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Yatra closed retail stores, reduced marketing costs by 83% to reach profitability in Q3FY19

Online travel company Yatra reported a 34.4% year-over-year fall in consolidated revenues to Rs 220.4 crore, and a 40.8% fall in profit to Rs 13.7 crore for the quarter ended December 31, 2018. However, the company’s losses from operations reduced by 48.4% in the quarter to Rs 32.5 crore, and adjusted EBITDA loss reduced by 60.3% to Rs 15.4 crore.

CEO Dhruv Shringi said that Yatra made substantial progress to reach breaking-even. He added that the improvement in numbers was because the company optimized marketing costs, drove up cross-sell revenues, closed some loss-making corporate customers, outsourced their call-center, and also closed their physical retail stores.

Service cost decreased by 33% year-on-year to Rs 93.6 crore in this quarter since the sales of holiday packages fell after physical retail stores were shut down to drive profitability. 

Adjusted Revenue grew 16.6% to Rs 233 crore in the quarter, owing to an 5.7% increased in air ticketing revenue, and a 10.5% increase in hotels and packages revenue, along with a 108.6% increase in income (listed as ‘Other Income’ in the financials) from cross-sales, advertisement income, and government grants.

The company has also reduced its marketing and personnel costs:

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  • Personnel expenses: decreased by 17.5% to Rs 59.4 crore due to a decrease in employee-share based payment expenses to Rs 3.38 crore this quarter from Rs 13.2 crore in Q3FY18. Personnel expenses also reduced because Yatra outsourced its customer call center.
  • Marketing & promotion expenses reduced by 83.9% to Rs 16.5 crore this quarter.

Here are the company’s segment financials this quarter:

Air ticketing

Air ticketing accounted for 68.5% of Yatra’s adjusted revenue this quarter, and 62% of the company’s adjusted revenue in Q3FY18. Air ticketing revenue fell by 38.6% to Rs 84.1 crore in this quarter. However, adjusted revenue grew by 5.7% and was driven by a 13.4% year-on-year increase in gross bookings of Rs 2,330 crore in this quarter.

  • Gross bookings: Rs 2,330 crore, 13.4% YoY increase
  • Air passengers booked: 2.48 million, 7.8% YoY increase
  • Net revenue margin: 6.2%, 6.7% YoY decrease due to change in “business mix”

Hotels & Packages

Revenue from hotels and packages fell 40% year-on-year to Rs 107.9 crore this quarter, but adjusted revenues increased 10.5% YoY to Rs 48.3 crore. The adjusted revenues includes customer promotional expenses of Rs 33.9 crore. The company shifted focus to room nights / hotels, against holiday packages since it shut down its physical retail stores.

  • Gross bookings: Rs 340 crore, 8% YoY fall
  • Stand-alone room nights: 600,000 19.2% YoY increase
  • Packages passengers travelled: 29,000, 36% YoY fall
  • Net Revenue Margin: 15.1%

Other Revenue

Other revenue increased 88% to Rs 28.4 crore this quarter from Rs 15 crore in Q3FY18. Adjusted revenues increased by 108.6% YoY to Rs 40 crore, “primarily due to increase in advertisement and alliances income.”

Other income increased to Rs 10.2 crore from Rs 4.1 crore, primarily due to the entitlement of a grant from the Government of India.

Developments at Yatra this quarter

Acquisition of Chennai-based travel company: In January, Yatra acquired the corporate travel business of Chennai-based travel service PL Worldways to strengthen its presence in South India, adding 100 clients to its existing 700 corporate customers. The size of the deal was not disclosed.

Advertising agreement with Times Group: The same month, Yatra entered into a 5-year advertising agreement with Bennett Coleman & Co, better known as the Times Group. As part of the deal, BCCL has subscribed to unsecured non-convertible debentures with a face value of Rs 19.5 crore in Yatra India which are 10% interest redeemable at Rs 21.4 crore after 5 years. The full contract is here (at the bottom).

Onboarded Axis Bank: Also in January, Yatra onboarded the country’s third-largest private bank Axis Bank as a corporate client: Yatra has created a customized platform for the bank to enable self-booking and management of travel details.

In December 2018, Yatra partnered with Agoda to offer Indian hotels rooms for Agoda’s customers, giving it access to accomodation in over 1,300 locations in India.

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Download: Release | SEC filing

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