TBO Tek Limited (TBOTEK) Earnings Call Transcript & Summary

Good evening, everyone. I'm Snighter Albuquerque from Adfactors IR. On behalf of the company, I would like to welcome you all to the earnings conference call for Q1 FY '25. Today on this call, we have with us from the management, Mr. Ankush Nijhawan, Co-Founder and Joint Managing Director; Mr. Gaurav Bhatnagar, Co-Founder and Joint Managing Director; Mr. Vikas Jain, Chief Financial Officer; and Mr. Anil Berera, President, Strategy. We will begin the call with brief opening remarks from the management followed by a Q&A session. Please note that certain statements made during this call may be forward-looking in nature. Such forward-looking statements are subject to certain risks and uncertainties that could cause the actual results or projections to differ materially from those statements. TBO Tek will not be in any way responsible for any actions taken based on such statements, and undertakes no obligation to publicly update these forward-looking statements. I would like to now hand over the call to Gaurav Bhatnagar for his opening remarks. Thank you, and over to you, Gaurav.

Thank you, Snighter. Good evening, everyone. We are pleased to share our results for Q1 FY '25. We had a very good quarter with all KPIs showing healthy growth. Our active agent base grew to 35,194 travel agents at an enterprise level. Our GTV was up by 14% while revenue grew by 21% compared to Q1 of FY '24. The company delivered a net profit of INR 61 crores compared to INR 47 crores for the same period last year. Before delving into the results further, I'll take just a few minutes to quickly recap our business model. TBO operates in the global outbound travel space. We aggregate outbound travel demand via travel agents, tour operators, OTAs across the world by providing them an online platform which allows them to book global travel supply, including airlines, hotels, transfers, rail and other products seamlessly. Our platform solves for discovery, trust, payment and service for both the buyers and travel suppliers globally. Our travel agent base is spread across more than 100 countries. Our platform supports almost a dozen languages. We transact in more than 50 currencies. And we have our commercial teams based in more than 47 countries. The global travel and tourism industry is growing -- is about $1.9 trillion in 2023 and expected to grow at a CAGR of 8.2%, reaching $2.6 trillion by 2027. The key highlights for this quarter was the increasing share of our higher-margin non-air business. We continue to grow our hotels business at a faster pace compared to our air business. The share of non-airline business grew from 46% in Q1 of FY '24 to 57% in Q1 of FY '25. This was primarily driven by increasing share of hotels GTV of both our international and India businesses. To remind everyone once more, our international business caters to travel agents based outside of India, though they may be booking destinations anywhere in the world. Strong growth in our international business was driven by robust growth across all regions, led by high double-digit growth in APAC and Europe source markets. The cumulative number of transacting buyers in the quarter reached more than 12,000 for the first time. Our average monthly transacting buyers grew to 9,449, which is 24% growth over the same period last year. For the organic business, without including Jumbonline, growth was 20%. Interestingly, the number of bookers within these travel agencies using the platform grew faster at 22%, indicating strong engagement with our travel agent platform. The number of bookings per booker also increased to more than 37 bookings in the quarter compared to 34.6 bookings in Q1 of last year. This is strong evidence of increasing loyalty to the platform. Over the past year, we have made several platform enhancements to improve our booking experience. This resulted in improvement in our hotel look-to-book ratios. In Q1, for the international business, our look-to-book ratio stood at 8.72% compared to 8.07% a year ago. We showed robust GTV growth across all international source markets. Overall, GTV grew by 47% compared to Q1 of FY '24. Part of this growth can be attributed to the acquisition of Jumbonline, which has now started to contribute meaningfully to both top line and revenue of the business. We saw strong organic growth as well with GTV growing by 17%, excluding the GTV contribution of Jumbonline. There were 2 major holidays of Eid al-Fitr and Eid al-Adha in Q1 which typically lead to a slowdown in sales, especially in the Middle East market. Otherwise, we would have seen even stronger growth. We expect to see stronger organic growth in the international business in Q2 of FY '25 compared to Q2 FY '24. I'd like to share some color on the Jumbonline business. Jumbonline based in Asima, Spain, aggregates hotel inventory across the Mediterranean coast and sales to tour operators and travel agencies across Europe. The business generated a GTV of INR 814 crores and a revenue of INR 32 crores. Our integration efforts to realize synergies with Jumbonline are progressing well. A part of TBO's inventory is now available on the Jumbonline platform and vice versa. We expect to complete a significant part of the integration before the end of this financial year. Finally, I'm very pleased to share that Mr. Gerardo Del Rio has joined as the President for our international business based in Dubai. With over 20 years of experience in global management, finance and business development across hospitality, travel and consulting sectors, he will be responsible for driving the overall P&L for our international business. I'll now hand over to Ankush to shed some light on the India business.

