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    TBO Tek

    TBOTEKGood
    Consumer Services·3 Nov 2025
    Management Summary

    TBO Tek delivered a stable Q2 FY26, characterized by strong growth in its high-margin hotel segment and successful international expansion. The company successfully navigated Q1 headwinds to post a 19% increase in Gross Profit. The primary focus of the call was the strategic integration of Classic Vacations, which management believes will unlock significant supply synergies and growth in the US luxury travel market.

    Highlights

    7

    • Gross Transaction Value (GTV) grew by 12% YoY, driven by a 20% growth in the hotels business.

    • Gross Profit (GP) increased by 19% YoY, outstripping GTV growth due to a favorable mix shift toward hotels.

    • Adjusted EBITDA (excluding M&A costs) reached ₹104 crores, representing 16% YoY growth.

    • Completed the acquisition of Classic Vacations on October 1, 2025; consolidation to begin in Q3 FY26.

    • APAC market showed robust performance with 40%+ growth, while Europe and Middle East also saw strong recoveries.

    • New travel agents added in the current fiscal year contributed 6.9% to GTV, up from 4.3% in the prior year.

    • Adjusted EBITDA margin for the quarter stood at 18.3% (excluding one-time M&A costs of ₹13 crores).

    What Changed3

    vs Q3 FY26

    Guidance items11 → 3 (-8)Risks discussed4 → 3 (-1)Q&A highlights8 → 3 (-5)

    Key financials

    Single quarter

    05 metrics
    1. 01GTV$3.5B+12%YoY
    2. 02Gross Profit—+19%YoY
    3. 03Adjusted EBITDA₹104 Cr+16%YoY
    4. 04Adjusted EBITDA Margin18.3%
    5. 05M&A Related Costs₹13 Cr

    Segment breakdown

    Hotels and Ancillary
    20% GTV Growth5.6% Take Rate35% Commissionable Model GTV
    Air
    — GTV Status
    List

    Guidance & targets

    3
    CategoryTargetPriority
    Revenue
    Classic Vacations Growth Rate
    15-20%
    		Medium
    Margin
    EBITDA Growth vs GP Growth
    Outstripping
    		High
    Profitability
    Adjusted EBITDA Margin Base
    18.3%
    		High

    Risks & concerns

    4
    RiskSeverity

    LatAm Structural Challenges

    Ongoing IOF tax issues in Brazil and currency volatility are impacting outbound travel demand and creating FOREX risks. — Management acknowledged

    medium

    Air Segment Competition

    Intense competition from B2C OTAs and B2B peers is pressuring take rates in the airline business. — Both acknowledged

    medium

    Integration of Classic Vacations Tech

    Classic's technology stack needs to be integrated into the TBO ecosystem to fully realize supply synergies, which will take time. — Management acknowledged

    low

    Areas of Evasion(1)

    • Specific regional P&L breakdowns were not provided due to shared platform costs.

    Q&A highlights

    3

    “Classic adds to the denominator but not so significantly for us to have a big drag... we should be able to find in the short term growth synergy to drive GP.”

    Investors were concerned that acquiring a slower-growing asset would dilute TBO's high-growth profile.

    asked by Manish Adukia

    2 min read5 chapters

    Detailed Narrative

    01

    Classic Vacations Acquisition: A Strategic Pivot to US Luxury

    The acquisition of Classic Vacations, closed on October 1, 2025, is the centerpiece of TBO's expansion strategy. Classic operates at a significantly higher take rate of approximately 22% and a GP margin of 11%, compared to TBO's core hotel take rate of 5.6%. Management expects to drive 15-20% growth in this business by integrating TBO's superior technology and global supply pool, which Classic previously lacked under private equity ownership.

    02

    Operating Leverage Begins to Manifest

    Management signaled a shift from an intensive investment phase to one of harvesting operating leverage. SG&A growth is expected to taper down as international hiring is largely complete. Consequently, EBITDA growth is projected to outstrip Gross Profit growth starting in FY27, with the current adjusted EBITDA margin of 18.3% serving as a baseline for future performance.

    03

    Hotel Segment Dominance and Mix Shift

    The hotel business remains the primary growth engine, with GTV increasing nearly 20% YoY. This segment now represents a larger portion of the overall mix, which helped drive a 19% increase in Gross Profit despite a lower 12% growth in total GTV. The company is also seeing success with its 'Platinum' hotel program, which has crossed 150 participating hotels and is driving incremental revenue through overrides.

    04

    Regional Performance Divergence

    Performance varied significantly by geography, with APAC leading at 40%+ growth and Europe/Middle East showing strong recovery. Conversely, LatAm grew at a more modest 10% due to structural headwinds like the IOF tax in Brazil and currency volatility🌐. India's business has stabilized and is expected to return to growth in 2026, supported by a turnaround in the air segment's GTV.

    05

    Technological Edge through AI and Data

    TBO is increasingly leveraging AI to optimize pricing and markups. The goal is to maximize conversion from the millions of searches performed on the platform while maintaining the highest possible markup. This IP-driven approach contributed to a slight improvement in hotel take rates on a QoQ basis and remains a key pillar for maintaining margins against B2C OTA competition.

    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.