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 risk and uncertainties that could cause the actual results or projections to differ materially from those statements. TBO Tech will hold no responsibility for any such actions taken based on such statements and undertakes no obligations to publicly update these forward-looking statements.

I will now hand over the call to Mr. Gaurav Bhatnagar for his opening remarks.

Thank you and over to you, sir.

Thank you, Aashvi, and good evening, everyone. Welcome to our Q1 earnings call.

We had uploaded our shareholder letter on our website yesterday, and I hope all of you had a chance to go through it. Before we jump into Q&A, we wanted to highlight a few salient features from this quarter.

The first one, I think this was by far the toughest quarter for the company in the last two years. The increasing disturbances in the Middle East caused severe disruption in travel across the globe.

I think the disruption expanded far beyond Middle East. Markets like India and Europe were also impacted because travel from east to west and west to east was disrupted because it is heavily reliant on the Middle East carriers.

The airfares were also very high. In spite of that, the company has delivered growth both on top line and bottom line, and we're very proud of it.

It has started to show the fact that the diversity of source markets that we operate in is a big factor in building resilience in our business model. Given that no one country or no one region heavily dominates our top line helps us cushion effects like the ones that happened in the last quarter.

A couple of other things that have helped us is that we were, as you all know, investing heavily into market development in Europe, and that helped tremendously. Even in a very tough quarter and travel in Europe was generally impacted as well, but we still delivered a 24% year-on-year growth in Europe.

The other thing that is helping the business, especially looking forward, depending on how long this crisis lasts, is our increasing saliency of North America. With the acquisition of Classic Vacations, North America is starting to be almost a quarter of our hotel GTV, which is substantial, and we believe we will be able to create growth plans over there.

That saliency will help us because that corridor, the North America-Europe corridor, is far more resilient compared to other travel corridors at this point in time. The final highlight purely on the numbers was that Middle East, in spite of massive crisis within the region, delivered flat numbers, right, it actually delivered 1% growth in constant currency, which is very commendable and full marks to our team for delivering that.

Net-net, our view is that the expanded investments that we made in retrospect were very timely because that helped us cushion a potential degrowth that could have happened in this quarter given our heavy reliance on the Middle East market. Europe came through, and the acquisition of Classic was also very timely because it has given us an entry into a much more resilient corridor.

The second thing to highlight for this quarter is that operating leverage was quite visible. Our bottom line, our EBITDA margins grew significantly faster than our GP or revenue margins.

As we all know, we've been promising operating leverage and it started to feel a bit mythical because we've been promising for it for some time. We were expecting to start to see it in Q4, but unfortunately the war broke out in that quarter.

We're happy with the fact that Q1, there is a clear demonstration of operating leverage. We expect, given that margins have expanded even on moderate top-line growth given the war situation, our expectation is that as top-line growth normalizes, when things come back to normal, the bottom-line growth should accelerate further.

The final point we want to highlight is that you would have observed that we've shared numbers in constant currency as well. This was feedback from some of you in the last call as well.

Secondly, this specific quarter was very unusual and you would see numbers both in INR and in constant currency. There was almost a 11% gap in our hotel GTV, when we looked at in constant currency versus INR, and which is leading to significantly higher growth numbers if you looked at INR stand-alone.

In the interest of transparency, we've started reporting numbers in constant currency as well. We should also highlight this was the first quarter when such a significant gap happened.

For example, even last quarter when the rupee had started to depreciate, there was only a 3% gap in hotel GTV, in constant currency versus INR, we did not find it significant enough to choose to report separately. Given the steep depreciation that has happened on a year-on-year basis, we've started reporting numbers in constant currency as well.

With that, we'll take a pause and open for questions.

Thank you, sir. We will now begin the Q&A session.

I would request all the participants to raise their virtual hand and introduce themselves and the firm they represent before going ahead with your question. We'll wait for a moment till the question queue assembles.

The first question is from Mr. Karan Uppal.

Karan, please unmute yourself and go ahead with your question.

Thanks for the opportunity. I hope I am audible.

Yes, Karan.

Yeah. Congrats, team, on very strong execution yet again in a very tough quarter.

All-round performance on top line as well as bottom line, congrats on that. The first question is on the operating leverage.

