IPO-Bound ixigo Slips Into The Red, Reports Loss Of INR 21 Cr In FY22

IPO-bound online travel aggregator ixigo reported a consolidated loss of INR 21 Cr in the financial year 2021-22 (FY22) as against a profit of INR 7.5 Cr in FY21, hit by the adverse impact of COVID-19 pandemic on travel demand.

Though ixigo saw a 180% year-on-year (YoY) jump in its operating revenue to INR 379.6 Cr from INR 135.5 Cr in FY21, a significant surge in expenses hurt the startup’s bottom line. ixigo’s total expenses in FY22 almost tripled to INR 402.5 Cr from INR 135.7 Cr in FY21.

ixigo earned INR 13 Cr as revenue from advertising, a YoY increase of about 92%. On the other hand, ticketing revenue was the biggest contributor to its total operating revenue at INR 261.9 Cr.

On the expenses side, customer refunds and cancellation costs saw the biggest jump in FY22, surging over 11X to INR 61.5 Cr from INR 5.3 Cr in the previous fiscal year. 

The introduction of a free cancellation product for flights business from August 2021 and an increase in free cancellation transactions across business segments largely contributed to the surge in expenses in the category.

Advertising and sales promotion also witnessed a 567% jump to INR 57.5 Cr during the year from INR 8.6 Cr in FY21. The acquisition of Confirm Ticket and Abhibus also partly contributed to the surge in the expenses.

The startup announced the acquisition of Hyderabad-based bus ticketing and aggregation platform AbhiBus in August last year, while Confirm Ticket’s acquisition announcement came in February 2021.

Meanwhile, ixigo’s distribution cost also increased to INR 61.6 Cr in FY22 from INR 50 Cr in FY21.

However, the biggest contributor to its total expenses in FY22 was spending on employee benefits. The expenses under the head increased more than 173.4% to INR 95.1 Cr from INR 34.8 Cr in FY21 due to an increase in salaries, wages, bonuses, and ESOP expenses.

In a letter to the shareholders, Aloke Bajpai and Rajnish Kumar, cofounders of ixigo said, “…we continued to retain the nimbleness and agility to react rapidly to the changing business environment due to the impact of Covid-19 pandemic. We chose not to lay off any employee in the team as we understood that, above everything else, this was a humanitarian crisis.” 

Talking about the business’s growth trajectory at the end of FY22, when the impact of the pandemic had largely settled down, Bajpai and Kumar said the demand for train reservations in the country had surpassed pre-pandemic levels, but daily flight passengers and bus passengers hadn’t fully recovered to the pre-pandemic levels. 

“International flight schedules have resumed from March 27, 2022, and we expect that international flights will commence recovering in FY23, though the Russia-Ukraine situation has led to an increase in oil prices that continues to keep fares on the higher side, preventing more rapid recovery,” the cofounders added.

ixigo aggregates and compares real-time travel information such as prices, availability of flights, trains, and other modes of transport, and competes with EaseMyTrip, Nasdaq-listed MakeMyTrip, among others. 

The sharp recovery in global travel demand with the reducing impact of the pandemic has provided a boost to the online travel aggregators (OTAs) in recent times. 

ixigo received the Securities and Exchange Board of India’s (SEBI) nod for its INR 1,600 Cr IPO in December last year and is on track for its public listing.