Executive Summary / Key Takeaways

• Strategic Pivot to High-Margin Segments: Yatra Online is strategically capitalizing on India's burgeoning corporate and MICE (Meetings, Incentives, Conferences, and Exhibitions) travel markets, which are growing significantly faster than the broader travel industry. This focus, bolstered by recent acquisitions like Globe Travels, is driving substantial revenue and Adjusted EBITDA growth.
• Technological Leadership as a Core Differentiator: The company is deeply investing in and deploying advanced AI-powered solutions such as RECAP for expense management, NDC integration for air ticketing, and the DIYA AI assistant, enhancing efficiency, personalization, and cost savings for its corporate clients.
• Robust Financial Performance and Strong Outlook: Yatra delivered impressive Q1 FY26 results, with revenue up 99.7% and Adjusted EBITDA surging 214% year-over-year, significantly exceeding guidance. Preliminary FY26 guidance projects 20% growth in gross margin and 30% Adjusted EBITDA growth, underpinned by operational leverage and strategic initiatives.
• Streamlining Corporate Structure for Value Unlock: Efforts are underway to simplify Yatra's multi-jurisdictional corporate structure, including a Composite Scheme of Amalgamation, aimed at enhancing efficiencies, generating tax savings, and unlocking shareholder value, though the timeline remains subject to regulatory processes.
• Navigating Competitive and Macroeconomic Headwinds: While facing intense competition in the B2C air segment and recent geopolitical disruptions, Yatra's strong brand recall, cross-selling to corporate employees, and focus on high-margin segments are proving resilient, with B2C growth expected to resume in Q2 FY26.

India's Travel Ascent and Yatra's Strategic Foundation

India's travel industry is undergoing a transformative phase, poised for exponential growth driven by a rapidly expanding middle class, increasing disposable incomes, and significant digital adoption. The nation's GDP, now valued at nearly $4 trillion and projected to become the third largest globally by 2028, is fueling a surge in both leisure and business travel. This dynamic backdrop sets the stage for Yatra Online, Inc. (NASDAQ:YTRA), a leading online travel company that has strategically pivoted to capture the most lucrative segments of this boom.

Founded in 2005, Yatra has evolved from a traditional online travel agency into a technology-driven platform, with a dual focus on the high-growth corporate and MICE travel markets. This strategic shift is a direct response to the immense opportunity in India, where the corporate travel market alone is expected to reach $20 billion by FY27 and $20.8 billion by 2030, with online penetration still relatively low at about 20% in FY24. Yatra's foundational strength lies in its integrated technology platform and a synergistic multi-channel approach that addresses the diverse needs of Indian travelers, differentiating it in a highly competitive landscape.

Technological Edge and Innovation

Yatra's investment thesis is deeply intertwined with its technological prowess, which serves as a critical competitive moat. The company has consistently introduced innovative solutions to enhance customer experience, drive efficiency, and expand its service offerings.

At the forefront of its innovation is RECAP, an AI-powered expense management solution. This platform leverages Large Language Models (LLMs) for dynamic and context-aware receipt parsing, offering substantial improvements in accuracy over conventional OCR systems. It integrates a conversational AI assistant, the GenAI RAG Chatbot, providing real-time support and guidance during the expense submission process, which drives better adoption and fewer submission errors. RECAP also features an advanced rule engine for high configurability across geographies and employee roles, ensuring customized policy enforcement, and offers native compatibility with leading ERP systems for seamless financial data synchronization. For investors, RECAP represents a pivotal step in Yatra's transformation into a technology-driven corporate travel and expense platform, promising deeper customer engagement and a meaningful contribution to its margin profile as it scales in India and internationally.

In air ticketing, Yatra has become one of the first travel management companies in India to integrate New Distribution Capabilities (NDC) offered by airlines. This transformative technology provides corporate travelers with more flight options and better pricing, including access to special fares not available through traditional Global Distribution System (GDS) platforms. NDC enables real-time seat availability, dynamic pricing for cost savings, and richer content display, such as third-party seating and bundled offers, all while ensuring tighter policy compliance. This integration enhances the booking experience, improves cost efficiency, and streamlines travel planning, reinforcing Yatra's commitment to innovation and leadership in the corporate travel market.