The EBITDA to GTV number in this quarter was at 1.3%, which was quite strong. The quarter got benefit from the Classic seasonality and operating leverage in the organic business also, but going ahead, do you believe that this on a consolidated basis EBITDA to GTV number at 1.3% is sustainable and hopefully grows from here as the revenue growth accelerate?

See, Karan, I think EBITDA to enterprise GTV is going to be a tricky number to track, especially at this point in time, for a few reasons. First one is that, and as there is a fair bit of difference between the take rate of our airline business vis-a-vis our hotels business.

As airline business starts to show its own growth, that saliency can move a little bit, which can have an impact because of the fact that the GTV volumes on airline are very high. The second aspect is that given the crisis, and you would have seen that the take rate in this quarter was slightly lower because of the fact that the regions were fighting for business in a tough environment.

From a dollar-value perspective, any growth would be accretive. There will be selectively places in such crisis situations where we do drop margin a little bit to win disproportionately more business.

I think the right metric to continue to look at, especially from an operating leverage perspective, is GP to EBITDA conversion, and that number should continue to improve.

Gaurav, you are indicating 26%, EBITDA to GP, that number should continue to improve from here on, is what you're saying?

That is correct.

Got it. Thanks for that.

Secondly, in terms of Middle East, given the situation remains volatile, do you expect that to come back to growth anytime soon? Because last time you had mentioned that the cancellations were lower and then search volumes were also increasing.

How are things on the ground currently?

Karan, the situation is extremely fluid. The fact that the Middle East was flat is quite an achievement in all honesty, given that that is the eye of the crisis right now.

It's also very hard at this point, we've given up on predicting what's going to happen because the situation literally changes every hour. In the last 72 hours again, some kind of a escalation has happened.

That's true just on the ground as well. There is a frequent change in behavior and mood on travel on the ground.

I would really not hazard a guess on what's going to happen in the Middle East and when it comes back to growth. We're thinking of that as optionality at this point in time that should that growth come in, that helps us accelerate bottom-line growth even faster.

Given where the situation is, it's very hard to bank on it.

Got it. No, we understand that.

Ex of Middle East, Q2 is generally seasonally strong for TBO, but Classic, the positive seasonality will reverse in Q2. How should we think about the growth in rest of the markets like Europe, North America, APAC from here on?

Look, I think year-on-year growth should be somewhat irrespective of seasonality because we're comparing year-on-year, and especially outside of Middle East. Middle East has dependency on when Ramadan falls and when Eid falls, but other than that, rest of the regions have similar seasonality same period every year, more or less.

The year-on-year growth would look probably similar. You're right that from a Q-o-Q perspective, this is a heavy quarter for Classic, no doubt about it, obviously, on a Q-o-Q perspective, that can have an impact.

Beyond that, outside of Middle East, we would expect nothing significant to change from a trajectory perspective, assuming nothing adverse is happening in the world.

Got it. No, I was just thinking about, let's say, in this quarter, FIFA World Cup was there.

Next quarter, European summer holidays would be there. Are they impacting the overall growth trajectory for you?

See,

on a Q-o-Q basis, Karan, historically, Q2 is bigger than Q1, and you would expect it to be same way. That is what we're really anchoring around that, just like last quarter, we said that let's aim for Q-o-Q growth and YoY growth.

We continue to aim for that. Yes, from that perspective, Q2 should be somewhat better than Q1 given that July, which is the heaviest travel month in the Northern Hemisphere, falls in Q2.

Got it. Thanks a lot for answering my questions, and I'll fall back into the queue.

Thank you.

Thank you, Karan. We'll now move to Mr.

Swapnil. Sir, please unmute yourself and go ahead with your question.

Hi, everyone. Thanks for the opportunity.

Also thanks for the taking the feedback and sharing the CC numbers this time around. My first question is around your growth numbers for the organic business.

So, 15% YoY growth on a CC terms is great at a time when Middle East is affected, definitely. From your growth standpoint, how do you model this from a go-forward perspective, assuming everything comes back to normal?

How should we model this growth from a slightly medium-term perspective?

Swapnil, I think if we were to just look at where we were from a growth profile perspective in Q3 of last year, which was last full quarter which was in some sense of normalcy, we would absolutely expect to get back to that when things get normal. The when is a big when, and we really don't have an answer for it.

I guess nobody does. Our expectation is that when things get back to normal, business can comes back to similar growth profile on the way we were growing at that point in time.

