EaseMyTrip Eyeing At Least 3 New Acquisitions By FY23 End: Cofounder Prashant Pitti

Online travel aggregator EaseMyTrip last week reported a 4% year-on-year (YoY) rise in its consolidated net profit to INR 28.2 Cr in Q2 of FY23. However, on a sequential basis, profit declined over 14% from INR 33.1 Cr, hurt by higher advertising and promotional expenses during Q2.

Though profit margins looked lacklustre during the quarter, EaseMyTrip’s operating revenue and Gross Booking Revenue (GBR) rose sequentially as well as on a YoY basis. It clocked a GBR of INR 1,977.7 Cr in Q2 FY23, up 120.9% from INR 895.1 Cr in Q2 FY22 and about 19% higher from INR 1,663.1 Cr reported in Q1 FY23.

Meanwhile, the leading travel aggregator’s operating revenue also jumped to INR 108.4 Cr in Q2 from INR 56.6 Cr in the year-ago quarter and INR 87.6 Cr in Q1 FY23.

Founded in 2008 by Nishant Pitti, Rikant Pittie, and Prashant Pitti, EaseMyTrip’s online platform enables customers to book air, rail, and bus tickets, hotels, holiday packages, and more. It competes with the likes of MakeMyTrip, ixigo, Yatra, and most recently, Flipkart.

It is pertinent to note that EaseMyTrip has been a bootstrapped startup and is profitable today, while its major competitors continue to report losses. Its peer, Nasdaq-listed MakeMyTrip reported a net loss of $6.8 Mn in Q2, although it was a 15% decline on a YoY basis.

In an interview with Inc42 post the announcement of Q2 results, EaseMyTrip cofounder Prashant Pitti shared the startup’s roadmap for the upcoming quarters, including its acquisition and expansion plans, his take on the overall recovery in the travel industry, growth in air travel in India, and more. 

Here are the edited excerpts from the interview:

Inc42: How has the recovery phase been like in the overall travel industry over the last one year given the hit due to the Covid-19 pandemic and changes post that?

Prashant: Basically, I no longer believe we are in a recovery phase. As an industry, we have done slightly similar to pre-Covid numbers since the last two quarters. So, the industry has recouped. The industry is at 100% of what it was earlier.

However, EaseMyTrip being a growing company, we have doubled up our GBR from the last and our best-ever quarter pre-Covid. So pre-Covid, in our best-ever quarter, we had somewhere about INR 900 Cr GBR and in this quarter we have done INR 1,977 Cr. Hence, this is the best-ever quarter for the company. Primarily because we are a growing company, we are now gaining market share.

Inc42: EaseMyTrip’s profit increased 4% YoY in Q2, while the jump in revenue was even higher, which means expenses pulled down the profit. Could you comment on that?

Prashant: Basically, the revenue has jumped up dramatically but the profits didn’t. The primary reason was our one-off marketing expenditure for the last quarter. We were the co-sponsors for the Asia Cup and also the Road Safety Series. We invested heavily in these two cricket series in the last quarter because of which we had a one-time marketing expense of INR 13-INR 15 Cr. Now, if you add that INR 13-INR 15 Cr in the profit after tax, you will see the jump to be the equivalent. So, nothing else has changed in the organisation except for this particular marketing endeavour which happened and which we have amortised in this particular quarter only. We have capitalised that in this quarter itself. 

However, the value of the event will continue to supersede because the Asia Cup was seen by almost about 49 Cr people across India. So, the value which we have derived from it will continue to happen over a long period. But because of this expense, you are seeing that the profit is not as great as what the overall business was. 

Inc42: Can you give a break up of segment-wise growth in terms of non-air travel business and air travel business? 

Prashant: We have been running this business for the last 14 years and predominantly our primary business was air ticketing all throughout. Hotel, bus, train, and holidays segments actually started only about four or five years ago. The numbers are demonstrating good growth. At the time of listing, about 97% of our business was air ticket business, but now 90% of our business is air ticket business and 10% comes from other revenue sources. This number is also growing as we speak. In fact, our hotel business specifically grew almost 70% on a YoY basis.

Inc42: How much is the contribution split between domestic travel and international travel? 

Prashant: Currently, about 70% of our business is domestic and 30% is international. 

Inc42: What is the growth roadmap from here on?

Prashant: At EaseMyTrip, we are focusing on three big things. First is basically continuing to increase our market share, second is international expansion, and third is inorganic acquisitions. 

At EaseMyTrip, we have started a Middle East office, and offices in the UK, Thailand, and Bangkok. At these places, we have actually set up a shop. For the Middle East, we have created easemytrip.ae so that people there can use it for their travel needs and pay us in Dirhams. So, it’s basically expanding to the other geography and serving other consumer bases outside India, and that is panning out really well. 

