operator

Thank you. There's a follow-up question from Anja Soderstrom in Sidoti.

Anja Soderstrom - Sidoti & Company - Analyst

Yes. Hi. Thank you for taking my follow-up question. So I'm just curious with a shortage of pilots and the crews that we see in the U.S. and bottlenecks at the airports in Europe specifically, how do you think that might affect your business in the coming quarters and months? And how is that also - how is India fairing with those same kind of problem?

Dhruv Shringi - Co-Founder & Chief Executive Officer

I think there are two aspects to it. What we are seeing firstly is that Indian carriers are able to ramp up faster, because they don't face the same crew constraint. Some of the European carriers are definitely facing this as a challenge, so supply on certain European routes is still lesser than where it was pre-COVID levels. But what we're also seeing is we're seeing some of the Middle Eastern carriers step in aggressively to try and muscle into those routes. So while the European carriers might be losing a bit of market share, we think some of the Middle Eastern carriers are gaining at their expense. So overall from a passenger perspective, we are seeing enough supply being available. It's just that it might not be the most direct route, which was available earlier. So some of the flights on the direct routes might be limited, but at least the option to fly via some of the Middle Eastern cities is definitely available to customers.

Anja Soderstrom - Sidoti & Company - Analyst

Okay. Thank you. That was helpful.

Operator

There are no other questions at this time.

Dhruv Shringi - Co-Founder & Chief Executive Officer

Great. Thank you, Arina. Thank you everyone for joining the call today. As always, we're available for follow-ups. Have a wonderful weekend.

Operator

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Q4 2022

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