On Thursday, Yatra Online (NASDAQ:YTRA) discussed fourth-quarter financial results during its earnings call. The full transcript is provided below.

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Summary

Yatra Online reported a 16.3% year-over-year increase in gross bookings to INR 21,007 million (USD 222 million) and a gross margin increase of 6.1% to INR 1,227 million (USD 13 million).

The company is embedding AI into its operations to improve user experience, compliance, and operational efficiency, positioning AI as a structural advantage in travel management.

Despite a challenging macroeconomic environment, Yatra added 53 new corporate customers in Q1, providing significant future revenue potential.

The international travel segment faced headwinds due to geopolitical issues, impacting the MICE segment significantly, though early signs of recovery are observed.

Strategic initiatives include investments in B2B growth through TravelPro, expansion of the RECAP expense management solution, and international expansion with Kanoo Travel in the Middle East.

Yatra's air business showed robust growth, with air passenger volumes increasing by 5% and gross air bookings growing by 18% year-over-year.

The company remains optimistic about future growth, expecting operating leverage from current investments to support revenue expansion and improved EBITDA margins over time.

Full Transcript

Dhruv

We believe that AI can fundamentally change the economics of managed travel. AI is automating routine workflows, surfacing saving opportunities in real time, improving policy compliance at the point of booking, and accelerating expense reconciliation. As a result, companies are able to handle higher transaction volume with fewer manual touch points, reduce cost leakages for their customers, and unlock better operating leverage as they scale. Our investments are firmly aligned with these trends.

We are embedding AI into search, recommendations, and conversational interfaces so that travelers can find the right options faster and with less friction while staying within policy. We are also using AI and machine learning to automate service interactions, flag out-of-policy spends, and provide travel and finance leaders with richer, more actionable insight into their programs. In practical terms, this translates into a better user experience, stronger compliance for our corporate clients, lower cost to serve, and a more scalable operating model for us.

We believe AI will increasingly be a structural advantage in travel management for us, not just enhancing the customer journey, but also improving margins and returns for our businesses. As we deepen these capabilities across the Yatra Online platform, we see a clear opportunity to drive both sustainable top line growth and continued improvement in our operating efficiency over time. Let me now turn to the broader travel ecosystem. The travel industry has gone through a period of disruption over the last few months.

International travel was particularly impacted with the West Asia conflict, resulting in air connectivity issues and affecting MICE activities. At the same time, we are operating in a structurally expanding market. India's overall online travel market is expected to grow at a high single- to low double-digit CAGR over the next several years, outpacing many global peers, supported by rising disposable income, rapid digital adoption, and improving air and rail connectivity across Tier 2 and Tier 3 cities.

Domestic travel has remained resilient despite global challenges. Air passenger traffic in India grew around 2.3% year over year in the period, driven by a young, increasingly affluent, and mobile population that is prioritizing travel and experience over discretionary goods. We're also seeing sustained strength in non-air categories such as hotels, as travelers look for short-haul getaways and value-for-money options. Outbound and international travel have seen more mixed results.

The West Asia conflict and rerouting of flights led to higher airfares, longer routes, and uncertainty around certain long-haul destinations, which weighed on outbound travel sentiment. Industry-wide inquiries for common international destinations declined by roughly 10% to 15% during the period. At the same time, the medium-term outlook for outbound travel from India remains robust, with multiple industry reports projecting low-teens growth in outbound spend over the next decade as many more Indians travel overseas for leisure, business, and education.

As visa regimes ease, connectivity improves, and new destinations ramp up targeted campaigns at Indian travelers, we see a long runway for growth in this segment. Our discussions with foreign tourism boards also support this view, with foreign tourism boards keenly awaiting the normalization of the situation to initiate joint marketing campaigns to stimulate demand. Given our higher business mix of international travel and MICE, these near-term headwinds have had a disproportionate impact on our business.