Thank you, Gaurav. Thank you, everyone, for joining us today. We are excited to share with you an in-depth promising trajectory of the aviation industry, particularly in relation to the expanding outbound travel market from India. We are on brink of significant growth in the aviation sector, and it is demonstrated by large aircraft ordered by the Indian airlines. This momentum is driven by a combination of factors that are reshaping global travel trends. Central to this growth is a growth -- growing outbound travel market from India which is set to become a major force in global tourism. India's outbound travel market is on a remarkable growth trajectory. Outbound airline sales from India are projected to reach $19.6 billion by 2027. Additionally, the number of outbound air passenger is expected to soar 42 million by 2027, reflecting a compounding annual growth of approximately 6% from 2023. The increase in overall travel spending is equally noteworthy with figures reaching $17 billion in FY '24, an impressive 24.5 increase from the previous year. This growth is not only substantial, but also aligns with the OECD view of India's outbound travel as a key driver for global tourism. Several demographic and economic factors are fueling this growth. Rising incomes, younger generation, more adventurous population are driving increased spending on travels. The urban lifestyle is also a significant factor with more people from urban areas opting for international travels. Furthermore, enhanced air connectivity, the digitization revolution and visa liberalization are making it more accessible and convenient. We are also witnessing the growth of niche travel segments, luxury travel, study abroad programs, adventure tourism, cruise vacations, sports tourism, MICE, destination wedding and musical tourism are all gaining popularity. Each of these segments represent a unique opportunity and reflects the diverse interest of Indian travelers. Looking ahead, India's strong GDP growth of 6% annually will drive a projected 9% annual increase in travel spending. Airlines are responding to the surging demand by expanding their network and increasing flight frequencies. Flexible payment options, such as EMI, are democratizing international travel, making it accessible to a broader range of consumers. Additionally, the rising aspirations in Tier 2 and 3 cities present a vast untapped market. Finally, the fact that a significant portion of the Indian population still doesn't have passports represent a substantial growth opportunity for the outbound travel industry. The outlook for the aviation industry, driven by the growing outbound travel market from India, is incredibly promising. With the continued infrastructure development, increasing connectivity and a growing diverse travel base, India is to become a central player in the global travel market. This dynamic environment presents exciting opportunities for growth and innovation. Now let's talk about an update of our performance of Q1 FY '20 -- for the financial year '25. Firstly, we saw a growth in our IATA, BSP India participating carriers for international air business, which increased from -- by 6.6% Q1 FY '24 versus Q1 FY '25. This is given that the overall international sales from BSP India or IATA India participating carriers decreased by 4.4% according to the IATA data. Additionally, our market share on IATA, BSP airlines have significantly grown over previous year. On a more positive note, our business in North India saw double-digit growth while West India also showed single-digit growth. And we're optimistic about our strong performance in South and East India markets in the coming quarters. We have implemented strategic measures, enhanced our talent acquisition efforts to capture potential market share, particularly in South and East India regions. In our hotel and ancillary business, we achieved a 2.3% growth in GTV despite the market's degrowth. However, we faced some challenges this quarter, including the impact of general elections, disruptions of the Maldives business, which notably affected our performance. Without these challenges, we believe our growth could have reached double-digit growth. Regarding active buyers. We had an all-time high active transacting, reaching 23,283 in Q1 FY '25. We have also enrolled new transaction buyers this quarter. The contribution has been significant. The GTV from these new buyers increased by 30% on a quarter-over-quarter basis. This reflects a successful focus on higher-spending-potential customers. In a cross-sell initiative, the monthly average of active hotels and ancillary buyers increased by 7% from Q1 FY '24 to Q1 FY '25. As a result of this initiative, the share of non-air active buyers among total active buyers improved from 46% to 49%. This growth is a direct result of our efforts to expand and reach the engagement of our non-air agent base. Finally, let's talk about our wallet share enhancement initiative. We've introduced a comprehensive strategy to increase both -- from both air and non-air agents. A key element of this strategy is a raffle scheme designed to foster competition and excitement. The scheme rewards agents who generate higher volumes of business with increased chances of winning significant prizes. For every increment of additional business beyond the entry level, multiple raffle tickets are issued, which have significantly boosted agent engagement. These results have been remarkable, and we observed substantial impact with 66 air agents contributing INR 315 crores and 191 non-air buyers contributing INR 101 crores of GTV. This brings total additional business from 257 buyers to INR 416 crores of GTV in the last financial year. The effectiveness of our incentive scheme is boosting performance is clear. We have relaunched the scheme with modifications in the current financial year, including a reduced minimum business criteria to encourage wider participation and drive further growth. Now handing over back to Gaurav to share some tech initiatives.

