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[What The Financials] Goibibo Earns 5X Higher Revenue Than Rival Cleartrip In FY20

[What The Financials] Goibibo Earns 5X Higher Revenue Than Rival Cleartrip In FY20

Goibibo reported a revenue of INR 1,595 Cr, whereas Cleartrip was at INR 318 Cr

Both the companies have cut down their losses and expenses in FY2020

Both Yatra and MakeMyTrip noted a 92% dip in Q1 FY2021 amid the lockdowns around the world

Delhi NCR-based travel aggregator Goibibo India, which is owned by MakeMyTrip, has reported an 11% increase in its standalone revenue in the financial year 2020 that ended in March last year. The company earned INR 1,595 Cr in FY2020, of which 99% come through operations. With these figures, Goibibo has returned 5X higher income than fellow Indian online ticketing agent Cleartrip.

In FY20, Mumbai-based Cleartrip reported a 2.5% year-on-year drop in revenue at INR 318.8 Cr. The company’s operational income of INR 273.5 Cr fell by a drastic 10% in the fiscal, ahead of the lockdown which severely impacted the operations since April 2020.

[What The Financials] Goibibo Earns 5X Higher Revenue Than Rival Cleartrip In FY20

Overall, 86.26% of Cleartrip’s turnover came through online travel agent services enabling booking of air tickets and the rest 13% came from the booking of hotel services.

While Goibibo outpaced Cleartrip in terms of revenue, both companies stepped out of FY2020 with reduced expenses as well as losses.

Goibibo cut its spending by 2.9% to INR 1,947.7 Cr, and its net loss reduced significantly by 38.2% to INR 352.52 Cr. Meanwhile, Cleartrip’s expenses dropped 6.8% to INR 333.2 Cr, whereas its loss was cut in half to INR 14 Cr.

[What The Financials] Goibibo Earns 5X Higher Revenue Than Rival Cleartrip In FY20

Both the companies started off their journey back in the mid-2000s. Cleartrip was founded in 2006 by Stuart Crighton, Hrush Bhatt and Matthew Spacie, whereas Goibibo was founded in 2007 by Ashish Kashyap. Goibibo signed a merger deal with MakeMyTrip in 2017.

Over the years, Goibibo has expanded its offerings across the travel tech segment, which explains its higher revenue relative to Cleartrip, which only enables flight, train and hotel bookings. On the other hand, Goibibo also operates bus ticketing platform redBus.in (acquired in June 2013), ride-sharing platform Goibibo Ryde, a SaaS solution for bus operators called YourBus, and agent-focussed travel tech platform Travelboutique.

The current financial statements, for both the companies, are limited to Indian operations, even as they are present in other markets such as the Middle East, South Asia and Southeast Asia.

Interestingly, in FY20, Cleartrip added the ‘Cleartrip for Work’ vertical for individuals travelling for work purposes. Announced in October 2019, the programme runs separately from the Cleartrip corporate travel management vertical.

At the time, the company’s senior vice president Balu Ramchandran had set a tall target for Cleartrip for Work. “In a 12-month timeframe, we have internal targets of getting up to $100Mn-$150 Mn GMV from this product,” he had claimed.

However, that target might have shrunk by a magnitude given the complete upheaval in the travel business in 2020.

Goibibo Goes Big On Ads As Cleartrip Optimises Costs

The spending patterns of the two companies were starkly different as Goibibo spent INR 1,168.9 Cr for advertising and promotions, whereas Cleartrip added advertising expenses as a separate expense item for the first time (based on recent financials). The latter spent INR 59 Cr on ads and promos, which is a fraction of what Goibibo spent.[What The Financials] Goibibo Earns 5X Higher Revenue Than Rival Cleartrip In FY20

According to Cleartrip’s financial statement, the company is making “conscious efforts” to optimise cost. The company believes that its spending on advertising cost this year will create goodwill for its brand, “the benefit of which would accrue to the Company in the future years.”

About 60% (INR 1,168.9 Cr) of Goibibo’s spending went into advertising and promotional expenses, despite the company cutting down spending in this area by 6.4% from FY2019’s INR 1,249.8 Cr.

Spending on employee benefits expectedly rose in FY20 along with the rest of the costs. While it accounted for 13.4% (INR 262.19 Cr) of Goibibo’s spending, employee costs made up 23% (INR 76.5 Cr) of Cleartrip’s expenses — increases of 17.2% and 0.7% respectively from FY19.

Besides all this, Goibibo spent INR 74 Cr on the cost of material, while INR 193.9 Cr was listed under “miscellaneous expenses”, which included doubtful trade receivables, outsourcing fees, business support expenses, website maintenance charges and net loss on foreign exchange fluctuations.

Cleartrip, on the other hand, has added information technology expenses (INR 16.2 Cr) and legal professional fees (INR 23.19 Cr) to its list of key expenses. It managed to cut down its miscellaneous expenses by 40% to INR 110 Cr in FY2020. Miscellaneous expenses included credit card collection charges, other coat of services, commission and brokerage, foreign exchange loss (Net), the procurement cost of tour packages and others.

Will Travel Tech Slide Further In FY2021?

As both the companies have shown steady performance in FY2020, there is no doubt that the FY2021 statements will not be as smooth. The entire tour and travel business had come down to its knees as the world started to step into a covid-induced lockdown and travel restrictions. Even the big guns like MakeMyTrip and Yatra couldn’t help but report a financial downturn.

In the first quarter of FY2021 between April to June 2020, MakeMyTrip recorded a 95.5% annual fall in its revenues. It just earned $6.4 Mn versus $141.7 Mn in the quarter ended June 30, 2019. The performance recovered only 69% in the next quarter, amounting to a revenue of $21 Mn. Similarly, Yatra.com’s revenue too dropped down 91% to INR 19.2 Cr ($2.5 Mn) in Q1 of FY21 versus INR 225 Cr ($32.7 Mn) in Q1 FY20.

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