However, based on past cycles and what we are already seeing in the market, we expect this to recover quickly as the macro environment stabilizes. As we have seen in the past, revenge travel following periods of disruption has been very strong and prompt, both in India and globally, and we expect it to be the same this time around. In fact, we are already seeing early signs of this in our own numbers. In the first half of the current quarter, our MICE bookings are trending approximately 50% higher than the first quarter.

Importantly, if we step back from these temporary factors, the underlying travel opportunity in India continues to strengthen. Rising disposable incomes, improving airport and road infrastructure, and a growing preference for experiences are supporting greater demand for domestic tourism, while corporate mobility is being supported by continued economic activity and investments. Importantly, the shift from offline to online travel still has a long way to go.

Online channels currently account for only a small part of business travel and are expected to grow meaningfully faster than the broader market over the coming years. Against this backdrop, our Q1 performance reflects the resilience of our franchise and the benefits of our diversified model. Despite the challenging external environment, gross bookings increased 16.3% year over year to INR 21,007 million, which is approximately USD 222 million. Gross margin increased 6.1% to INR 1,227 million, or approximately USD 13 million.

Total transactions grew 11%, and air passenger volume increased 4.8%, roughly double the industry growth rate, reflecting continued market share expansion for us. Our corporate business also continues to demonstrate strong traction. During the quarter we added 53 new corporate customers with an expected annual billable potential of INR 2.2 billion, which is approximately USD 23 million. This provides a healthy pipeline of incremental business as these accounts progressively ramp up.

We believe this is where Yatra Online's differentiated positioning becomes particularly relevant. Our diversified business model across corporate and consumer travel, air, hotel, and other travel services, combined with our strong corporate relationships, extensive domestic hotel supply, and technology-led platform gives us a strong foundation to capture the growing travel opportunity in India. As the market continues to shift towards organized and online travel, and as outbound demand normalizes from current geopolitical disruptions, we believe we are well positioned to benefit from the structural transition and to deliver sustainable, profitable growth. With this, I will now hand you over to our CEO, Siddharth Gupta, to walk you through the quarter's performance.

Siddharth Gupta, CEO

Sid, thank you so much, Dhruv. Building on Dhruv's comments, I want to spend a few moments on something that has been fundamental to Yatra throughout our journey, which is our ability to innovate, adapt, and continually rethink how travel should work. Over the last two decades, the travel industry has been reshaped repeatedly through each period of disruption. Our response has not simply been to manage the immediate challenge. We have used these periods to question established ways of working, rethink the fundamentals of our business, and build for a more resilient future.

That mindset has been part of Yatra from the beginning, and I think our approach to the current environment is another example of it. Coming to Q1, the larger headline is that Yatra continued to deliver strong underlying growth despite a challenging macroeconomic and geopolitical environment for the travel industry. Gross bookings grew 16.3% year on year to INR 21,007 million, approximately USD 222 million, while total transactions increased 11%, supported by healthy growth across air and hotel segments.

Gross margins increased 6.1% year on year to INR 1,227 million, approximately USD 13 million. Revenue from operations stood at INR 1,879 million, approximately USD 20 million, down about 10% year on year, primarily reflecting lower MICE top line during the quarter. This is the group corporate travel. Adjusted EBITDA stood at INR 216 million, approximately USD 2 million, compared to INR 206 million last year, up nearly 5% year on year. There are two important factors behind this movement.

The first factor was the impact of temporary macro geopolitical disruptions on MICE, group corporate travel, and corporate travel. The MICE top line was approximately INR 300 million, about USD 3 million lower year on year, mainly due to disruption in international group travel. This had approximately INR 30 million, which is about USD 0.3 million, impact on our gross margins. In addition, the shift from international to domestic group travel increased competitive pressures, resulting in a further impact of about INR 30 million on gross margins.