Further cementing its technological lead, Yatra recently launched DIYA (Digital Intelligent Yatra Adviser), an AI assistant designed to handle customer service inquiries, refine search results, and book personalized travel products. This AI-enabled servicing is expected to provide significant operating leverage and a more refined service process, attracting new customers. Additionally, an AI-enabled low fare finding tool for corporate travelers continuously scans for fare drops post-booking, alerting travelers to rebook at reduced prices up to six hours before departure. This proactive service delivers tangible customer value and reinforces trust in the platform. The company is also building intelligent bots to automate back-end customer service tasks, which is anticipated to significantly drive down servicing costs.

Yatra's underlying common technology platform, built on a hybrid data center and cloud services, is certified to support a traffic spike of 4.5 times across its various platforms (flights, hotels, holidays, bus, rail). This scalable and comprehensive infrastructure ensures a consistent user experience across B2C and B2B channels, fostering familiarity, cross-selling, and repeat usage, while reducing development costs and accelerating time-to-market.

Strategic Growth Pillars: Corporate Travel and MICE

Yatra's strategic focus on the corporate and MICE segments is yielding substantial results. The corporate travel market in India, with its accelerating online penetration, presents a significant runway for growth. Yatra is India's largest independent corporate travel services provider, a position it continues to strengthen through aggressive client acquisition and strategic integrations. In Q3 FY25, the company onboarded a record 50 new corporate clients, adding an annual billing potential of approximately $32.2 million. For the full fiscal year 2025, Yatra secured 148 new clients, contributing INR 7.5 billion in expected annual volumes. This expansion is supported by a growing corporate sales team targeting high-growth sectors, which has quadrupled the company's sales pipeline.

The MICE business has emerged as a standout performer, demonstrating significant growth and margin expansion. The Indian MICE market, estimated at $3.3 billion in 2023, is projected to grow to $10 billion by 2030, representing an 18% CAGR. This highly fragmented market, with the organized sector accounting for only about 15%, offers immense long-term growth potential. Yatra's acquisition of Globe Travels in September 2024 was a game-changer, adding approximately 360 new corporate customers and Globe's deep expertise in the MICE sector. This integration, progressing ahead of schedule, is expected to make the combined Yatra and Globe entity one of the top three players in the MICE market in the current fiscal year. The company aims to double its combined MICE run rate within the next three years, driven by cross-selling opportunities within its extensive corporate customer base.

The Hotels and Packages segment, which includes MICE, has historically yielded higher margins than air ticketing. This segment saw robust growth, with gross bookings increasing by 49% in FY25 and 43% in Q1 FY26. This growth is fueled by a strategic focus on cross-selling standalone hotels to existing corporate clients and improved conversion rates due to enhanced platform features and strategic supplier relationships. Yatra boasts India's largest hotel inventory, with approximately 80,685 properties, particularly strong in the budget category in Tier 2 and Tier 3 cities.

Financial Performance and Operational Momentum

Yatra's financial performance reflects its strategic execution and operational discipline, particularly in its high-margin segments. For fiscal year 2025, the company reported annual revenues of INR 7.9 billion (approximately USD 93.1 million), marking a substantial 90% year-over-year increase. Adjusted EBITDA for FY25 rose by 28%, and the company achieved a net profit of INR 24 million (approximately USD 0.3 million), a significant 106.5% improvement year-over-year, turning profitable.

The momentum continued into the first quarter of fiscal year 2026, with Yatra delivering strong results well ahead of its annual guidance. Revenue from operations for Q1 FY26 reached INR 2.098 billion (approximately USD 24.5 million), up 99.7% year-over-year. Revenue less service cost, or gross margin, grew 36.6% year-over-year to INR 1.15 billion (USD 13.5 million). Profit for the quarter stood at INR 110 million (approximately USD 1.3 million), a significant turnaround from a loss of INR 0.8 million in the prior-year quarter. Adjusted EBITDA surged 214% year-over-year to INR 206 million (approximately USD 2.4 million), "significantly ahead of our annual guidance of 30% growth."

