TBO Tek — Q3 FY26 earnings call

Call held 11 Feb 2026

Management summary

TBO Tek reported its Q3 FY26 results, marking the first full quarter with Classic Vacations integrated, contributing significantly to the ₹784 crores revenue. The organic air business showed robust 16% YoY growth, and enterprise GTV to Adjusted EBITDA conversion improved to 1.18%. While gross profit to EBITDA conversion saw a slight dip at the enterprise level, management anticipates strong top-line growth and operating leverage for the organic business in Q4 FY26, alongside a strategic focus on achieving high double-digit growth in North America over the next 3-4 years.

Highlights

  • Revenue from operations of ₹784 crores, driven by Classic Vacations integration.

  • Organic air business demonstrated strong 16% YoY growth.

  • Enterprise GTV to Adjusted EBITDA conversion improved to 1.18% in Q3 FY26 from 1.05% in Q3 FY25.

  • Cross-sell from TBO to Classic Vacations has started with promising results.

  • Anticipated significant top-line growth and operating leverage for the organic business in Q4 FY26.

Concerns

  • Gross profit to adjusted EBITDA conversion at enterprise levels declined to 23.7% from 25.3% in Q3 FY25.

  • Air business GP decreased to 1.1% in Q3 FY26 from 1.2% in Q3 FY25.

  • Forex element impacted Q3, though overall impact reduced YoY.

Key financials

  1. Revenue from Operations ₹784 Cr
  2. Enterprise Take Rate 8.1%
  3. Gross Profit to Adj. EBITDA Conversion (Enterprise) 23.7% -6.3%YoY
  4. Enterprise GTV to Adj. EBITDA Conversion 1.2% +12.4%YoY
  5. Organic Air Business Growth 16% +16%YoY
  6. Air Business GP 1.1%

What they filed

Q1 FY27: revenue up 81.2%, net profit up 31.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue451 422 446 511 568 +26%784 +86%814 +83%926 +81%
EBITDA75 55 65 74 88 +17%100 +82%105 +62%138 +86%
Net profit60 50 59 63 68 +13%54 +8%60 +2%83 +32%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentTake RateGross Profit to Adj. EBITDA Conversion
Organic Business6%25.3%
Classic Vacations24.9%19.6%

Capital allocation

high confidence
  • Capex Capex disclosed
    • In-house IT work for Classic Vacations integration
    Chirag, there is no incremental Capex for it. There will be some in-house Capex for the IT work, but that is not a substantial amount. It is not substantial.
  • Debt Debt disclosed
    So, this quarter includes the debt and amortization cost for the PPA provisional that we have done. While the PPA study is currently provisional, but we do not anticipate major changes in the same. So, the debt cost is already taken into account, the amortization cost is taken into account, the cost which will get amortized for the CVPP. And similarly, the finance cost includes the full quarter cost for the loan that we have taken for the Classic Vacation application.
  • M&A Classic Vacations Acquisition · Integrated · Consideration ₹[object Object] (undisclosed)

    Meaningfully expands the scale of our platform and provides access to 10,000 active, high luxury travel advisors in North America.

    Contributed to ₹784 Cr revenue, but added complexity to headline metrics and increased depreciation/finance costs.

    This quarter represents an important milestone in TBO's journey as we integrate Classic Vacations into our financial and operating matrices for the first time. While the consolidation meaningfully expands the scale of our platform, it also adds complexity to how certain headline metrics should be interpreted.
  • Liquidity Liquidity disclosed Hedging policy in place for forex differences, aiming to hedge 70-75% of payment/collection differences.
    As regarding the hedging policy basically wherever we have difference in payments and collections at a particular any currency level let us say for an INR or an Euro or a GBP. We try to hedge the difference amount in the range of around let us say 70% to 75% we try to hedge that amount in any particular market.

Guidance & targets

Air Business Growth

  • Organic Air Business Growth Momentum Air Business Growth · Q4 · Medium confidence continue momentum
    So, Karan, as we do not talk about forwards, but yes, I can tell you that we will continue the momentum in Q4 as well.

    — Ankush Nijhawan

  • Air Business Growth Air Business Growth · implied ongoing · High confidence early teens
    We still rather grow in our early teens. We can grow more but we are very happy to maintain our GP as well as some decent growth and obviously outbeat the market. Right? I think that is more important as well.

    — Ankush Nijhawan

SG&A Growth

  • SG&A Growth SG&A Growth · Q4 · High confidence tapering down
    the growth of SG&A has been tapering down and we expect that to continue in Q4 as well.

    — Gaurav Bhatnagar

Top Line Growth

  • Organic Business Top Line Growth Top Line Growth · Q4 · High confidence significant growth
    we expect to see a meaningful growth in top line in Q4 while the SG&A will not grow at the same pace and hence we should see a significant flow through to the bottom line.

