Easy Trip Planners Ltd (NSE:EASEMYTRIP) Q2 FY23 earnings concall dated Nov. 14, 2022
Corporate Participants:
Prashant Pitti — Co-Founder and Executive Director
Ashish Bansal — Chief Financial Officer and Chief Compliance Officer
Nishant Pitti — Co-Founder and Chief Executive Director
Analysts:
Madhuchanda Dey — MC Pro — Analyst
Manik Taneja — JM Financial Capital — Analyst
Santosh Sinha — Axis Capital Limited — Analyst
Unidentified Participant — — Analyst
Presentation:
Operator
Good evening, ladies and gentlemen, welcome to the Q2 FY 2023 Earnings Conference Call of Easy Trip Planners Limited.
Today in this call we have Mr. Prashant Pitti, Co-Founder and Executive Director; Mr. Nishant Pitti, Co-Founder and CEO; Mr. Ashish Bansal, Chief Financial Officer and Chief — and Chief Compliance Officer; and Mr. Rajeev Gupta from our Investor Relations.
The results for Q2 FY 2023 for the company, the investor presentation, and the press release have been uploaded on the stock exchange and on the company’s website.
Before we start the call a disclaimer. This conference call may contain forward-looking statements about the company which are based on the beliefs opinions and expectations of the company, as on-date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict.
As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]. Please note that this conference is being recorded.
I now hand the conference over to Mr. Prashant Pitti, Co-Founder and, Executive Director of Easy Trip Planners Limited. Thank you, and, over to you, sir.
Prashant Pitti — Co-Founder and Executive Director
Thank you, Ms. Jha. Good evening, everyone. This quarter has been remarkable one for the company as we recorded our highest-ever gross booking numbers up approximately INR2,000 crores. The highest GBR in a single quarter. We have almost reached our full last year’s GBR in just two quarters of this current financial year. A testimony to our growth capabilities. We have also crossed INR100 crore milestone in terms of revenue from operations during quarter two of FY ’23, a sharp increase in 92% year-on year back on strong broad-based growth across all segments. Our core segment, which is air reported global growth of 82% year-on year.
In terms of transaction, our hotel — our air and hotel segment registered a healthy with people 52% and 69% respectively in-quarter two of FY’23 against the same quarter of last year. Again, a testimony to our marketing strategy and sales promotion efforts undertaken through the quarter. As one of the prominent industry players, we continue to lead with innovation and a customer-centric approach by providing the most competitive pricing to customers and giving us a great booking experience, and running our own call center.
The Ease My Trip Travel Carnival sale, for instance, in August of 2022 received an encouraging response recording a GMV of INR300 crores. Beginning on 1st of August and ending on 10th of August, we collected more than INR300 crores for the first time in the company’s history. After this, we launched Travel Utsav festival between October 6th, 2022 to 23rd of October, which recorded the highest-grossing of more than part INR555 crores for the company. This accomplishment speaks volumes about the robust industry recovery and pent-up demand, in general, add our brand value in particular. This is also a significant affirmation for our customer-first strategy.
Keeping in mind with our brand-building investment during the quarter the company became Co-Powered sponsor for Asia Cup cricket 2022, which had an estimate collective viewership of more than 49 crores, given that cricket in India is not just a game, but an emotion, this partnership brings the company the most required visibility. To be the part of the most-watched and loved cricket tournament. The brand witnessed visibility on multiple TV spots, inflection, various OTT channels across the game providing a solid push towards our vision of going global.
In another important campaign initiative, EaseMyTrip became the presenting partner for the Road Safety World Series Tournament of 2022. This recognition reflects our responsibility and total marketing enhancement towards supporting an existing significant societal concern like traffic accidents. These two initiatives combined we spent one-time costs of INR13 crores, which we believe yields much higher sales and growth going forward. The company continues to balance these investments through strategic marketing opportunity while maintaining cost discipline.
We have taken another step to strengthen our presence abroad. By partnering with SpiceJet Airlines through it’s Thai subsidiary which is EaseMyTrip Thai to sell tickets and other services to customers in Thailand. We have also brought this well-recognized brand such as MagicPin, and South Indian International Movie Awards, SIIMA in Thailand. This comes on the back of the company already setting up subsidiary in other countries like USA, UK and New Zealand, Philippines, Singapore, UAE and our corporate office in Dubai and London, in particular. That brings new of all noteworthy efforts.