Now, whether this happens in this Q3 or Q4, very hard to say given what the situation is. Broadly, we don't expect a change in trajectory pre- and post-war at this point in time, if anything, this is not a commitment at all, but if anything, what we've seen is that post-crisis, usually the bigger players become bigger because of the fact that attrition usually happens in smaller and mid-sized players.

Will it be fair to say, Gaurav, that most of this growth will be driven by Europe and APAC, which this quarter did fantastically well for you, given that a lot of your investments last year would have gone in these two markets? Look,

yeah, I think, Swapnil, that's fair to say. Europe and APAC are leading the growth charter right now.

We are also expecting to see reasonable growth, like-for-like basis in North America as well, starting whenever, October, November, December, when it's a like-for-like comparison, admittedly, on a very large base in a very tough market, but we are looking for growth levers over there as well.

Got it, Gaurav. The second question is with respect to your organic margins.

This quarter around, you've delivered 1.5% EBITDA margin on GTV. Let's just assume things normalize and you start reporting 20% plus growth at the GTV level and possibly higher at a GP level.

These margins can expand to around 1.5% eventually? Is that the right way to look at it, assuming your investment phase is behind and you don't need to meaningfully increase your SG&A cost here on?

See, Swapnil,

look,

internally, like I was mentioning, we have come down to starting looking at our numbers from a GP to EBITDA conversion because now we have three different types of GTVs which have very, very varying GP profiles. We have the air GTV, which is like a 1% kind of a GP profile, but on the other hand, there is Classic, which is an 11% GP profile, and then there is our organic business, which is in the middle.

For us, it just becomes very hard to model by looking at GTV as blended GTV. What we do know is, at this point, unless we choose to, and we'll tell you if we choose to, if we choose to re-look at accelerating market development, etc., our SG&A growth will be significantly slower than GP growth, and hence those margins should expand meaningfully.

Understood. How to look at the Classic Vacations margins?

When I do the same math on Classic Vacations, the 3.4% margin is meaningfully higher versus the previous numbers that we have reported. Directionally, how should look at that business?

Swapnil, I think directionally, look, we have acquired this business only six months ago. Directionally, not a whole lot has changed in it.

You would be seeing higher numbers because of the fact that this is a heavy check-in period, right, hence the EBITDA is historically highest in this quarter for Classic, and hence those numbers will look higher, but nothing has materially changed either way in that business.

On a full-year basis, one should build in around 2.5% margin? Will that be a fair assessment?

I think that's a fair assessment.

Okay. Just the last thing on your working capital side as well.

There was some release this time around. I remember that there was some working capital investments last time.

From a seasonality perspective, is this the way to look at it, there will be some quarters where you will need some investments on working capital, some quarters you will have some of this releases, or it should ideally be a meaningfully negative working capital each quarter? I'm just trying to triangulate those things.

Thanks.

Swapnil, working capital does have a seasonality impact. To give you an example, like in the last quarter, we have explained some of those items were more seasonality, or I would say driven through how the business works.

For example, the performance-linked incentives, etc., they get accrued from the hotels or the airline suppliers, etc., over the year. Either they would be on the Jan to December calendar or April to March.

Generally, those accruals would be more or less highest at the time of March end. Those accruals get released, the payment gets released during the first half of the next year.

Similarly, at times, because of the supplier mix, etc., as well, some changes if happens in the supplier mix, and because there are different payable days for different suppliers, that may also impact the working capital movement.

Vikas. Just a related question to that.

What would be our net cash position right now? I understand that there is some borrowing that we had for the Classic Vacations business, net of that.

We have reported 1900, 1980 plus crore as a cash in bank, and we have $70 million USD of loan as well as a €6 million of a loan, working capital loan for Jumbo.

Got it, Vikas. Thanks much, and all the best, guys.

Thank you.

Thank you, Swapnil. We'll now move on to Mr.

Kavish. Kavish, please unmute yourself and go ahead with your question.

Hi, team. Thanks for the opportunity, and congratulations on a great set of numbers.

My first question pertains to India airline, just trying to understand a bit more on this. 15% GTV growth this quarter on the back of volumes shifting to East Asian carriers.

Does this mean our market share is far higher with East Asian airlines versus other geographies, and overall airlines grew 20% in 3Q and 4Q FY26, that was 17% this quarter? What was driving the momentum in 2H FY26 if this quarter's strength was attributed to this volume shift that we've spoken about in the shareholder's letter?

