Good day, and welcome to the Yatra’s Third Quarter 2022 Financial Results Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Manish Hemrajani. Please go ahead.

Thank you, Jennifer. Good morning, everyone. Welcome to Yatra’s fiscal third quarter 2022 financial results for the period ended December 31, 2021. I am 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, April 1, 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. These include expectations and assumptions related to the impact of COVID-19 pandemic and the ongoing conflict in Ukraine. For a description of these risks, please refer to our filings with the SEC and our press release. With that, let me turn the call over to Dhruv. Dhruv, please go ahead.

Thank you, Manish, and good morning, everyone. Thank you for joining us this morning. Before I discuss the results, I’d like to discuss what we believe will be a major milestone in Yatra’s evolution. As we shared with you last week, we are continuing to work with bankers and lawyers in India to explore our options for an India IPO. To that end, as we shared earlier, we took the first step in the process with the filing of the Draft Red Herring Prospectus with SEBI, which is the main market regulator in India. Our brand is and continues to resonate positively in India with travelers and our corporate travel business continues to recover strongly. We believe this would translate into a successful IPO that could significantly enhance Yatra’s strategic flexibility and act as a catalyst to improve shareholder value going forward. Benefits of this listing, which would support Yatra’s ongoing strategy and value creation opportunities include access to an additional pool of capital including retail and institutional investors in India who are already familiar with Yatra’s business and brand, but who are currently restricted from participating in the U.S. markets. Providing a liquid stock that can be used for M&A in India, further capital to strengthen the balance sheet and provide working capital to accelerate growth in both corporate travel and trade business, additional sell-side research coverage amongst others. Yatra will begin management road shows in India towards the end of April, early part of May, and we believe which should be in a position to complete the offering by the back end of summer of 2022. Now coming onto our December quarter results. Adjusted revenue for the quarter ended December 31, 2021, came in at INR1.044.9 million, which is approximately $14 million. This was up 33% QoQ and…

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

Yes. [Operator Instructions] And we’ll go first to Scott Buck with H.C. Wainwright.

Hi, good morning, guys. Thank you for taking my questions. First one for me, I’m curious if you’re seeing some of the benefits of the market share gains you’ve made on the corporate side or the new contracts you’ve signed on the corporate side during COVID, now that recovery or activity levels are starting to come back? Or is it still too early for that?

I think we’re beginning to see early signs of that, Scott. Firstly, as I mentioned, we’ve seen corporate travel volumes touch about 75% of pre-COVID levels from the month of March. It’s relatively early to comment on it, but there have been days in the month of March where volume has exceeded – our daily volume has exceeded our pre-COVID levels. So from that perspective, I’m quite hopeful that as we go into April, May, June and as corporations reset their budgets, we should end up seeing a very strong recovery happening in corporate travel for us on the back of not just recovery of our existing customers, but also on account of the new wins.

Great. That’s helpful. As travel activity picks up, both corporate and leisure, are you guys staffed appropriately? Or do you have to do a significant amount of hiring, rehiring, customer service folks or whoever else to meet the higher levels of demand?

So, we’ve done some hiring in the last few months as demand has picked up, and this hiring has been largely on the corporate travel side of things. On the consumer front, we spent the last two years focusing a lot on back-end automation. So our incremental headcount expansion to take care of the increased volume has been negligible. On the corporate travel side, there continues to be – there continue to be areas where customers still want to speak to someone, especially when it comes to international travel, where the regulations around COVID and COVID-related restrictions still continue to exist. So on that front, we are adding some headcount. But the headcount, which is coming in and is coming in typically at the frontline level, and the frontline staff would average somewhere close to about $500 to $600 a month. So it’s not an [indiscernible] headcount, which is being added. Yes.

That’s really good color. And similarly, it looks like marketing – sales and marketing expense was the highest level in two years. Are you comfortable with this level of marketing sales promotion or do you think there’s more required as activity starts to pick up?

I think on the marketing and sales promotion front on this maybe slightly higher than this as we go into the April, May, June quarter, would be there, but then again, it should stabilize in this quarter subsequent to that. April, May, June is leading into the peak summer month. And I think given the kind of revenge travel that we are seeing and the demand uptake, it’ll make sense for us to spend a little bit more on marketing, but it won’t be significantly more. It should be more than made up by the increased revenue that we would generate from that. So whatever incremental marketing spend that you would see, you would still see it being accretive to the bottom line.

Great. That’s helpful. And then last one for me, you kind of touched on it, but given that the last two years have been a little bit unordinary, can you remind us what seasonality looks like in a more normalized environment?

So, the two peak seasons for us are the months of April, May, June, and October, November, December. Those are the two peak periods. And then Jan, Feb, March would be that – in terms of sequencing, April, May, June would be the highest, October, November, December would be the second highest quarter, Jan, Feb, March would be the third highest, and July, August, September would be the leaner.

Okay, perfect. I appreciate all the additional color, guys. Thank you so much and congrats on the quarter.

Thank you. Thanks, Scott.

We will go next to Anja Soderstrom with Sidoti.

Hi, thank you for taking my questions. So I’m just curious about the freight business. How is that progressing? And have you seen any surprises there? Is it better or slower than you expected?