We have received Asia’s best B2C Travel Provider 2022 award and received Best B2C Travel Provider in India for 2022 at the awards at the 29th Annual World Travel Tech Awards 2022. This is a validation of our industry-leading and customer-centric approach.
Now a brief snapshot of financial highlights for quarter two and first half year of FY ’22. Despite being seasonally down quarter the company continued to deliver robust growth in our GBR which is gross booking revenue stands at INR1,997 crores in the quarter two against INR895 crores in quarter two of FY ’22, an increase of 120% year-on-year. We have also reported adjusted revenue of INR169 crores for this quarter, which is again an increment of 68% compared to the last year.
Our B2B volume for the quarter stood at 84.4%. We are pleased to report that EaseMyTrip Dubai office has been performing well and in just few months, it has seen a good response with GMV for quarter two crossing INR24 crores which was INR7 crores in the previous quarter.
Coming to the operational number. The company’s air segment, net of cancellation grew by 52% year-on-year. We sold 28.3 lakh air tickets in quarter two compared to 18 lakhs for quarter two of FY ’22. Our number of total flights has seen a jump of 70% in quarter two of FY ’23. [Indecipherable] in the quarter was 26% of GBI, which was similar to look quarter of the previous fiscal.
Marketing and promotional expenses as a percentage of GBR was 1.5% of quarter two as compared to 0.9% of last year’s quarterly two mainly due to one-time promotion and marketing expenses of INR13 crores that we undertook this quarter towards Asia Cup and Road Safety World Series.
EBITDA for quarter two stood at INR40 crore as compared to INR46 crore of last year. PBT was INR38.8 crores. However, adjusting for loss reported due to overseas subsidary of INR1.7 crores and one-time marketing expenses of INR13 crores. The adjustment to PBT for quarter two would have been INR53.5 crores compared to INR65 crores of the corresponding year which would have given a growth of 47%. We maintained our deal being profitable since inception, and our profit-after-tax of quarter two stood at INR28 crores which was compared to INR27 crores of last year. On half yearly basis, the GBR for the first-half year stood at INR3,640 crores as compared to INR1,251 crores of corresponding two quarters of last year, an increase 119%.
Our adjusted revenue touched INR300 crores for the first half year, which is again a 500%. EBITDA for the half year stood at INR85.7 crores as compared to INR58 crores for the first half year of FY ’22, and profit after tax stood at INR51 crore as compared to INR42 crore of last year. We are in a pole position to consistently deliver strong growth given our diversified and low-cost business model. That is on a healthy balance sheet, strong return ratio, and continued cash generation from operations. We expect this momentum to continue as we focus on various promotional activities and brand-building initiatives. We are looking for new territories, along with inorganic growth opportunities to create value for our esteemed shareholders.
Now. I would request the moderator to open up the questions — the floor for the question-and-answer.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Madhuchanda Dey from MC Pro. Please go ahead.
Madhuchanda Dey — MC Pro — Analyst
Yeah. Hi, good evening. I have a couple of questions. The first question is we understand that there was these so-called ad hoc INR13 crore expenses which impacted the cost as well as the margin but going forward, I mean given where you are where do you see the marketing expenses settling eventually? That is my first question. I have a second question which is when I look at your numbers for hotel nights, there seems to be a sequential jump of 8.5% but when I look at your segmental results, there is a significant reduction in the revenue reported under hotel package from INR7.3 crores to INR1.7 crores if you could explain that to us of I mean, what is it behind the numbers where the actual number of hotel nights going up but the revenue declining sharply. Thank you.
Prashant Pitti — Co-Founder and Executive Director
So this is Prashant. To answer your first question the efforts which we have taken were basically branding efforts. In the future, we do look our marketing to settle anywhere between 0.6 to 0.9% of the GBR which was basically 1.5% growth because of the one-off activity. So in the future to consider it can vary anywhere between 0.6% to 0.9% as what we are considering.
Related to your question number two, the number of room nights have increased dramatically. The revenues were currently because we are giving the majority of the money back to the consumer as the form of discount at a difficult time.
Madhuchanda Dey — MC Pro — Analyst
Okay, is it an increased strategy which is deliberate at this point in time and not necessarily expected?
Prashant Pitti — Co-Founder and Executive Director
That is correct because till the time the business matures. See at the time of listing 97% of our business was flight business and, only 3% was everything was put together which was hotel, train, bus, cab, now that number has changed significantly where that number has jumped to 10%, around 10% of business comes from everything else besides the flight. The idea is for us to get that number to good stability which would be 70-30 and then we probably will start making money. Right now the company is following the process of growing this business, not at the cost we, want to do this business either at breakeven on making somebody but not with the passenger. So we will continue with this policy for sometime.