Kavish, see, very difficult to say that because of the Far East airline picking up the share, I think the lot of people are also flying on the European airlines. I think we kind of definitely in grabbing the business, and I think we did some right things in terms of our customer service, and I think the CAMs were very aggressive picking up this business.

Nothing to do with the shift of Far East, etc., but I think overall we fared up well and that 15% growth what we're showing you is something which I think was commendable keeping in mind the situation we were in. Kudos to the team for the same.

Got it. On Classic, we've mentioned that bulk of integration of Classic will be completed by 3Q FY27.

Earlier of course, we've spoken about the steps that we have taken to integrate and start cross-selling with Classic, but what levers are yet to start contributing to the business and what kind of an impact would you envisage led by these pending levers?

Kavish, basically it's a three-prong strategy, and it's quite straightforward. One is we're expanding our feet-on-street sales team in North America, both in the Classic as well as the TBO North America business, because it's a very large geo and very, very distributed and a very large travel advisor base over there.

That's the first step, and this is mostly happened. We have already upped our hiring, and most of the hiring is actually completed.

The second is integration and automation of many of these CA back-office and customer service experiences, for example, implementing our enterprise CRM into Classic and things like that, which is currently underway and which will allow us to improve the quality of service and also make it more measurable and more efficient as well. The third is the platform integration, which is the big one and which we are likely to finish by CY end of this current calendar year.

This is what will allow one, seamless integration of the TBO platform into the Classic ecosystem, and secondly, a more seamless selling and buying between the two platforms. While we have already integrated one way where TBO supply is now powering a fair bit of Classic supply, the vice versa cannot happen until the platforms migrate.

That's the other upside that we will see once this platform migration is completed. Then

fair to assume that most of the cost synergies are in the numbers already, or cost impact are in the numbers already, and revenue bit will see some pick-up going ahead, would that be a fair conclusion?

I think that's a fair conclusion.

Got it. Thank you so much.

All the very best.

Thank you.

Thank you, Kavish. We'll take the next question from Mr.

Manish. Sir, please unmute yourself and go ahead with your question.

Hi, good afternoon. Thank you for taking my questions.

This is Manish Adukia from Goldman Sachs. Firstly, congratulations again on a fantastic set of numbers across the board.

I had a couple of questions. The first one was just maybe a little bit more or delving deeper into just the modeling bit as we think about full integration of Classic, and starting December quarter, they will fully be in your base.

When I look at, let's say, your GP growth, there are maybe two opposing forces as we approach the December quarter. One is, let's assume that Middle East and Europe maybe normalizes a bit more, so that should be a tailwind to growth.

Then on the other hand, you have Classic, which will start forming a part of your organic growth, and because at least for the quarters, we don't have some visibility on how the seasonality there plays out, how should we think about your overall GP growth once Classic fully comes into the base? At this point in time, you're growing at about mid-teens or mid to high teens on organic basis, but because Classic is 1/4 of your overall GP, is it safe to assume that from December quarter, overall company-level GP could actually see a bit of deceleration despite Middle East coming back, or is that maybe a bit of a premature assumption?

Manish, I think you're right. There are two opposing forces playing right now, and I think the first thing to acknowledge is that for Classic, which is a business that we have just recently acquired, it will be a period of time before we get Classic standalone, and I'm not saying North America as a whole, but Classic standalone to start delivering enterprise-level growth.

I think we'll have to find those levers. We are confident we'll find them, but that's definitely a few quarters away.

On the other hand, if you remember when we presented our Q4 numbers, we had shown the organic growth in Jan and Feb before this war broke out. That growth was far higher than the 15% that is historical and that probably we are trending at.

Those are the two opposing forces that we need to blend for. I don't have an answer for you that what will that blend look like, but if and wishfully thinking, if things were to normalize back, I think we did not enjoy the full benefit of the investments we made last year.

We enjoyed in the sense that the market disrupted and we still managed to grow, but had the market not disrupted, we were expecting just absolute bumper growth in Q4 and Q1. Now, how soon normalization happens, does it happen in OND quarter and are we able to see similar growth numbers as Jan, Feb, then we are not concerned at all.