Thank you, Ankush. I'll now share some of the key platform enhancements that we delivered in Q1. We launched a new cloud-native platform that significantly reduces customer latency for our API customers who purchase hotels from us. This led to a reduction in latency for our largest customer from an average of 3.1 seconds to 1.9 seconds. We made several platform enhancement to support multi-tenancy. This functionality allows several of our group entities to operate and invoice from the same platform. This would be a key enabler for rapid integration of current and any new acquisitions. We also invested in improving the self-serve features on the India platform for international ticketing. This led to a 9% increase in the number of international ticketing transactions which required no manual intervention. This led to improvement in customer experience while increasing our operational efficiencies. Finally, we also launched several cross-sell initiatives on the platform. We saw an increase of 33% in our GTV from selling transfers within the international market and a 15% GTV increase within the India market. In the current quarter, we are evaluating several AI-driven voice bot technologies to drive better customer experience while reducing operational costs. These initiatives are still in early stages, but we expect them to make meaningful impact a few quarters from now. I'll now hand over to Vikas to share a commentary on the financials.

Thanks, Gaurav. Good evening, and very warm welcome to everyone on this call. I'm delighted to present the financial performance of TBO for the quarter ended 30th June 2024. In the quarter ended 30th June 2024 at an enterprise level, our monthly transacting buyer base grew by 7% which led to an overall increase in GTV by 14% year-on-year. Our revenue from operations surged to INR 418 crores, making a growth of -- marking a growth of 21% year-on-year. Our enterprise take rate improved from 4.96% to 5.2% to 7% year-on-year. The airline business take rate improved from 2.49% to 2.63% year-on-year. However, there is decrease in hotels and ancillary business take rate from 7.662% to 7.13% year-on-year primarily due to consolidation of the Jumbo numbers in Q1 FY '25. In case of Jumbo, it works primarily on markup model and with minimal incentive budget to the buyers. And thus, take rate and gross profits are similar. Gross profits are as a percentage of GTV for the quarter improved from 3.22% to 3.52% on a year-on-year basis. This was largely driven by increase in share of GTV or potential ancillary business from 46% to 57% year-on-year. Our adjusted EBITDA increased to INR 85 crores, growth of 23% year-on-year, while our PAT reached to INR 61 crores, demonstrating a growth of 29% year-on-year. Adjusted EBITDA margins and PAT margins for the quarter stood at 20.33% and 14.56%, respectively. Just on one-off items. Our Q1 FY '25 numbers includes amount of INR 2.88 crores of share issue expense pertaining to fresh issue of shares in IPO. Our Q1 FY '24 numbers included exceptional items of INR 7.7 crores, primarily pertaining to advances written off, or [indiscernible]. Income tax is applicable on our wholly owned subsidiary in UAE from current financial year, and our current quarter tax expense includes provision for the said expense. Thank you, everyone. And now we would like to open the floor for questions.

Thank you, Vikas. We will now begin the Q&A session. [Operator Instructions] We can start with Karan, Karan Uppal. [Operator Instructions]

This is Karan Uppal from PhillipCapital. A couple of questions from my side. Firstly, on the organic business, what was the organic growth? I missed that comment. If you can clarify that.

So the international GTV -- international business GTV on an organic basis without including the Jumbonline business grew by 17% year-on-year.

17% Y-o-Y. And in terms of the revenue, how much was the revenue growth organic?

So as mentioned by Gaurav, the Jumbo contributed INR 52 crores in overall revenue of the enterprise.

Okay. Okay. And second question is in terms of the seasonality in the business. So if you can clarify, how should we model the seasonality with respect to India and international markets?

So Karan, the -- because we have a significant presence in the Middle East market, the seasonality of the international business has 2 components. One is the summer holidays, which is typically going to be largely in the July, August, September, so in the current quarter. However, the dates of the 2 Eids and Ramadan also have an impact. So like I talked about it, because this quarter, both the -- unlike last year, in this -- both the Eids fell in the same quarter. So typically, for Eid, the -- most of the region will shut down for about a week or 10 days. And hence, there is a slight slowdown in business over that period of time. So when we're looking at seasonality, and that's why we made the comment that we expect the Q2 growth from Q2 of last year for the international business to be higher because -- or just because of the seasonality and timing effect of the festivals.