Madhuchanda Dey — MC Pro — Analyst
Okay. Got it. Thank you.
Operator
Thank you. The next question is from the line of Manik Taneja from JM Financial Capital. Please go ahead.
Manik Taneja — JM Financial Capital — Analyst
Thank you for the opportunity. Prashant just wanted to understand from you as to how are you seeing the competition play out across the different categories of business. And the second one was a bookkeeping question, if you could, help us understand the GBR breakup between airlines and the non-air segment, and the third question was just a clarification question around the decline in cash that we’ve seen on the balance sheet. If you could help us understand what’s streaming from a working capital intensity. Thank you.
Prashant Pitti — Co-Founder and Executive Director
Understood. So question number one is in terms of market share and the Group. So, Manik as you might notice, for the entire industry and the competition you would see that the number which we have reported is pretty much muted or the same as you would have reported in the last quarter. Cyclically speaking quarter one and quarter three are usually the strong quarters because of summer vacation and winter vacations. Quarter two is usually a muted quarter. In the [Indecipherable], we have grown, on a quarter-on-quarter basis, we have grown by 20% where you could see our competitors did not grow. In fact, they had a slight degrowth. So on the basis of that, you would be able to understand that we have gained market share considerably in this particular quarter across the segment.
The second question is related to GBR. Ashish Ji, have we provided the breakup of the GBR for this particular in our quarterly results in our presentation.
Ashish Bansal — Chief Financial Officer and Chief Compliance Officer
No, we have not provided segmental GBR.
Prashant Pitti — Co-Founder and Executive Director
So for this quarter we have you we have not provided the segmental but I can give you a number that probably existed for the last quarter and I do not think that there will be a monumental change in that. I believe that the air was somewhere around 90.5% for the hotel, it was somewhere around, for the hotel and holiday packages it was somewhere around 3.8% and the remaining was basically around 6% odd was basically for train, bus, cab, and other services. This was the breakup. So that’s the answer for your second question.
And the third is related to the working capital. Working capital is pretty much remained the same despite being profitable. The reason I believe that there have been since then since we report this number every six months, there has been increase in other current assets which is the airline deposit by INR61 crores. The sales receivables have also increased by. INR45 odd crores because of this, the working capital, and then there were other things as well but it was all after paying taxes and everything. Overall the net cash depleted by somewhere around INR9 crores.
Manik Taneja — JM Financial Capital — Analyst
And, just a clarification on the statement estimate around second quarter being flat or declining for one of your large competition. Just given the sense, given the fact that the report numbers in dollar terms and thereby the dollar number will have a dilutive impact because of currency.
Prashant Pitti — Co-Founder and Executive Director
If you look at in terms of their volumes as well, I think there is a slide uptake movement on the volume side but our volumes grew by more than 28%. In terms of our gross booking revenue we grew by 20% but in terms of absolute number of tickets we grew by about 28%. I think the competition grew by 4% or 5%, if I could remember correctly. So even then, there is a significant increase.
Manik Taneja — JM Financial Capital — Analyst
Thank you and all the best for the future.
Prashant Pitti — Co-Founder and Executive Director
Sure.
Operator
Thank you. The next question is from the line of Aditya Krishna from, sorry the next question is from the line of Santosh Sinha from Axis Capital. Please go ahead.
Santosh Sinha — Axis Capital Limited — Analyst
Hi. My question is regarding balance sheet items. Now trade receivables are up in this quarter from 528 million to 987 million and also contract liability that is 700 million as we can see in your balance sheet. So what are this attributed to? That’s my only question.
Prashant Pitti — Co-Founder and Executive Director
I understand. The trade receivables is the money which basically is the amount which we are yet to receive from the corporates and the travel agents. That business is going up. As you could see our B2C component was around 90% which has come to 85%, which is basically our increased efforts in growing our corporate and travel agent business because of this trade receivables has gone up by around INR45 crore. And the second thing which you mentioned is the contract liabilities which has gone up by INR70 odd crores that’s because of the advance which we get from the [Indecipherable] which is the Bellagio. So that was renewed this year and because of which you are seeing the additional amount of INR70 crores which is basically sitting as a liability because that’s the money which was given to us in advance in our book in the view of the commissions which we will get from them in a period of time.