We also know that the ground realities of the Middle East are very unpredictable right now, but we are also three, four months away from that quarter. Very hard to predict, Manish, but we still remain optimistic that between the blend of what we're expecting to do in North America versus where our organic growth was starting to normalize at a new normal, if that comes back, we should still remain fairly healthy.

Very helpful, Gaurav. Thank you so much.

Then maybe just a follow-on question. Firstly, on the two regions which were discussed earlier in the question as well, which is APAC and Europe, which continues to do really, really well, organic basis 30% plus growth, 215 in APAC, and part of it you alluded to were a function of your timely investments, which have helped you get this level of growth.

Would you be able to provide any color as to the investments that you've already made, for what duration you would be able to reap the benefits of those investments before you may need to undertake another new investment cycle? What I'm trying to get at is, for how long do you think these APAC and Europe growth could sustain before you maybe need to undertake a new round of investments?

It's a tricky question to answer, Manish, but let me just share that on the whole, a key account manager will show at least four to six quarters of increasing growth before they start to kind of exhaust whatever they could have gathered within their region, with the caveat that this varies a lot, especially on terms of how much revenue you get per CAM varies depending on the source market. Germany would look very different from Italy, would look very different from Philippines, Indonesia, and so on.

This is tricky, right? One of the premise that we work with, Manish, is that once you bring a customer in, they organically grow plus your sales guy does bring in more business as well, and which is where the operating leverage happens.

It should not be so time-sensitive that you need investment every three or six months to drive another three or six months of growth. It is definitely more than that.

We don't have any early signs right now, especially because of the fact that signals are disrupted because of the crisis, but we don't have any early signs that we would start to see slowing growth because the investments have started to kind of already mature.

Very clear. My next question was on Classic again, and I know again it's been early or it's not been even a year since you've completed acquisition, but from a markers perspective, what will give you comfort that your Classic Vacation acquisition is moving in the right direction and is allowing you to get a foothold in the largest travel geography, which is North America, and what might it take for you to really realize the full potential of that market?

I know it's a very subjective 20,000-feet-view question, but any color maybe you can provide will be helpful.

Okay. I think, Manish, the first realization for us, and which is really a revelation for us, is how large the North America market is, especially when it comes to luxury outbound travel.

It's probably, and I'm not on exact numbers, but probably North America alone contributes more to luxury travel than the rest of the world combined, so that is just the scale of that market. The other bit that we've come across where we've started to realize is how large the travel advisor base is in North America and how large that opportunity is and how large some of the players are who are operating this space.

If you look at a consortia like Virtuoso and Travel Leaders, because they aggregate travel, they are not merchant of record, but they aggregate travel demand to travel agencies, and both those report more than $25 billion each of GTV that flows through their networks, right, and those are just two. The size of the market is immense.

For us, the core marker is, is North America on the whole growing for us or not, right? That's really where we want to get to, that if this is the market that we're operating in, which is that large, we should over a course of And this is, look, I think we will be realistic.

These are very developed markets, mature markets. They take time to break through, and you would see Europe we've been trying for almost five or six years before we reached where we did.

Hopefully not that long in North America, but several quarters through, if we are able to find enterprise-level growth in North America, then that's a big win for us because what we know is that that kind of top-line growth in North America will drive a far larger bottom line in that market.

Thank you so much, Gaurav and team. Really appreciate your responses.

All the best.

Thank you, Manish.

Thank you, Manish. We'll take the next question from Mr.

Prateek Kumar. Sir, please unmute yourself and go ahead with your question.

Yeah.

Can you hear me? Hi.

Good evening. Congrats for great results, sir.

My question again is on investments. Of course, the company went through heavy investment cycle for two years and which is now concluded.

How should we understand in terms of investments, and while you said that there is no rule there probably how soon your investments benefit gets exhausted, but that should for our modeling purpose, that should reflect in our peak EBITDA to gross profit at some stage, what is that EBITDA to gross profit you kind of see for your company on a total basis?

I think, Prateek, two things I'll focus on. First is that the quantum of investments, because the nature of investment in our business is an investment in a sales force, right, which is really hiring people.

The quantum of investment as a percentage of your GP will continue to shrink even if you invest it at the same levels as before. Right now we are not, but even if you were to invest at the same levels as before, because we are on a higher GP and there is a higher cash generation happening in the business, the quantum of investment doesn't correlate with the size of the business, right, it kind of remains same while the GP grows.

