Yatra Online, Inc. — FY2018 Form 20-F Summary
Business context and reporting period
Annual report for the fiscal year ended March 31, 2018, prepared under IFRS as issued by the IASB. Yatra operates primarily in India as an online travel company serving consumers, corporate clients and travel agents, with air ticketing and hotels/packages as its principal segments. FY2018 includes eight months of Air Travel Bureau Limited (ATB) results following Yatra’s acquisition of a majority stake; FY2017 does not include ATB, limiting comparability. INR is the reporting currency; USD figures are convenience translations at INR 65.11 per $1.
Financial and operating performance
| Metric | FY2018 | FY2017 |
|---|---|---|
| Revenue | INR 12,248.5 million ($188.1 million) | INR 9,356.8 million |
| Revenue less service cost (non-IFRS) | INR 7,317.8 million | INR 5,177.3 million |
| Operating loss | INR 3,360.1 million | INR 1,863.4 million |
| Net loss | INR 4,052.0 million ($62.2 million) | INR 5,937.0 million |
| Adjusted EBITDA loss (non-IFRS) | INR 1,910.3 million | INR 1,000.9 million |
| Net cash used in operating activities | INR 881.9 million | INR 1,589.8 million |
- Revenue increased 30.9%; gross bookings rose 36.1% to INR 92,542.5 million. Revenue less service cost grew 41.3%.
- Air ticketing revenue rose 37.1% to INR 5,012.9 million; its net revenue margin eased to 6.3% from 6.4%. Hotels and packages revenue increased 24.4% to INR 6,628.2 million, while its margin improved to 12.7% from 11.0%.
- Marketing and sales promotion expense increased 69.1% to INR 4,155.4 million, equal to 56.8% of revenue less service cost, versus 47.5% in FY2017. Personnel expense rose 37.2%; other operating expense rose 48.1%.
- Net loss improved from FY2017, which included INR 4,242.5 million of listing and related expenses. However, operating loss and adjusted EBITDA loss both worsened. FY2018 also included a INR 563.3 million warrant fair-value loss, versus a gain of INR 230.1 million in FY2017.
- Cash and cash equivalents were INR 2,465.1 million and term deposits INR 1,012.1 million at year-end; INR 831.7 million of deposits were pledged. Trade and other receivables increased to INR 4,008.9 million from INR 1,970.4 million.
- Total borrowings were INR 851.8 million, up from INR 44.9 million. New InnoVen loans included USD-denominated borrowing at 9% and INR borrowing at 14.75%; loans were secured by assets, including intellectual property, and the Indian loan also by Yatra India’s ATB shares.
- Total assets were INR 11,616.8 million and total liabilities INR 11,842.1 million. Equity attributable to Yatra shareholders was negative INR 224.9 million, compared with positive INR 3,137.5 million a year earlier.
Material changes and outlook
- ATB’s majority acquisition contributed INR 561.0 million of net revenue and INR 7.6 million of profit in the consolidated period. The remaining 49% was expected to be acquired in the third quarter of calendar 2018; the estimated total purchase price was INR 1,469.3–1,795.8 million. The recorded acquisition liability was approximately INR 904.7 million.
- Management stated that available cash and expected operating cash flow should meet working capital, operating losses, capital expenditure and other needs for at least 12 months. This is an expectation, not a profitability forecast. FY2019 capital expenditure was expected to be approximately INR 400–500 million.
- Management’s stated priorities included mobile-first growth, technology investment, expansion in Tier 2 and Tier 3 markets, and growth in corporate and travel-agent channels. The filing provides no quantified revenue or earnings guidance.
- Growth initiatives showed increased platform activity: visits rose 66% to approximately 283 million, and mobile accounted for approximately 76% of consumer visits. Management reported a 52% 90-day repeat rate and 85% of visits from direct and organic traffic.
Risks, contingencies and unusual items
- Yatra continued to incur substantial losses and negative operating cash flow. The increase in FY2018 operating costs, especially marketing, alongside the larger adjusted EBITDA loss, is a key profitability concern. The operating cash-flow improvement partly reflected a INR 1,898.8 million increase in payables.
- Indian tax disputes are significant. The filing describes service-tax demands, including INR 983.2 million plus penalty of INR 381.8 million and a separate INR 240.7 million demand plus penalty of INR 240.7 million, with appeals pending. The financial-statement contingency disclosure separately reports INR 254.2 million of service-tax claims and INR 108.5 million of income-tax claims for which management recorded no provision, judging payment not probable. These figures cover different disclosed matters and should not be assumed to be additive without checking the notes.
- India’s GST transition increased compliance costs, raised tax rates on many travel services and could lengthen receivable collection cycles. The company said some tax positions remained under review because of uncertainty in the rules.
- Other disclosed risks include intense competition and margin pressure, dependence on airline and other supplier relationships, reliance on search engines and third-party systems, credit and collection risk, foreign-exchange exposure without hedging, and integration and payment uncertainty relating to ATB.
- Warrants are remeasured through profit or loss, creating potentially material non-cash earnings volatility. The company also reported negative shareholder equity at year-end. It disclosed no dividend plan for the near future.
- IFRS 15 adoption from April 1, 2018 was expected to cause possible reclassification of certain customer incentives from marketing expense to a reduction in revenue; management did not expect a material overall financial-statement impact, subject to continuing evaluation.
Important facts for investors to verify
- Reconcile FY2018 reported losses, adjusted measures and the large marketing and sales expense increase; assess the trajectory toward positive operating cash flow.
- Review the aging and collectability of the INR 4,008.9 million receivables balance, the reliance on increased payables, and the availability of unrestricted liquidity given pledged deposits.
- Confirm the terms, maturities, security and covenant compliance of the new loans, and the funding and final payment status of the remaining ATB acquisition.
- Track outcomes and potential exposure from service-tax and income-tax proceedings, including penalties, interest, pre-deposits and the relationship between detailed notices and the reported contingency totals.
- Assess dilution and earnings volatility from warrants, share-based compensation and equity plans; verify the impact of the subsequent July 2018 offering, which raised net proceeds of $53.0 million after the fiscal year-end.