Santosh Sinha — Axis Capital Limited — Analyst
Sorry. I couldn’t get the second part actually, INR70 crore contract liability.
Prashant Pitti — Co-Founder and Executive Director
We get commissions not just from the airlines but we also get commissions from the GDS. The new is of the GDS booking which we work. This year they gave us almost INR100 crore as advance for the commissions which we would have earned over a period of time of which INR70 crores is kept in in long-term and around 30 we get-in short-term because we anticipate INR30 crores to be utilized within a matter of one year and INR70 crores is kept in the long-term because that we will capitalize after this.
Santosh Sinha — Axis Capital Limited — Analyst
Okay, thank you. Thanks a lot.
Operator
Thank you. The next question is from the line of Aditya Krishnan, Individual Investor. Please go ahead.
Unidentified Participant — — Analyst
Hi, Prashant. Am I audible?
Prashant Pitti — Co-Founder and Executive Director
You are audible. Please go ahead.
Unidentified Participant — — Analyst
Yeah. Hi, Prashant, I’m calling from the United States. My first question. Actually, impressive quarter given the kind of circumstances the company has been. First question is, I can see some different kind of other expense this quarter apart from the one short INR13 crores ad hoc expense which you mentioned. There is a significant difference in other expense which has been categorized just for this, which is not profit equity.
Prashant Pitti — Co-Founder and Executive Director
It is not for this quarter, even for the last quarter the other expenses was slightly higher. The reason is the commissions which we get while working with travel agents reside over there, whether we are working with travel agents or whether we are working with B2B company B2B2C company and hence since our business shot up on B2B side. The commissions which we have to get our decisively other expenses and that is why that number has gone up.
Unidentified Participant — — Analyst
So just a follow-up for that. I have another question. This is closely related to that. So now when our revenue starts shooting up even more and when we start to really go into that explosion face. Are we, is our payment charges also going to keep on increasing like this because I can see quarter-on-quarter payment charges are increasing, I mean at some stage.
Prashant Pitti — Co-Founder and Executive Director
Payment gateway charges are basically the revenue proportionate to the GBR, which is gross booking revenue. If you see as a percentage of GBR they are pretty much standard, in fact, I gave, it might be viewed as more and more UPI payments adoption gets adopted.
Unidentified Participant — — Analyst
Okay, that’s pretty clear. Okay. Yeah, so that’s pretty clear. Second one is importantly, what is the profit PAT percentage or EBITDA percentage. More importantly, profit after tax percentage from the Dubai office and the Dubai business, because it is expected to be at least significantly higher than the India business or in the target, might be, so, I want to know a little bit about the Dubai office and even the other global businesses if started or has been moving into what kind of phase.
Prashant Pitti — Co-Founder and Executive Director
So basically, Aditya, these businesses are under the incubation phase right now where we are trying to make our mark, we are increasing our customer volume, we are getting that spec on in front of me from the respectable airline which are based out of there. They might not have dealt with these markets as much before. So this is the incubation phase where we are working with them we are and as we continue to grow we will be able to command better margins, better commissions from them. As of now, the business looks good, the business is growing. We are growing on the strong demand which is coming to EaseMyTrip primarily because the kind of convenience fee or service fee which these global player charges are exorbitantly high than what service fees or convenience fees Indian player charges. The incumbent player in the Middle East, Europe, US, these developed nations they charge anywhere between INR600 to INR2,000 per passenger as a convenience fee. Now EaseMyTrip’s strength is not that we don’t charge convenience fees, EaseMyTrip’s strength is that because of our low coast business model and operational efficiency we can afford to not charge convenience fees. In these geographies, international geographies which you are, these are the geographies which could bring tremendous value for EaseMyTrip as we continue to go forward because we are proceeding with the same thought process of not charging convenience season in this geography and because of that the demand is coming very strongly and right now, the business is running at breakeven or slightly negative for the regions but that is not what is troubling us. We understand that as the business grows we will be able to make a lot more money from here by commanding better PLDs, better commissions from the respective companies.
Ashish Bansal — Chief Financial Officer and Chief Compliance Officer
That’s primarily because we will be charging in foreign currency and because of that we will be able to make higher working capital.
Prashant Pitti — Co-Founder and Executive Director
Our operations and our technology will continue to exist from India. So entire operations and technology will continue to exist from India and because of this cost arbitrage, we believe we are in a very good position to become the global ticketing company of India.