And Karan, regarding India, the ledger obviously peaks from the summer holidays, which is basically Q1 of the FY. This quarter currently, we'll have a lot of corporate, MICE business, plus the long weekend, which is now the August 15, which will also see some ledger traffic. Diwali is on 31st of October. So the booking period, which was October last year, which now shifted to September for the [ share ] Diwali breaks and then followed by the New Year/Christmas. And then January, February, March, when school goes back, I mean, people go back to corporate travel, and the bookings start happening for the summer as well. So that's the typical season. The only shift we see this year is the Diwali moving from November to October.

So just to summarize your comments. Basically, you're saying that Q2 and Q3 of this year, you're looking at a stronger quarter -- quarters per se?

Karan, I think see, the India peak season will be usually Q1 because that is where India summer happens. But rest of the world, the European Northern Hemisphere summer is typically Q2. So we would expect Q1 to be very India-heavy, Q2 to be more international. And typically, between Q1 and Q2, you would see the heaviest traffic -- travel happen.

Right. Okay. The other question I had was on the international expansion. So in your annual report, you have mentioned that you want to expand your sales presence to more than 47 countries, which you already have the presence. So which are the markets you are looking at in terms of the regions, like Middle East, U.S., Europe, APAC, where you want to expand both from the supply as well as from the demand side?

See, on the source markets, which is demand side, we are significantly investing in the APAC market. And for -- with APAC, we include all the way from China to Australia. So within APAC, Indonesia and Australia are 2 markets we have made significant investments in the last 1 year. The other investment is happening in building out the European source market, which is a large market. So we typically look at Europe as 3 different segments. We look at U.K., Ireland separately. We look at Eastern Europe and the DACH countries as one group. And then we look at Southern Europe and Israel as one group. So we've been making investments in creating feet-on-street sales team and enhancing supply to service this demand quite aggressively. Also because we did the Jumbonline acquisition, so which also gives us good, differentiated supply to service that market. So those are the 2 regions we expect to see significant demand growth from. From a supply perspective, the strategy is fairly global because our focus is, as we've talked in the past as well, is focus is on building out the luxury, slightly premium travel. More than looking at just a region or a destination, we look at specific hotels and chains that we want to work with globally. So there, while the spectrum of hotels will run into a few thousand hotels, like 7,000, 8,000, 10,000 hotels, we would -- those would be spread across the globe, wherever the demand is traveling to.

Okay. Got it. The last question from my side is if you can share a typical CAC to acquire a travel agent, let's say, in India and in international markets. Ballpark figures.

Karan, we don't do CAC calculations and I'll explain why because it's very hard to articulate CAC. The way our business works is that there is a -- typically a -- when an acquisition is happening to a feet-on-street sales team, there is a salesperson who will go out and acquire a travel agency. But as -- if you look, at and we've shared our cohorts in the past, the stickiness of our travel agent is quite high. So they will stick on the travel agent -- on the platform for many years and they will increasingly do more business every year. So the way we look at sales efficiency is that we have the cost of a salesperson on the ground, but he's doing 2 functions. He is acquiring new customers, but he's also managing existing relationships. So the revenue per salesperson is typically the number that we want to optimize for, but it does not necessarily translate into a CAC because we don't know what portion of that per salesperson's cost should we allocate to acquiring a new customer vis-a-vis what portion should we allocate to account management. Hence, CAC is not a good metric to measure the business on, but long-term agent retention and increasing share of wallet are the 2 numbers that make more sense.

[Operator Instructions] The next question is from Swapnil Potdukhe. [Operator Instructions]

This is Swapnil from JM Financial. I had one obvious question actually starting with. So the air ticketing GTV has meaningfully declined on a Y-o-Y basis. And the other thing is we are hearing from the OTAs that the outbound business seems to be doing quite well for them. So any -- so that -- there seems to be some disconnect over here. If you can help with that, Ankush.

So Swapnil, regarding the domestic air, we shied away from our low-margin business which we were selling in domestic air. And we actually -- low business and high-volume business. We gave it up because we wanted to maintain our net retention margins, which I think are healthier than our previous quarter. So that's on the domestic air side. On the international, we have outbeaten the market. If you see the market kind of shrunk by 4.4%, but we grew almost 6.5%. We also gained our market share. What you are seeing on the OTAs is there are also other segments which they have been serving. It's just not the B2B business which they are looking at. They're also serving the corporate/B2C markets. So to compare, it won't be fair because they also are catering to other segments as well, where we are only servicing to the off-line travel assisted market. But on the international side, I think we have gained our share versus last year and obviously outbeat the market by almost 11%.