For example, for the Middle East one, it’s been only two quarters since we run it, starting from April 2022. In the first quarter, in the months of April, May, June, we did business of about INR 7 Cr put together. Now, in the last quarter, the months of July, August, and September, we did a business of INR 24 Cr. So, we have a humongous advantage waiting for us to be captured. 

At EaseMyTrip, our cost structure remains practically the same. Our entire operations, our entire team, and technology sit out of India. However, now we are competing with the companies which are based in the Middle East or the UK. If you use the same efficiency on which we have already built our business so far and start competing with companies which are based outside India, how much of cost arbitrage we have! As a result, we have launched the same value proposition of not charging convenience fees in the Middle East as well. In India, our competitors charge INR 400 to INR 600 per passenger as convenience fees and in the Middle East, they charge INR 1,500 to INR 2,000 per passenger. So, the market is waiting for EaseMyTrip to be taken. Hence, growing in such markets is the second endeavour which we are focusing on.

 The third endeavour is basically to grow our business inorganically. At EaseMyTrip, we are looking forward to acquiring travel-related companies which are profitable. We are looking to grow along with them and help them to grow faster. 

Inc42: You mentioned about the Middle East and the UK, any other markets you are looking to foray into? 

Prashant: We have started an office in Bangkok and operations in Singapore. These are the locations we have shortlisted and have started our operations. The basic premise remains the same, technology teams continue to run from India, the operation continues to run from India. It’s just that we are creating a different domain name for these places because you have to show that in their language and you have to create their kind of experiences. 

Inc42: Are you not setting up any offices in these regions?

Prashant: There are very small five-seater office spaces, which is basically to maintain the relationship with the airlines, hotels, and the payment gateways.

Inc42: Coming to the acquisition part, how many companies are you looking to acquire and within how many months?

Prashant: Before this year closes, there’ll be a couple of other acquisitions.

We have already done two acquisitions, and in the current financial year, at least two or three more acquisitions will happen.

Inc42: How is market competition right now? And where does EaseMyTrip stand in this regard, especially after Flipkart started providing hotel and flight booking services? 

Prashant: To answer that, let me talk about the financials. Q1 is the summer holidays and Q3 is the winter holidays and festivals, hence, these two quarters do really well. Q2 is usually a lull period in travel. 

Despite that, EaseMyTrip saw a GBR increase of 20% quarter-on-quarter (QoQ). If you compare that with our listed competitors, it either remained the same for Q2 compared to Q1 or has shrunk a bit. 

Inc42: What is your outlook for the rest of FY23? 

Prashant: Last quarter, since we did business of around INR 1,650 Cr, our extrapolated annualised GBR would have been somewhere around INR 6,500 Cr for FY23. Given how strong the last quarter went, I would say that we probably would be able to touch INR 7,500 Cr as total GBR for FY23.

Inc42: When are you planning to launch your Save Now Buy Later (SNBL) product? Have you got the licences for the same?

Prashant: There is no licence required for the SNBL product. It’s just that the customers will deposit money in our wallet. Later on, they can utilise that wallet to make any bookings on our platform. So there’s no licence required for this particular product. And within this quarter, I think, we should be able to launch this product. It’s going to be launched primarily in India.

So, the way we are thinking about it is that basically customers anyways do this thing right now that if they have to plan for holidays, they start saving money for it. 

You make a plan of how much money you want to put in your EaseMyTrip wallet for the next 10 months. Let’s say you decide that you want to save INR 10,000 every month, so you put INR 10,000 on EaseMyTrip in this particular month and continue it for 10 months straight up, and hence you have put in INR 1 Lakh. We will give over and above up to 20% on that amount after the 10th month, and you can utilise the entire amount which would basically become INR 1.2 Lakh to book your hotel, bus, train, holidays. However, we are still working on that particular model for what all customers can use that amount. 

Also, customers can choose and pre-decide how much amount and for what duration they want to put their money in, and accordingly we will be able to give them a bump up. 

Inc42: Will EaseMyTrip use the wallet amounts to make business investments?

Prashant: EaseMyTrip already has about INR 250 Cr sitting in the bank right now in the form of FDs. The plan is not to utilise this money but to lock in customers so that in future they plan travel via our platform.

Inc42: What do you think is the growth trajectory for the overall travel industry going ahead? 

Prashant: Travel is a great industry to be in right now. There is no other country in the world which can say that there are going to be 66 new airports coming up in the next decade, except for India. Because of this, the overall domestic market from FY22 to FY32 is going to grow more than 3.8X. Hence, it’s a great time to be in the industry and at EaseMyTrip, since we are the only ones profitable, we look forward to capturing this growth.