Unidentified Participant — — Analyst
Absolutely. I mean, we’re going to do this, I mean that’s what we are hoping. Just clarify on what you said which means you are telling me that the INR238 million, which is INR23.8 crores, you have not made money from that this quarter or how is that, from the Dubai. Is it still?
Prashant Pitti — Co-Founder and Executive Director
Which number you’re putting. This is a number which we have not disclosed right now but overall as I mentioned for all our subsidiaries put together in the quarter we have reported a loss of INR1.7 crores.
Unidentified Participant — — Analyst
Okay. That does not give much of an idea. Anyway okay, we’ll keep it that way. And what about the three acquisitions we have made YoloBus, Spree and the other one?
Nishant Pitti — Co-Founder and Chief Executive Director
We have made two acquisitions Yolo and Spree. Spree hotels have been able to increase their number of hotels from, I believe 12 hotels at the time when we acquired to around 27 hotels right now. So the business is growing great, and the business is profitable. I believe the Spree [Phonetic] business is able to generate anywhere between INR20 lakh to INR30 lakh on monthly basis of profit. While Yolo is in very integration phase, the Company which we acquired YoloBus [Phonetic] was really in distressful situation, the last valuation at which we raised company was at about INR100-odd crores while we acquired the company at INR2 crores. So the business is coming back, the business — I think the strength and the technology got started early about two, three months ago and we are looking forward for it to as well grow and become a decent part of these matters.
Unidentified Participant — — Analyst
Okay. Can you repeat that number of Spree generating profits per month again? I didn’t get the number.
Prashant Pitti — Co-Founder and Executive Director
Between INR20 lakh to INR30 lakh per month.
Unidentified Participant — — Analyst
INR20 lakh to INR30 lakh. Okay. That’s still a significant number when we put it up together and then this keeps increasing because the cash on books of EaseMyTrip has reduced because we are using the cash for other projects, which means this will cushion that a little bit as it grows. Okay. I mean, these are my questions. I mean, thank you so much for answering them.
Prashant Pitti — Co-Founder and Executive Director
Yeah. Pleasure is mine, Aditya.
Unidentified Participant — — Analyst
Yeah.
Operator
Thank you. [Operator Instructions] The next question is from the line of Manik Taneja from JM Financial Capital. Please go ahead.
Manik Taneja — JM Financial Capital — Analyst
Thank you for the follow-on opportunity. Prashant, just wanted to understand the fact that in the last six months, you’ve seen us increase in terms of share of our B2B2C [Phonetic] business, which is also a function of the markets opening up and corporate travel, etc., opening up. But if I have to think about the next three to five years, what kind of a mix of business do you want to have between B2C and B2B — cash B2B2C because historically, we went from a significantly higher B2B [Phonetic] business to a bigger share of B2C business and now you’re talking about once again increased focus on FY [Phonetic]. Would be great to get your thoughts as to what kind of a mix are we thinking about over a three to five year time — your timeframe?
Prashant Pitti — Co-Founder and Executive Director
So Manik, basically, what has changed between the last time and this time is, previously, we were pretty much focused on travel agent. Whether now majority of the business is coming from B2B2C because basically the likes of HDFC SmartBuy, all basically being available on Bajaj Finserv, or being available on Justdial, or being available on Internet.
So basically, — there is some noise coming from Sampath [Phonetic]. Basically, it’s powering the net asset of online organizations, and EaseMyTrip has been well-positioned to do beautifully because of the very low-cost operations. And due to this, this number has gone up slightly in the last couple of quarters. We believe that this number is looking steady, stable right now. We have continued our focus on growing our B2C business and the number [Indecipherable]. I believe the number which is right now, which is 85 versus 15 is like a stable number for the long-term future.
Manik Taneja — JM Financial Capital — Analyst
Sure. Thank you and all the best.
Prashant Pitti — Co-Founder and Executive Director
Thank you. [Operator Instructions] Okay. To conclude, we believe that the business is in well position to take advantage of growth opportunities. We will strive to deliver paramount results and achieve greater milestones in the future as well. This will be backed by our customer service strategy, low-cost business model, new-age technology and our exceptional marketing campaign. This will help us realize our vision of becoming a truly global provider for all-in-one travel solution. Thank you everyone for joining us. I hope we have been able to answer all your queries. If you have any other follow-up questions, feel free to write to us. Thank you once again. [Operator Closing Remarks]