Got it. Ankush, any guidance as to how should we model this thing going ahead, the air segment specifically?

So Swapnil, I think the trend will follow because our story is outbound travel is what our main theme of the company is. So we will continue to build on our hotel, ancillary, and our international airline business. And domestic air for us is important because it's a hook, right? But is it a big margin revenue contributor? Yes. But the saliency for the bottom line remains in the hotel/international air business. So that trend will continue.

Okay. Got it. And with respect to the recent tensions in the Middle East, any comment on that? How -- will there be an impact on our business? And how do we see that, I mean, if the tensions grow?

Swapnil, we are not seeing any immediate softness because of the political situation in the Middle East. Historically, we have seen that, unless some very, very adverse event happen like what happened October 7 last year, which caused a temporary blip in the Israel source market. In general, we have seen that so far, travel, especially from the Middle East region, has been fairly resilient to the broader macroeconomic situations.

Okay. And I think while you have mentioned some of the source markets in Europe and APAC, China is growing in double digit, you have not mentioned North America, which I think was one of our key markets to target in terms of growth going ahead. Any particular reason why that market may not have grown at the same rate as the other markets?

So to be fair, Swapnil, the market is growing. But if I look at -- and if I look at the order in which the size of the market as they stand today, it is a smaller market for us. There are investments planned in H2 in North America which we also believe will probably have some impact within Q4 by the end -- by Q4 of this year. But for this -- for Q1, North America was not a big focus for us. We will be absolutely investing in this market later this year.

Okay. And any guidance on the tax rate going ahead? Because 19%, I think, was something which was significantly higher than what we were expecting at the time of the IPO.

So yes, the current quarter, the tax rate is coming at 19%. But on a full year basis, we project it at around 17.5%. One of the key other reason is basically the Jumbonline business also get taxed at a higher rate, which is at around [ 45% ]. So overall effective tax rate for the full year should be around 17.5%.

Okay. And if I can just squeeze in one more. So if I got it right, you mentioned a GTV of around INR 814 crores for Jumbo versus a revenue of INR 52 crores, if that is -- if those numbers were right.

Yes.

So if I were to use those numbers, then your take rate in Jumbo seems to be significantly higher than what used to be at the time of acquisitions. Any particular reason for that?

The take rate is coming at around 4%, which is -- which was the take rate -- which was the similar take rate, which -- when we had acquired Jumbonline.

[Operator Instructions] The next question is from Anirudh Agarwal. [Operator Instructions]

This is Anirudh from Valuequest. So I had a few questions. The first one, Gaurav, was on the international business. So this 25% growth in international agents, should we take it as a lead indicator for the kind of organic growth that one can expect in the international GTV going ahead?

Yes. Anirudh, I don't want to comment on this as a guidance. But yes, we do believe that, with some lag, active agent growth is the strongest indicator of future growth. And that is why we think of it as a North Star metric. That's a number that we focus and invest in increasing. So like I said, just the organic growth in active agents was almost 20% -- north of 20% this quarter. So that, combined with active booker growth as well, which was about 22%, is an indicator that, yes, we are increasing engagement. And a lot of these travel agents would have joined us for the first time. So if you see our cohorts, you will see that travel agents do -- typically if they do $1 of business in year 1, they will do more than double of that business year 2. Historically, right? So not to say that this will continue. But yes, I would agree that from a -- just directionally, the active agent growth is a lead indicator of future GTV growth.

Got it. Second question was on the regional vendor growth. So while you alluded to the fact that Middle East was weaker, if you were comfortable sharing what the growth was like in Europe and APAC specifically, where we put in a lot of investments? Was it significantly higher than the 17% international growth that we've seen organically?

See, Anirudh, just to clarify on Middle East as well. Middle East has shown high double -- a high teens growth in spite of the fact that there was, on the core business, in spite of the fact that there were the 2 Eid holidays. But yes, APAC and Europe coming from a smaller base are growing significantly higher. I don't think we have split our numbers, Vikas, basis geographies at this point in time. But yes, I would say significantly higher than the average growth of 17%.

Got it. Final thing was on Jumbo. So Jumbo, if you could just -- you mentioned the INR 800-odd crores of GTV and INR 30 crores of revenue. On a like-to-like basis, what would that growth have been versus Jumbo's own numbers last year?