So I want to reiterate that we view this drop of INR 60 million on gross margins as a short-term transitory factor rather than structural change in the business, and we expect the impact to normalize going forward as travel patterns have started to stabilize already. Corporate travel demand was also impacted because of elevated fares, while the timing of airline incentive programs created an additional near-term headwind during the quarter. The second factor, however, is one that I want to spend a little more time on because it reflects a deliberate choice we have made.

We have continued to invest and build through this period of turbulence. Rather than allowing short-term disruption to define our priorities, we have used this period to invest in capabilities and capacity that we believe can materially expand Yatra's future growth opportunity. We've been doing this through a three-pronged approach. First, strengthening and scaling our core B2B business. We have continued to invest behind TravelPro, our small and medium enterprise offering, including building out the people, platform, and go-to-market capabilities required to expand our reach within the corporate market.

We are already seeing early validation of that investment. Of the 53 new corporate customers won during Q1, 30-plus customers representing approximately INR 800 million, or USD 8.5 million, came through TravelPro. While still early, this gives us confidence in the potential of the new go-to-market engine we have built around our core corporate offering. Second, expanding our addressable market through RECAP, our expense management solution. Since its launch, we have already added more than 20 customers.

We continue to invest in the product and technology behind RECAP and believe it can develop into another meaningful growth engine as we scale the proposition. Third, taking our corporate platform beyond India. Over the preceding two quarters, we have invested in making our technology globally ready, including the product infrastructure, solutions, and teams required to support international deployment. Our partnership with Kanoo Travel gives us the opportunity to take the capabilities built and refined over many years in India into a large adjacent market in the Middle East alongside a mature and highly respected regional partner with deep customer relationships and market knowledge. While the region itself is currently experiencing some near-term disruption, we believe the long-term opportunity is very significant. Importantly, across all three initiatives, we've been building capacity ahead of the revenues we expect them to generate as they scale. While this investment is visible in our cost base today, we believe it materially expands the future earning capacity of the business. Periods of turbulence have often been the periods in which Yatra has done some of its most important building.

We believe this period will be no different. Let me now turn to the individual businesses. Our air business delivered healthy growth during the quarter, with gross air bookings increasing approximately 18% year on year to INR 16,579 million, approximately USD 175 million. Growth was supported by higher average ticket price along with continued expansion across our distribution channels. Importantly, air passenger volumes grew approximately 5% year on year, nearly twice the industry growth rate.

Despite capacity constraints, elevated fares, and a softer demand environment, we continued to grow passenger volumes materially ahead of the market, resulting in further market share gains. Air margins remained under pressure during the quarter. Our focus remains on building a healthy and sustainable air business with continued discipline around unit economics and the quality of growth. Moving to hotels and packages, the segment delivered gross booking growth of approximately 13% year on year.

Within this segment, our standalone hotels business continued to perform particularly well, with gross bookings growing approximately 34%, revenues increasing by about 62%, and room nights growing approximately 30% year on year. This performance reinforces our conviction that our investments in expanding hotel supply is the right strategic priority. We're seeing these investments drive stronger demand across our businesses while increasing the contribution from hotels, a higher-margin and increasingly important part of Yatra's business mix.

On MICE, corporate group travel, as I mentioned earlier, MICE faced a particularly challenging operating environment during Q1 given its greater exposure to international and discretionary travel. Geopolitical uncertainties led to delays in corporate decision making, and in several cases a shift from international programs towards short-haul and domestic destinations happened. As discussed earlier, the combination of lower top line and temporary margin compression resulted in an approximate INR 60 million year-on-year impact on MICE gross margins during the quarter.

But what is important, however, is what we are seeing as we enter Q2. The Q2 MICE pipeline is significantly stronger than Q1 and has a much healthier margin profile. Based on the visibility that we have today, we believe the Q1 impact was temporary, and we are seeing encouraging signs that MICE business is returning to a growth phase. Coming now to our corporate travel business. Corporate travel remains one of Yatra's key strategic growth pillars.