That will fundamentally mean that even when the investment cycle comes back, we should still be able to continue to grow our margins. Now, on where those margins can land, Prateek, is very hard to comment on because we don't want to give any guidance on that, because several things are in play right now.

One of those is that there is a whole thesis we still need to form on what does AI do to efficiencies, and the jury is still out on it. The second bit, Prateek, is that what happens in the Middle East in the medium to long run, right?

If this is a crisis which becomes something like Russia-Ukraine, then you will have to go back, look at it and say, look, we need to find other levers of growth and maybe there is an investment cycle because of it. The flip side is that if Middle East starts to normalize in the next couple of quarters, then we will be generating significantly more cash and hence an investment can still be absorbed while continuing to grow the EBITDA margins.

If you wanted to look at very steady-state businesses which have scaled up, say, in Hotelbeds or WebBeds, Webjet kind of businesses, those businesses are kind of starting to normalize anywhere between 45% to 60% EBITDA margins, which we are not at all anchoring towards in any short to medium term. Platform-level dynamics should play out, and we should if we choose to optimize, there is a significant runway for improving those margins from where they are today.

Sure. While of course improvement in margin is great, you are now not too much focusing on margin versus growth?

The question is actually flipped versus what we used to ask earlier, but

Sorry, Prateek, your voice broke, I couldn't really figure out the question.

Sorry. My question was so, while we are kind of encouraged with your margin improvement, what we have seen in past two, three quarters, but two quarters, but are we not focusing too much on margin versus growth, right?

We will be kind of optimizing growth versus margin and incrementally focusing on growth which is upwards of 20% and plus margin expansion, which is kind of an implication there.

Absolutely, Prateek. There is no change in that strategy.

Okay. Coming on to the AI question which you mentioned earlier, what is the CapEx and OpEx intensity in AI investments like Voya rollout, and where do they sit, and are there any measurable improvement in agent productivity from that?

Prateek, there are three broad initiatives happening right now. One is on CX productivity, second is on sales productivity, and third is Voya, which is our AI itinerary tool.

Voya remains very much experimental at this point in time. Look, we have seen a few bookings happen through it, but nothing that is going to impact your top line.

Having said that, the CapEx on it is also very minimal right now, which is probably sitting in CapEx, but

it is,

yeah, it is in intangibles, but it is not

It's all in-house, it's all done through the tech team, which is our all in-house team.

It's a lean team as is the mode in AI-native projects. It is not impacting our cost structures in any way at this point, but it is creating optionality on the other side.

CX is where we have actually seen significant improvements in productivity. The metric that we're trying to drive, and I don't have numbers for you today, but the metric we're obviously trying to drive is what percentage of GP do we spend on CX today and can that number start to come down, because that again is a lever for margin expansion.

There we have made significant inroads. Some of it is actually translating, although we have not reported any of it as yet, but some of it is actually translating into efficiency gains on the P&L, but it's a journey.

The other place where we are actually investing is creating our in-house CRM, creating a very interesting AI layer, which allows us to start doing things which allow our sales teams to know which travel agencies to go to, basis signals which we are collecting from across the enterprise, basis which are promising leads, which are at-risk travel agencies, which are travel agencies which are healthy. That's a project that is happening.

The key there is that can that increase number of active agents per key account manager? Very early days on it.

This is a launch that happened a few weeks ago, a couple of weeks ago, I don't have any early results on it and I can't even say that this is a successful project as yet. We are very hopeful on this project, and there's significant amount of engineering effort has gone into building this out.

Sure. Third question is on your competition.

How do you think competition would have done in markets like Asia-Pac and Europe where you have done strongest post your investments?

Prateek, hard to say, but we have clearly taken share, because it's hard to imagine that these markets could have grown at this level at all. In fact, they won't have grown at all, but we have high double-digit growth.

We must have taken share. I believe some of our peers would be releasing or have released their results in the last couple of days, so that may give some indication, but we haven't studied as yet.

We're clearly taking share because at this point in time there isn't any organic growth in the market.

Next on your constant currency numbers, great disclosures on every line item. Will you be sort of giving this data every quarter from here on, including region-wise, GP impact, and all the data which you have given, which I think is overdisclosure frankly, but would you be kind of disclosing this in later quarters also?

Prateek, directionally, yes. As Gaurav pointed out in the initial comments as well that we had seen a wild fluctuation in this quarter, and that's the reason we wanted to transparently show the numbers in the constant currency so that you have the real picture of the numbers.