So we can't comment on those numbers because, one, that we're not part of the consolidation that we did. And the numbers at the kind of diligence are very high-level numbers that we get to know. So we'll not be able to comment on their growth. But we can just say that the growth is -- there is a good growth and is in line with our organic business. But yes.

Understood. Understood. Sure. On take rates, Vikas, if you can just help us. I mean, how should one look at take rates evolving going ahead, given that Jumbo is obviously lower take rates? But as the business evolves over the next 2, 3 quarters, are these the kind of take rates that you would expect? Or there is some room for take rates to kind of inch upwards as Middle East does a little better, India does a little better over the next 2, 3 quarters?

So yes, as the mix of GTV changes and shifts from one particular region to other, there could be minor improvements in the take rate. But it would primarily be coming from the mix impact rather than we are increasing our take rates or gross profit in any particular region. So as we have mentioned earlier as well, our focus is primarily to maintain a similar kind of gross profit numbers rather than trying to optimize on the take rate and the gross profit numbers. But we are -- if you see in the current quarter as well, overall, the GP, gross profit numbers have increased from 3.22% to 3.52%. And this is primarily coming up because of the mix of the hotels and the air business. And that's how the improvement would happen in future as well.

The next question is from Prateek Kumar. [Operator Instructions]

Can you hear me? This is Prateek. I'm from Jefferies. My first question is on like a broad industry trend. I mean, like we have seen -- because I travel -- I track travel industry. So there is a global moderation in the growth in hotel industry in terms of ARRs. Also, there is [indiscernible] of the world, many countries and which -- because of the demand issue in general. Is this something which also impacts our growth in business because of contraction in the ARRs? And I mean, unlikely the way we grew across the world, like in line with India also, unlikely to see it going forward. So how does that impact?

So Prateek, I think there are 2 ways to look at it. There are -- if there are short-term headwinds because of softening of demand in different markets, it may have some marginal impact on our growth. But we have to keep in mind that one as a -- in general, our size compared to the overall size of the market is very small, right? So from a share of market perspective, we are still so small. So irrespective whether the market grows or not, I think the headroom for growth is always there. Second is we are in the business of aggregating existing demand. So until we start to saturate a source market, we will always have an opportunity to just aggregate the existing demand without having to rely on new demand to come in. Third, just because of the size of the market is so large, it's almost $2 trillion if you look at outbound travel, which if it is growing at 6%, 7%, even it doesn't grow at 6%, it grows at 2% also, it's growing on such a large base that our growth hopefully doesn't get hampered by minor headwinds across the globe. Yes, if something significant happens, of course, it can impact. But there is always some seasonality, there's always some softening of demand and which is very cyclic. That should not hamper us too much.

Okay. Question was actually not from a demand perspective. In general, my question was from growth and pricing perspective across the world on both the air and hotel segment. But I understand that you are saying that because the market is so large and our pie is small, and we continue to grow at our own pace, I guess. Another question is on -- like now you're listed for, I think, a couple of months. And is there -- and your financials are now sufficiently available in public domain, 2 quarter results are out, annual results. So is there any change in like on the ground in competitive intensity from some of your listed and unlisted peers of India and maybe elsewhere in the world?

Prateek, not as much. The domestic air, obviously, is very competitive because everybody is trying to get a piece of that, be it offline or online. So that sometimes can have comp pressure. But I think when it comes to the international air, our share has increased. So that demonstrates that we are winning from competition. And our outbound business also had a decent growth, keeping in mind the general elections were there. We could have gone better, but I think from a comp set right now, post listing and our results being out, I don't see any major pressures right now from our competition. Prateek, can we...

Yes, sorry. Yes, I got the answer, sir.

Okay.

One last question. Well, one last question on inorganic. Can you just sort of talk about the -- like, again, like there's been some time after last acquisition. Obviously, you're integrating it and ramping up, the Jumbo acquisition. But how are we looking at an organic strategy over the next 12 months for the company?

So Prateek, we are constantly evaluating opportunities. It's a stated part of our strategy to look at opportunities that make sense. And the -- how we look at opportunities remain the same. We are looking at complementary demand. So source markets where we may not have a significant presence ourselves, we may look at those markets from a demand network perspective. Or we've been looking at complementary supply opportunities, where aggregating getting access to supplier which we may not have direct access to previously. And the third is there are solid technology or travel technology opportunities which are available. Those are kind of like the 3 buckets. So constantly looking at opportunities, but nothing concrete to share right now.

[Operator Instructions] We have our next question from Karan Uppal once again. [Operator Instructions]

Just one question in terms of the hotel segment. So out of the total hotels which we are transacting on the platform, how much is the direct sourcing?