Despite elevated fares and disruption to international travel, the underlying business remained resilient and customer acquisition momentum continued to be strong. As I mentioned earlier, during Q1 we added 53 new corporate customers, and these additions provide visibility into incremental volumes as customers are onboarded and progressively ramp up. Beyond new customer acquisitions, we remain focused on increasing wallet share with our existing customers and expanding the range of services consumed through the Yatra platform.

The structural opportunity remains significant. With online penetration in India's managed corporate travel still relatively low, we believe our scale, technology platform, extensive hotel supply, and long-standing enterprise relationships position us well as the market continues to digitize. As we look forward, we have several reasons to be constructive. MICE is seeing a stronger pipeline and improved margins, corporate travel is recovering, air margins are improving, and hotel continues its strong growth trajectory.

At the same time, our investments are expanding our growth opportunity. TravelPro is strengthening our B2B go-to market, RECAP is opening new customer segments, and the Kanoo partnership is expanding and extending our corporate capabilities beyond India. As these factors come together, we expect the operating capacity we have already built to support a much larger revenue base, driving operating leverage and rebuilding EBITDA margins towards 20% plus.

As corporate travel normalizes and our growth initiatives scale, we believe this EBITDA margin can progress into the 30% plus range over time. The macro environment remains uncertain, but the underlying opportunity has not changed. India remains one of the world's most attractive long-term travel markets, and Yatra today has a broader set of growth opportunities than at any point in our recent history. Our priorities therefore remain clear: strengthen the core, expand our addressable market, take our capabilities into new geographies, and continue using technology, AI, and automation to build a more scalable Yatra.

This is how we have approached periods of disruption throughout our 20-year history, and it is how we intend to build the next phase of Yatra's growth. Thank you, everyone. I will now request our CFO, Anuj Sethi, to brief you on the financial performance of the quarter.

Anuj Sethi, CFO

Thank you, Siddharth. Good morning, everyone. For the first quarter of financial year 2027, on a consolidated basis, our revenue from operations decreased 10.4% year on year to INR 1,879 million, equivalent to approximately USD 20 million. Gross margin, defined as revenue less service cost, rose 6.1% year on year to INR 1,227 million, approximately USD 13 million. Adjusted EBITDA increased 4.9% year on year to INR 216 million, approximately USD 2 million, translating to a 17.6% adjusted EBITDA-to-gross-margin ratio.

As a result, profit after tax came at INR 41 million, equivalent to approximately USD 0.4 million. In terms of segmental performance, our air ticketing passenger volume increased by 4.8% year on year to 1,264,000. Our gross air bookings grew 17.6% year on year to INR 16,579 million, equivalent to approximately USD 175 million, and our gross margin rose 8% year on year to INR 699 million, with margins declining from 4.6% to 4.2%. Under the hotels and packages segment, hotel room nights grew by nearly 30% year on year to 548,000.

Gross bookings increased 13% year on year to INR 3,876 million, equivalent to approximately USD 41 million, while gross margin expanded 24% year on year to INR 386 million, approximately USD 4 million, with margins improving from 9.05% to 9.95%. On the liquidity front, cash and cash equivalents and term deposits stood at INR 2,162.8 million, equivalent to approximately USD 22.8 million as of 30 June 2026. With this, I would like to hand it back to the moderator and open up for the question-and-answer session.

Thank you.

OPERATOR

Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question for optimum sound quality, and if muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. There are no questions at this time. I will now pass the call back to Siddharth Gupta for closing remarks.

Siddharth Gupta, CEO

Thank you so much. I would like to thank all of you for joining the call today on behalf of the Yatra family. I hope we were able to give you enough insights and were able to address all the queries you might have. If you have any further questions, you can reach out to our IR partner at ICR Inc. Thank you once again for participating in the call.

OPERATOR

This concludes today's call. Thank you for attending. You may now disconnect. Thank you.

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