    — Gaurav Bhatnagar

Operating Leverage

  • Operating Leverage Demonstration Operating Leverage · Q4 · High confidence demonstrate operating leverage
    So, we remain convinced on that and that is on organic business not counting CV. So, we should be able to demonstrate that operating leverage in Q4.

    — Gaurav Bhatnagar

Air Business GTV Growth

  • Air GTV Growth Air Business GTV Growth · medium term · Medium confidence double digits
    air GTV will essentially grow in double digits over the medium term.

    — Ankush Nijhawan

North America Business Growth

  • Overall North America Business Growth North America Business Growth · next three to four years · High confidence high double-digit growth
    we would definitely endeavor to find high double-digit growth in North America as a whole over the next three or four years.

    — Gaurav Bhatnagar

Profitability

  • EBITDA growth vs GP growth Profitability · starting next quarter · High confidence EBITDA growth to outpace GP growth
    EBITDA growth is expected to outpace GP growth starting next quarter.

    — Gaurav Bhatnagar

Margin Expansion

  • Organic Business Margin Expansion Margin Expansion · Q4 · High confidence significant margin expansion
    on the organic business, we will see a significant margin expansion happening, hopefully, in Q4.

    — Gaurav Bhatnagar

Conversion Ratio

  • GP to EBITDA conversion Conversion Ratio · implied long-term · Medium confidence converge
    we would expect GP to EBITDA conversion to converge for the TBO core business as well as Classic.

    — Gaurav Bhatnagar

Take Rates

  • Blended/Hotel Take Rates Take Rates · next few quarters · High confidence remain range bound and stable
    We would expect the numbers to remain range bound, Karan, because we are not actually anticipating any pricing action on our end. And we are also not expecting the saliency of the business to change dramatically over the next few quarters.

    — Gaurav Bhatnagar

What to watch in Q4 FY26

Organic Business Top Line Growth

Next quarter (Q4 FY26)
Current Significant growth expected in Q4
Target Continued significant growth

Why it matters

Demonstrates organic business strength and contribution to overall performance.

we expect to see a meaningful growth in top line in Q4 while the SG&A will not grow at the same pace and hence we should see a significant flow through to the bottom line. So, we remain convinced on that and that is on organic business not counting CV. So, we should be able to demonstrate that operating leverage in Q4.

Risks & concerns

  • Forex Volatility

    medium

    Forex element impacted Q3, but overall impact reduced YoY; hedging policy in place for 70-75% of currency differences.

    Both acknowledged

  • Competitive Intensity

    medium

    Competitive landscape remains status quo, though intense in some geographies.

    Analyst acknowledged

  • Seasonal Impact from Ramadan

    low

    Ramadan straddling February and March may cause monthly deviation but no material change from a full quarter perspective.

    Analyst downplayed

  • Large Agents Bypassing Platform

    low

    Risk of top 0.1-1% of agents dealing directly with suppliers, but business model relies on long tail, and credit limits are managed.

    Analyst downplayed

Q&A highlights

5 direct
Air Business Growth Sustainability Direct
So, Karan, as we do not talk about forwards, but yes, I can tell you that we will continue the momentum in Q4 as well.

Analyst questioned if the strong 16% YoY organic air business growth is sustainable, and management confirmed continued momentum for the next quarter.

Asked by Karan Uppal

Classic Vacations Integration and Cross-sell Partial
So, TBO selling to Classic Vacations has already started. So, we have done that integration. And I would say that the early signs are quite promising because Classic Vacations has a very long booking window and a check-in window... The overall platform migration is happening, but that is a several quarters long project because it is complex.

Analyst sought clarity on the integration progress and early cross-sell signs, with management indicating promising initial results for TBO selling to Classic, but a longer timeline for full platform migration.

Asked by Karan Uppal

Classic Vacations Depreciation and Finance Costs Direct
Yes. So, this quarter includes the debt and amortization cost for the PPA provisional that we have done... the finance cost includes the full quarter cost for the loan that we have taken for the Classic Vacation application.

Analyst inquired if the increased D&F costs post-acquisition are steady state, and management confirmed they are fully accounted for in the current quarter.

Asked by Karan Uppal

Forex Impact and Hedging Policy Direct
So, year-on-year, Forex impact has reduced per se, Prateek... we try to hedge the difference amount in the range of around let us say 70% to 75% we try to hedge that amount in any particular market.

Analyst asked about the impact of Forex and hedging policy, with management stating reduced impact YoY and a clear hedging strategy for 70-75% of currency differences.