The direct sourcing is in the range of about 35-ish percent, right? I don't have the exact number at hand, but it's about in the range of about 35%.

Okay. And the international expansion, which we are doing, so the strategy would be for direct sourcing only?

No. So Karan, see, we are -- because we are a 2-sided platform, as a platform, we remain open to working with third-party suppliers as well. The reality of travel business is that supply is extremely fragmented, right? There are at least, I would say, roughly 2 million-plus properties across the globe that could potentially be sold to travel agents on the other side. We do not intend to aggregate all of that inventory ourselves. In fact, we believe that the -- our ability to combine direct sourcing with third-party supply efficiently is one of our key unique selling points just from the perspective diversity of supply that we're able to bring on board. So while continue to invest in building our direct supply, that's not the only channel to increase our supply base.

No, I understand that. But my question was mainly if we are increasing our focus on direct supply, then it might positively impact the take rates for the hotel segment. That's where I was...

No, no, that is true, Karan. It does give us pricing advantage, but it's -- then how we use that pricing advantage is either to grow the top line by just being more price competitive; or by keeping that margin for ourselves, increasing our margin, then it will improve our bottom line. Given that we are in a growth phase right now, the broad objective is that use the price competitiveness to pass on the benefits to the travel agents and continue to grow and invest in growing the top line and then drive operating leverage to drive EBITDA margins.

The next question is from Swapnil. [Operator Instructions]

This is more of a modeling question. So if I see your depreciation and amortization expense, last quarter, it was around INR 15 crores. This quarter, it is INR 12.4 crores. I would just like to understand like how should we look at this expense line item going ahead? And any reason for the variation in the quarter-to-quarter result?

Yes, Swapnil. So the decrease is primarily because of some intangible block getting depreciated fully, amortized fully out. And that was the reason. However, on a full year basis, on basis on the expected capitalization that we are looking at in the current year, the overall depreciation and amortization expense for the full year should be around INR 55 crores.

INR 55 crores. Okay. Got it. And just one, more of a basic question again. This is -- what is the difference between active agents and active bookers?

Okay. Yes, I think -- thanks for asking this question, Swapnil. I didn't realize that we didn't clarify it. Look, a travel agency will typically have more than 1 booker, right? So when we look at active agents, we count one travel agency working with us as one active agent. But if there are 3 bookers within the travel agency using the platform, then they count as 3 active bookers. This ratio of growth at which active bookers is increasing or the average number of bookers per agency is an important metric because it's an easy growth lever by making sure that all the bookers in a travel agency are using the platform. It also is an indication that if a travel agency was trying out the platform and saying, "Okay, let 1 or 2 bookers use it." But then they start telling everybody else in the travel agency to use the platform, that's a very strong indication of engagement. And hence, we are tracking the 2 numbers separately.

The next question is from Anirudh Agarwal. [Operator Instructions]

Yes. Just one question on the other income number. It seems much higher this year versus last year. So is that just on account of the treasury income from the cash we raised during IPO? Or is there something else to...

Yes. Primarily, it is -- the increase is driven by both increase in the treasury income generated through the funds in IPO. And plus, there were some old liabilities which were returned back in the current quarter.

[Operator Instructions] The next question is from Pranay Shah. [Operator Instructions]

This is Pranay from Anand Rathi. Sir, my question is in terms of airline GTV and take rates. So I think I might have missed the rest If you can explain the decline in the GTV which has been called. And -- but simultaneously, we have seen an increase in our take rates in terms of airlines. So this is -- so what is the thing -- what is the downside over here? Like some markets which are affecting or some airline contracts we have been not going ahead with?

So decrease in GTV was due to the reasons which Ankush has explained earlier in the call. This is primarily that we let go some of the high-volume, low-margin domestic air business. The overall increase in the take rate is primarily again because of the mix impact as our international air outbound business increases, wherein we again receive incentives, commissions more from the airlines as compared to the domestic business. That's the reason of the marginal increase in the take rates for the airline business.

And to answer this last thing. We haven't lost any contract with any airline, be it domestic or international. Just to answer your second point.

Okay. Also, sir, and second thing, in terms of hotels and ancillaries, where we see the service costs being increased as compared to quarter -- last quarter. So is it a quarter 1 phenomenon, which like we have the service cost increase? And then in the quarter 4, we see the decline in the service cost? So is the seasonality being played over here or...