Segment-wise, while air ticketing passenger volumes declined 9% in Q1 FY26 due to macroeconomic headwinds, gross bookings still grew 4% year-over-year, and the adjusted margin improved from 3.10% to 4.60%. The Hotels and Packages segment continued its robust performance in Q1 FY26, with gross bookings increasing 43% year-over-year and gross margin expanding 74% year-over-year, with margins improving from 7.46% to 9.05%. This underscores the strength of Yatra's diversified business model and its ability to deliver higher revenue and stronger margins despite external challenges.

Liquidity and Capital Strength

Yatra maintains a strong liquidity position, providing flexibility for growth initiatives and strategic investments. As of June 30, 2025, cash and cash equivalents and term deposits totaled INR 2.235 billion (approximately USD 26 million). Notably, the company has significantly reduced its gross debt from INR 546 million (about $6 million) as of March 31, 2025, to approximately INR 29 million (around USD 0.3 million) as of June 30, 2025. This prudent capital management, with debt making up a mere 0.4% of equity, reduces financial risk and supports the company's growth ambitions.

The company's capital expenditures were INR 330.8 million in fiscal year 2025 and are projected to be between INR 450 million and INR 600 million for fiscal year 2026, primarily for technology infrastructure and platform upgrades. Yatra believes its current cash and cash equivalents, coupled with cash flow from operations, will be sufficient to meet its working capital and capital expenditure needs for at least the next 12 months.

Outlook and Risks

For fiscal year 2026, Yatra has introduced preliminary guidance of 20% growth in revenue less service cost (gross margin) and 30% adjusted EBITDA growth. This outlook is driven by the continued expansion in corporate travel, the scaling of its MICE and hotels businesses, and the realization of full cost synergies from the Globe Travels acquisition. Management anticipates gradual growth in the B2C air business starting in Q2 FY26, assuming a normalization of geopolitical conditions. The company also believes it can achieve 30% to 40% revenue growth without significant additional operating expenses, demonstrating strong operating leverage.

Despite this positive outlook, Yatra operates in a dynamic environment with several key risks. Geopolitical tensions, such as the cross-border conflict and air crash in June 2025, can temporarily disrupt travel demand, particularly in northern India, which accounts for 25% to 30% of business volumes. The B2C air segment continues to face intense price competition from domestic airlines and other online travel agencies, necessitating a strategy to view flights as a customer acquisition tool rather than a primary profit driver.

Furthermore, the ongoing process of simplifying Yatra's multi-jurisdictional corporate structure, including the conversion of U.S. shares into India shares, involves navigating complex regulatory processes across different jurisdictions, making the timeline uncertain. Other risks include potential cybersecurity incidents, challenges in maintaining the quality of third-party travel products, dependence on key personnel, and the evolving regulatory landscape in India.

Conclusion

Yatra Online, Inc. is strategically positioned to capitalize on India's booming travel market, particularly through its dominant presence in the high-margin corporate and MICE segments. The company's unwavering commitment to technological innovation, exemplified by its AI-powered RECAP platform, NDC integration, and DIYA assistant, is creating a formidable competitive advantage, driving efficiency and enhancing customer value. This technological leadership, combined with strategic acquisitions and disciplined cost management, has propelled Yatra to profitability and strong financial growth, as evidenced by its robust Q1 FY26 performance that significantly outpaced guidance. While navigating competitive pressures in the B2C market and geopolitical uncertainties, Yatra's strong brand, expanding corporate client base, and solid liquidity provide a resilient foundation. The ongoing efforts to streamline its corporate structure promise further value creation, making Yatra an compelling investment opportunity in India's digital travel ecosystem.