Indian online travel firm Yatra aims to breakeven in the first quarter of FY20 as revenues continue to expand and promotional costs are on a decline. It has trimmed EBITDA loss by 19 per cent to $3.2 million in the quarter ended September 30, 2018 on improved efficiency in marketing expenditure.
The marketing and sales promotion expenses decreased by 76 per cent to $2.7 million in Q2 of FY19 as compared to $11.4 million in the corresponding quarter of FY18. “We continue to make a strong progress towards that (breakeven). If you even look at quarter-on-quarter sequentially , in the previous quarter at current exchange rates, I think our loss would translate into something in the range of $5 million-$5.5 million. From that it has come down to about $3.2 million in July-September quarter. Directionally, we continue to see meaningful improvement in our quarter-on-quarter operational loss. We should see this happening in the subsequent two-three quarters as well as we get to breakeven, which we are targeting in the April-June quarter of 2019,” Dhruv Shringi, co-founder and chief executive officer at Yatra said in an investor call early this month.
It will be the first breakeven in the company’s history of little over 12 years. The firm listed at Nasdaq in December 2016, it enjoys a market cap of $240 million. Yatra competes with online travel market leader MakeMyTrip, also a Nasdaq-listed firm and Cleartrip among others in domestic market.
Shringi believes the company will continue to be able to optimise on the cost base and bring efficiency in marketing expenditure, while maintaining the momentum of growth and new customer wins, especially on the corporate travel side where it claims to be the market leader. Yatra's gross travel bookings (hotels, flights and packages) amounted to $400 million during the July-September quarter, marking a strong 24 per cent growth over the corresponding quarter of previous year. It has seen a healthy 30 per cent growth in online hotel room nights booked during the quarter to 0.57 million. The number of air passengers booked also rose 22 per cent to 2.7 million. As of September 30, 2018, the company had cash and assets worth $68.3 million on its balance sheet.
Alok Vaish, chief financial officer at Yatra said the company is positive on the Indian macro environment. “We see solid growth potential in air and hotels industry and believe we are uniquely positioned with a strong presence and market leadership in the corporate travel. We reiterate our guidance for fiscal 2019 of over 20 per cent growth in adjusted revenue, with a meaningful improvement in our adjusted EBITDA loss on the back of efficiency in marketing spend and leverage in operating costs”, he said.
Online travel booking is a small fraction of total Indian travel business, especially in the hotel space, and companies have been luring customers to online booking platforms through discounts and offers for last two-three years. However, players are now turning rational.