So it is not more a factor of seasonality. It again depends on the mix of the suppliers that we are working with in the hotels and ancillary business, wherein some suppliers or hotels work on a net model wherein we market up. And thus, there is no further service fee we are parting to the travel agent. However, there are suppliers who give us commission. And out of that commission, we pass some commission to the travel agent. And so depending on the mix of the suppliers, you may see increase or decrease in the service fees accordingly.

Okay. And also, sir, continuing the previous participant question in terms of active bookers. So you said that you are tracking in terms of the travel agencies. If there are 3 persons who are booking from the same agency, you consider this as active bookers. But your code and everything will be the same. So how this tracking will happen? If you can explain the process.

Pranay, the way our system works is that every travel agency has a login, and then they create sub-users in the system. So if a travel agent has 3 bookers, they will have their own logins and they will be attached to the same travel agency. So we'll be able to track how many distinct travel agents within a travel agency are using the platform.

[Operator Instructions] Mitesh. [Operator Instructions]

Hello? Can you hear me?

Yes, we can.

Yes. I just wanted to ask you, can we develop a platform like Booking.com for a B2C category of business?

So Mitesh, technically, we can, but it would be a very different business from what we do. So it's not on the horizon for us to enter the B2C business.

Okay. Okay. But any long-term plans, any thinking on those lines?

No, Mitesh. I think our view is that we are building a travel distribution platform. B2C business is more of an online travel agency business. So no short-term or long-term plans around it.

[Operator Instructions] Yes, Pranay? [Operator Instructions]

Sir, just a follow-up on that active bookers. So when we said that we have registered buyers and in that monthly transacting, so that includes a travel agent only, right? It doesn't include the bookers for it?

No. Yes, so when we talk of active travel agents, even if there are 3 bookers in a travel agency, that count as 1. When we're talking of active travel bookers, then we are talking of 3 -- then we'll count those as 3.

Yes, Swapnil?

Yes. Just one more clarification. In the India air business, what would be the share of domestic and outbound now that we are focusing more on the outbound side?

So the outbound is around 75%, and domestic is around 30%.

And how do you -- just to expand that point. Like what would be the growth rate on a Y-o-Y basis, let's just say, on the outbound side and domestic side, if you could just bifurcate that?

Outbound side, as Ankush mentioned on the international, IATA, those carriers, we grew by 6.6%. And on the domestic side, we degrew, and that's the reason for the overall decline in the GTV of the air business.

We're giving up that high-volume, low-margin business, Swapnil. Which we kind of gave it up, therefore that degrowth which you see in the domestic air. We maintained our -- we increased our GP on the domestic business, what we sold this quarter.

We'll take our last question from Karan. [Operator Instructions]

Just last question on the wage hikes. When are you planning to give the wage hikes in this year?

So our increment cycle works on -- from July to June. So increments happen in the month of July. So that gets effective from July month.

Okay. So in Q2, we will see the wage hike impact.

Yes.

We'll take our last participant before we hand it over to the management for their closing remarks. [ Jeet Shah ]. [Operator Instructions]

I'm [ Jeet Shah from Arkema ]. Just going ahead, do you expect the GTV growth more towards volume-driven or more price-driven? Just a sense on how you're expecting the market to play out in the next 2, 3 years.

Jeet, I didn't understand the question. What do you mean by -- what's up by volume-driven or price-driven?

So the bookings you get. So your GTV increase, right, will be more like the way hotels would increase their prices because see, in the last 3 years post corona, where the prices for the world had declined drastically. So there is going to be a value component like price rise, they might have increased, right?

Yes. No, I got it. I think, Jeet, our view is that at this point, it is going to be more volume-driven than just average transaction value-driven because there is already some correction starting to happen in pricing, right? We saw much higher pricing last summer and last to last summer, which was post-COVID revival. But at this time, I think just the -- when pricing softens, demand increases. So we would expect the future growth to be more demand-driven than just price-driven.

Okay. And just want to say, you expect this trend to be more like a long-term trend, right?

Yes. Look, very hard to predict what happens in the future. But yes, I think for the foreseeable -- at least for the medium term, that's what it looks like.

That was the last question. With that, we conclude the Q1 FY '25 earnings call of TBO Tek. With that, I would hand it over to Ankush for his closing remarks.

So thank you, everyone, for joining this evening and spending time with the management here. The deck and everything is loaded on the website. If anybody has any question, feel free to please write to one of us, and happy to revert back. And see you next quarter, and thank you so much.

Thank you, everyone, for participating on this call. We look forward towards you participating at the next quarterly call. Thank you have a nice evening.

Thank you, everyone.