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[What The Financials] What Made Yatra Lose Revenue And Still Cut Losses By 70% In 2019?

[What The Financials] What Made Yatra Lose Revenue And Still Cut Losses By 70% In 2019?

23.6% yearly fall in the company’s revenue

In terms of Q-o-Q performance, Yatra turned profit to a significant loss

Yatra has signed a definitive agreement for merger acquisition with Ebix

In what could be its last independent annual earnings report before the merger with Ebix, Gurugram and New York-headquartered online travel aggregator Yatra has reported its performance for the financial year ending March 31, 2019.  Curiously, the company managed to have a fall in revenue, yet reduced its losses significantly in the year. In an SEC filing, Yatra has shown that its revenue decreased from INR 1224.8 Cr in FY18 to INR 935.8 Cr this year. This is a 23.6% yearly fall in the company’s revenue.

Yet, surprisingly, the company’s losses have improved substantially. From INR 405 Cr losses in FY18, the company has reduced losses by 70.5% reaching INR 119.35 Cr this year.

Coming down to quarterly performance, shareholders would not be happy that the company turned a profitable Q3 into a loss-making Q4. The company said that its loss for Q4 2019 was INR 85.9 Cr. Notably, in Q3 2019 the company reported a profit of INR 13.5 Cr, which improved on a loss-making Q2 2019 with an INR 16 Cr loss.

At the same time, Yatra revenue for Q4 2019 improved barely 10% reaching INR 225.84 Cr from INR 220.47 Cr in Q3 2019.

However, the start of the year was a major fall in revenues and the company hasn’t yet recovered from the same, even though it is trying bit by bit. In Q4 2018, the company had a revenue of INR 328.57 Cr, which was followed by INR 283.97 Cr revenue in Q1 2019.

Comparing Q1 2019 to Q4 2019, the company has barely 20% recovery in the last 9 months.

Is Yatra’s Adjusted Revenue A Valid Indicator?

Dhruv Shringi, cofounder and CEO, Yatra Online, said the company has delivered “solid growth in the fourth quarter of fiscal year 2019 despite a challenging macro environment for the aviation sector, which enabled us to exceed our full year adjusted revenue guidance.”

He emphasised that in Q4 both its consumer business and business travel platform continued to deliver strong Adjusted Revenue growth and through a combination of cost reductions and optimisation of marketing spend, it made significant progress in reducing the Adjusted EBITDA Loss.

He has also claimed that the company had to accrue certain charges related to Jet Airways being referred to insolvency process and Reservation Content Movement, which adversely impacted its Adjusted EBITDA for the quarter by INR 26.69 Cr.

In terms of yearly performance, the company’s EBITDA loss improved 35.7% from INR 191 Cr in FY18 to INR 122.8 Cr in FY19. As far as quarterly performance, the company’s EBITDA loss improved 30% from INR 62.3 Cr in FY18 to INR 43.3 Cr in FY19.

“We expect the macro environment to remain challenging on the aviation front for the next couple of quarters, however, despite this, we continue to make good progress towards our objective of achieving break-even Adjusted EBITDA in the near term,” Shringi added.

In simple terms, adjusted revenue represents revenue and other income after deducting service costs and adding back expenses related to consumer promotions and loyalty programme costs that has been reduced from revenue due to the adoption of new accounting standard, IFRS 15.

The yearly marketing and sales promotions expenses have reduced by almost 80% Y-o-Y reaching INR 80 Cr in FY19 from INR 415 Cr in FY18. However, including the expenses for consumer promotions and loyalty program costs would lead this to INR 438.1 Cr in FY19, making it a 5.5% increase Y-o-Y.

Further, the company’s personnel expenses also reduced by 12% reaching INR 255 Cr in FY19 from INR 290 Cr in FY18. The company said that this was primarily due to a decrease in employee share-based payment expenses, outsourcing of customer contact centers and certain rationalization in headcount.

The company in the statement has said that it believes that adjusted revenue provides investors with useful supplemental information about the financial performance of its business and more accurately reflects the value addition of the travel services that it provides to its customers.

Yatra: Key Operating Performances

Founded in August 2006 by Sabina Chopra, Manish Amin and Dhruv Shringi, Yatra provides a full range of travel-related services such as domestic and international air ticketing, hotel booking, homestays, holiday packages, bus ticketing, rail ticketing, activities, attractions and ancillary services.

The company claims to have tie-ups with 70K hotels in India and nearly 800K hotels across the globe. It is backed by IDG Ventures, Vertex Venture Management, Norwest Venture Partners and other investors.

Despite rising losses, Yatra has made a string of acquisitions geared towards growth and expansion. These include Travelguru, Travel-Logs, WhatsApp-based concierge app Dudegenie and Bengaluru-based auto rickshaw aggregator MGaadi. In July 2016, Yatra signed a reverse merger agreement with NASDAQ-listed firm Terrapin 3 Acquisition Corp(TRTL).

In 2017, Yatra acquired corporate travel service provider Air Travel Bureau (ATB)for an undisclosed amount. However, the acquisition has been stuck in legal proceedings after ATB alleged that balance of ATB’s outstanding shares owned by the sellers in exchange for a final payment to be made at a second closing has not been done yet.

In February 2019, Yatra India acquired all of the outstanding shares of  Travel.co.in Limited, the corporate travel business of PL Worldways, to strengthen its base in southern India.

During a rocky year, the company’s operating performance had different results. On one hand, gross bookings for the year raked in INR 9254 Cr in FY18, it improved to INR 11,115 Cr in FY19. The yearly performance was led by Air ticket as a segment which contributed INR 7915 Cr, contributing 85.5% to the overall performance.

The performance of hotels segment stayed almost similar at INR 1335 Cr for FY19 from INR 1338 Cr in FY18.

In terms of quarterly performance, the gross bookings improved a mere 10% Q-o-Q, reaching INR 2920 Cr from INR 2639 Cr in FY18. The share of air ticketing increased from 87% in Q3 to 89% in Q4 2019.

In terms of hotels revenue, the performance fell nearly 12% decreasing to INR 308 Cr in Q4 2019 from INR 320 Cr in Q3 2019.

The yearly performance of the company also makes significance as it has recently signed a merger acquisition agreement with Ebix. For the merger, each ordinary share of Yatra will be entitled to receive 0.005 shares of a new class of preferred stock of Ebix. Following the completion of the transaction, Yatra will become part of Ebix’s EbixCash travel portfolio alongside Via and Mercury and will continue to serve customers under the Yatra brand.

At the time of publishing, US markets had just opened and Yatra showed a positive performance for its results at $4.41 (11:15 AM).