So the freight business continues to recover and in fact grow quite strongly. There was a slight disruption for the freight business in the month of January on account of Omicron, and maybe in the last couple of weeks of December when flights got disrupted. But with international travel opening up and international flights coming back on scheduled and moving away from the bubble agreements, we are seeing a lot more capacity come on stream for international air freight. And I think that’s a great avenue and area for growth for us. So from the freight perspective, we are quite excited right now seeing the international travel and international air freight open up. So that gives us a real incremental avenue for growing up freight business in the coming months.

Thank you. And on a pre-COVID level, roughly how much of your revenue were derived from international travel?

So pre-COVID, about 30% of our revenue was coming from 30% to 35% of our revenue, depending on the quarter was coming from international travel.

Okay. Thank you. And I think you mentioned before that you didn’t expect the corporate business travel to come back fully to pre-COVID levels. But now you’re saying that you think it might come back this year to pre-COVID levels. So how do you – how has that changed?

So what has happened is, through a combination of new customer wins and recovery on our existing customers, we are seeing our corporate travel volumes come back very strongly. As I mentioned, I think there’s also some kind of, when we are talking to our customers, we are figuring out what I might call zoom fatigue. A number of our customers now want to be in front of their customers. They want to be in front of their other team members and meet people physically. So we are seeing a lot of pent-up demand for corporate travel at this point in time. And that pent-up demand is leading to a strong recovery in our corporate travel volumes. So this is what’s happening on an existing customer basis. And then in addition to that, we are seeing new customer wins also coming through and as we go into the new financial year, so India follows an April to March financial year – as we go into a new financial year company set up new budgets, funds go up again. So we would expect to see travel come back very strongly in the April, May, June quarter.

Okay. And to the extent you have one new customers, are they from more in-house that go on to outsourcing, or is it, are you winning those from competitors?

We are largely winning them from competitors and we are also winning, the win is happening on the backup technology adoption. So like we’ve spoken in the past as more and more companies get used to working in a hybrid environment, they’ve realized they can’t do a lot of their business processes manually. And as they move towards automating their business processes, including travel and expense management, we are the market leaders in an automated solution for business travel. We are seeing strong interest towards our products and services.

Thank you. And then just a last one. You have a good cash position and you’re looking to maybe strengthening the balance sheet with this India listing. What are your capital allocation priorities at this point?

Sure. So the capital allocation priorities would be one area would be deploying more capital behind growing the freight and the corporate travel business. The other would be a certain amount of incremental spends on consumer marketing as the market recovers, and we see a lot of event travel happening in the domestic Indian market. So these would be two key areas. And then the third behind that would be a little bit of spend on the tech side of things, as we expand our product portfolio on the corporate travel side.

Okay, thank you. That was all for me.

Sure. Thank you.

We’ll go next to Lisa Thompson with Zacks Investment Research.

Hi, I was wondering if you could talk a little bit about what you see maybe your cash breakeven level is as far as what revenues given your new corporate structure with all the new automation versus pre-COVID?

Sure. So at an operating level, we think cash breakeven should happen between $18 million to $20 million a quarter of revenue, should mean cash flow breakeven for us at an operating level.

Okay. Great and you made a comment that you thought you could get to pre-COVID levels by the end of this year. And if I look back to 2019, you’re doing $36 million a quarter. Do you think that’s going to happen this year?

So 2019, our exit quarter. So if I look at the full year 2019, our exit quarter was, I think, about $23 million in terms of revenue. So that’s the number that we think we should be able to get to in the very near term, it is get to the $23 million number. And if I look at our full year number, full year, we did about $80 million on current exchange rates. So exchange rate has also moved about 20% in dollar terms from 2019 until now. But in current exchange rate terms, we would have done $80 million for the full year of fiscal 2020, which is roughly $20 million a quarter. So we think we are on track in the coming fiscal year to do better than that.

Great. Thank you. That’s all my questions.

Sure. Thank you.

[Operator Instructions] We’ll go next to Jeff Van Rhee with Craig-Hallum.

Great. Hey guys. Thanks for taking my question. Just want to follow up on the last question around margins. I think you had previously given some thoughts of what your EBITDA margin or EBITDA dollars would be around $90 million. Maybe the better question at this point is just what is – take it one step further beyond the breakeven question, if you get to $100 million in revenue, what kind of EBITDA do you think you could throw off? I guess what I’m trying to understand is you’ve got more capital potentially coming in the door through the Indian IPO. And are you pivoting back more to a growth mode as opposed to maybe what I would describe as a more of a balanced mode? I think you had given some pretty aggressive EBITDA margins you thought you could hit. Just what do you think of $100 million?

Yes, I still think, Jeff, that at $100 million, we should be between a 15% to 20% kind of margin levels. I don’t see any reason why we should not be able to get to those margins in a more normalized environment because we’ve seen very strong uptake happening on corporate travel. We are also seeing companies adopting a lot more technology than they’ve done in the past. So the relative servicing cost has gone down quite meaningfully compared to where it was in the pre-COVID kind of era. So I still believe, and I’m confident, that we should be able to deliver a 15% to 20% kind of operating margin as we get to a $100 million number.

Okay, great. Thanks for taking my questions. Congrats.

Yes, not at all. Thanks.

Hi, Jennifer any further questions on the line?

At this time, there are no further questions.

All right, great. Thanks, everyone, for joining the call today. And as always, we are available for follow-ups. Dhruv, anything to add?

No, thank you everyone. Stay safe and thank you.

This does conclude today’s conference. We thank you for your participation.