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    TBO Tek

    TBOTEKGood
    Consumer Services·12 Nov 2024
    Management Summary

    TBO Tek delivered a strong Q2 FY25, characterized by a structural shift towards the higher-margin hotel business, which now drives 84% of gross profits. The company successfully fast-tracked the Jumbonline integration and is aggressively deploying AI for pricing and customer service. While domestic air ticketing remains pressured, international expansion and hotel saliency are providing significant growth tailwinds.

    Highlights

    7

    • Gross Transaction Value (GTV) reached ₹8,000 crores, growing 24% YoY.

    • Revenue from operations stood at ₹450.7 crores, up 27.9% YoY.

    • Adjusted EBITDA grew 24.5% YoY to ₹89.6 crores with a margin of 19.89%.

    • Hotel segment saliency increased significantly, contributing 59% of GTV compared to 47% in Q2 last year.

    • International GTV growth was robust at 60%+ YoY (26% on an organic basis).

    • Jumbonline integration was fast-tracked by one year, completed on November 1, 2024.

    • Profit After Tax (PAT) came in at ₹60.1 crores, a 7.1% YoY increase, impacted by new UAE tax provisions.

    What Changed1

    vs Q3 FY25

    Guidance items4 → 3 (-1)

    Key financials

    Single quarter

    06 metrics
    1. 01Revenue₹450.7 Cr+27.9%YoY
    2. 02Adjusted EBITDA₹89.6 Cr+24.5%YoY
    3. 03Adjusted EBITDA Margin19.9%
    4. 04PAT₹60.1 Cr+7.1%YoY
    5. 05Gross Transaction Value₹8,000 Cr+24%YoY

    Segment breakdown

    Hotels and Non-Air
    59% GTV Contribution79% Revenue Contribution84% Gross Profit Contribution56.0% GTV Growth
    Air
    2.6% Take Rate33.3% Domestic GTV Share
    List

    Guidance & targets

    3
    CategoryTargetPriority
    Margin
    Adjusted EBITDA Margin
    20%
    		Medium
    Other
    Hotel Take Rate Range
    7.2% to 7.6%
    		High
    Other
    Jumbonline Integration Completion
    November 1, 2024
    		High

    Risks & concerns

    6
    RiskSeverity

    Domestic Air Ticketing Slowdown

    Management noted pressures in domestic air ticketing and a marginal decline in GTV for this segment. — Both acknowledged

    medium

    Geopolitical Headwinds in Europe

    While acknowledging macroeconomic stress, management believes their small base in a large TAM allows for continued growth. — Analyst downplayed

    medium

    Seasonality in Q3

    Q3 is historically the weakest quarter for TBO's organic business due to the end of summer travel. — Management acknowledged

    low

    Areas of Evasion(3)

    • Specific split between corporate and leisure travel
    • Specific headcount split between India and International
    • Forward-looking GTV growth guidance

    Q&A highlights

    3

    “The whole thesis is that EBITDA should grow via operating leverage not from take rate expansion.”

    Clarifies that management is prioritizing market share and volume over aggressive margin extraction from partners.

    asked by Karan Uppal

    2 min read5 chapters

    Detailed Narrative

    01

    Structural Pivot to Hotels Drives Profitability

    TBO Tek has successfully shifted its business mix toward the hotel segment, which now accounts for 59% of GTV, up from 47% a year ago. This segment is significantly more lucrative, contributing 79% of total revenue and 84% of gross profit. Hotel GTV grew 56% at an enterprise level, with international markets leading the charge at 64% growth, including the impact of Jumbonline.

    02

    Jumbonline Integration Fast-Tracked

    The integration of Jumbonline, originally slated for completion in November 2025, was finalized on November 1, 2024. This acquisition now contributes 8.5% of enterprise GTV and 7.6% of total revenue. Management expects this acceleration to drive cost optimizations and standardize back-office processes across the TBO ecosystem sooner than anticipated.

    03

    Take Rate Dynamics and Margin Stability

    The enterprise take rate improved to 5.68% from 5.51% YoY. While the hotel and ancillary take rate declined from 8.67% to 7.59% due to the consolidation of Jumbo's lower-margin markup model, the overall gross profit as a percentage of GTV improved to 3.86%. Management aims to maintain Adjusted EBITDA margins around the 20% mark while reinvesting operating leverage into growth.

    04

    AI and Technology Deployment

    The company is aggressively rolling out its 'H-Next' booking platform, which now covers 13% of international users, up from a 3% pilot. Additionally, AI-driven dynamic pricing has been deployed for 25% of wholesale customers, showing early improvements in take rates. An LLM-driven voice bot pilot handled 7,000 calls with a 60% success rate, aimed at reducing long-term customer service costs.

    05

    Regional Divergence: International vs. India

    International markets are the primary growth engine, with GTV up 60%+ YoY. In contrast, the Indian market saw muted growth in transacting buyers due to a high base and pressures in domestic air ticketing. To counter this, TBO is focusing on penetrating Tier 4 and Tier 5 Indian cities to expand its buyer base, while LatAm and APAC are identified as the next major growth frontiers.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.