Asked by Prateek Kumar

CV Integration Synergies and Costs Partial
Prateek, very early days... These synergies are like earlier I mentioned, we have already started selling the TBO inventory into CV... The immediate synergies that we will see are likely going to be us TBO also buying from CV which should start happening in the next couple of months and then the broader benefits will happen when we migrate the core booking platform of CV onto the TBO ecosystem.

Analyst questioned immediate synergies and costs from CV integration, and management clarified that while some cross-sell has begun, major benefits from platform migration are still several quarters away.

Asked by Prateek Kumar

EBITDA as a percentage of GTV vs GP Direct
What we are trying to anchor away is from looking at revenue as the top line metric, because Classic Vacations has a significantly large revenue, but almost 50% of that revenue is a commission pass through to the travel advisors. So, that is not really, you know, income in a true sense of the word... And from there on the operational efficiency of the business to convert that GP that into bottom line cash is a true representation of the business.

Analyst sought clarity on the preferred profitability metric, and management explained why GP as a percentage of GTV is a more robust measure due to Classic Vacations' pass-through commissions.

Asked by Manik Taneja

Agent Credit and Risk of Bypassing Platform Partial
What you are describing is probably the top 1% or a top 0.1% of our travel agencies who will actually be able to work directly with the suppliers. The whole business model is dependent on a long tail of small businesses dependent on the platform for accessing supply... Also, Amit, sometimes we do not expose our credit limits with a full partner also. So, that kind of also kind of ask them, can be leakage for them to deal with or to supply directly, that can be one of the reasons as well.

Analyst raised concerns about large agents bypassing the platform due to credit, and management clarified this is a rare occurrence for a small segment of agents, and credit limits are managed to mitigate this risk.

Asked by Divyansh Gupta

Classic Vacations UI/UX and Platform Migration Capex Direct
See, the branding for Classic will remain distinct from the TBO branding because they serve as a different kind of customer. The underlying UI/UX may change somewhat, especially when the platform migration happens... Chirag, there is no incremental Capex for it. There will be some in-house Capex for the IT work, but that is not a substantial amount.

Analyst asked about UI/UX changes for Classic Vacations and associated Capex, with management confirming distinct branding, potential UI/UX changes during migration, and no substantial incremental Capex.

Asked by Chirag Kachhadiya

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Detailed narrative

Q3 FY26 Performance and Classic Vacations Integration

TBO Tek reported revenue from operations of ₹784 crores for Q3 FY26, marking the first integration of Classic Vacations into its financial matrices. The enterprise take rate stood at 8.08%, with the organic business delivering 6.04% and Classic Vacations reporting 24.94%. The consolidation significantly expanded the platform's scale, though it introduced complexity in interpreting headline metrics, leading to a focus on gross profit as a more robust measure of value capture.

Profitability and Operating Leverage

Gross profit to adjusted EBITDA conversion at enterprise levels was 23.7% for the quarter, a decrease from 25.3% in Q3 FY25. The organic business achieved a 25.3% conversion, while Classic Vacations was 19.6%. Management anticipates significant top-line growth in Q4, particularly for the organic business, while SG&A growth is expected to taper down, leading to a meaningful flow-through to the bottom line and demonstrating operating leverage.

Air Business Performance and Outlook

The organic air business showed strong recovery, achieving 16% year-on-year growth. Despite this, the air business's Gross Profit (GP) was 1.1% in Q3 FY26, down from 1.15% in Q2 FY26 and 1.2% in Q3 FY25. Management expects the momentum in the air business to continue into Q4 and aims for double-digit GTV growth over the medium term, emphasizing maintaining GP while growing in the early teens.

Classic Vacations Integration Strategy and North America Growth

The integration of Classic Vacations is progressing, with TBO already cross-selling its inventory to Classic Vacations' customers, showing promising early results. The full platform migration is a complex, multi-quarter project expected to take two to three quarters. The acquisition provides access to 10,000 active, high-luxury travel advisors in North America, and TBO Tek aims to achieve high double-digit growth in the overall North America business over the next three to four years.

Take Rates, Direct Sourcing, and Working Capital

The organic TBO hotel take rates have remained strong, influenced by ancillary businesses, the mix between enterprise and retail, and the Platinum program. TBO core's direct sourcing is about 40%, while Classic Vacations' is significantly higher at 80-85%. Classic Vacations operates on a highly negative working capital model due to long booking-to-check-in windows, which will contribute to negative working capital at the enterprise level.

Forex Management and Competition

The overall Forex impact has reduced year-on-year, with the company hedging 70-75% of its payment and collection differences in various currencies. Management noted that the competitive landscape remains largely status quo, though intensity can vary by geography. They also addressed concerns about large travel agents potentially bypassing the platform, stating this is rare for their business model which relies on a long tail of smaller businesses, and credit limits are managed.

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