Directionally, yes, we would tend to show the numbers in the coming quarters as well. Wherever it feels that it is overdisclosure, we can look at it and see whether that makes sense or not, but, yeah, directionally, yes.

Prateek, I think there was a lot of compelling requests for us to give a region break-up. The last two quarters, I think we've been giving.

I think that's something we will continue as well.

Thanks. Last question, this hosting and bandwidth expense fell 14% this quarter.

Any specific reason there?

See, this is something we also discussed sometime back. We had made significant investments in terms of technical investments to make sure that we optimize our traffic.

Also on the infrastructure, we essentially tried to move away from expensive solutions, infrastructure solutions, to solutions that we manage ourselves to essentially bring that cost down. That's the new baseline that we can assume from now on.

Thank you. These were all my questions, and all the best.

Thank you.

Thank you, Prateek. We'll take the next question from Mr.

Chirag. Please unmute yourself and go ahead with your question.

Hello, am I audible?

Yes.

Yeah. I have two questions.

If I look at your gross margin, it has down sequentially and as well as on year-on-year. Is it due to the contribution has increased from Classic and the pass-through to the agent is a little bit on a higher side, that's why we are seeing this number as a percentage of revenue sequentially down?

Second, the operating leverage which we witnessed during the quarter in terms of margin expansion to be expected to continue, yeah?

I think the first one is a mix change, right, because from revenue to GP.

Chirag, if your question is that on revenue to GP margin on sequential basis you're saying down basically, that as you mentioned, that is primarily because for Classic it is a big season and that is kind of driving down.

That's a saliency change. Chirag, on your other question on operating leverage, in the short to medium term, especially as a top line grows, for example Q2, we expect historically Q2 to be bigger than Q1 on top line, we should definitely see a little bit of further margin expansion in Q2.

Okay. This run rate of margin continue throughout the year, right?

No, I think look, because our business has seasonality, it will go both ways, right? For example Q3 historically is less than Q2, you will again see a dip in margin just because of the fact that revenue would be lesser, given that seasonality is not there.

Once the integration of Classic will complete, should we expect after that subsequent quarter a meaningful improvement or it will take some time, yeah?

Sorry, I didn't understand the question.

Once the integration of Classic will complete, okay, during this year, should we expect this operating leverage will continue to play out after the quarter?

Chirag, I think because Classic is a similar platform kind of business with fairly fixed cost. You would expect any top-line growth in Classic will also lead to operating leverage and margin expansion.

In fact, if you look at the current quarter itself, you will see some margin expansion in Classic because of the seasonality. The GP was higher and the costs were what they were, the flow-through was better in Classic as well.

Okay. From seasonality point of view, Q1 and Q2 is a little better for Classic, is that understanding correct?

Q1 is the highest. Q2 actually would be the lowest, because in Classic, as we mentioned that it is on the check-in basis.

Okay. Thank you.

All the very best.

Thank you.

Thank you, Chirag. We'll take the next question from Mr.

Samarth. Samarth, please unmute yourself and go ahead with your question.

Thanks for providing opportunity. I had two, three questions.

First one is if I just look at the organic SG&A growth, right, that was around 4% on a year-on-year basis in a constant-currency term. Is that the kind of run rate that we should carry into the rest of FY27?

That's the first question.

Samarth, I think it will expand a little bit from here in the short term, one, because it's also increments season in Q2, and secondly, as business revives back, there will be opportunities for us to opportunistically do a little bit of more market development exercise. I would say that it will be range-bound, but the SG&A growth may slightly increase, but not at the pace of top line, definitely.

Some elements of SG&A like payment gateway cost, etc., that's also linked to the top line.

Yeah.

Understood. Very helpful.

The second question is if I look at the organic hotels and ancillary gross profit as a percentage of GTV, that came down by around 30 bps. Can you just help me with 30 bps between, let's say, lower saliency coming from Middle East and our calibrated decision to protect the volumes?

Any rough idea that you can provide?

It's very hard, Samarth, to do a breakup of this, but absolutely we have fought for business in this quarter with the view that we don't want to lose money on it, but because that we are an operating leverage fixed-cost business, it sometimes does make sense in a tough situation to lower your margins and take top-line share. We have done that.

It's impossible to say what happened because of saliency and what happened because of just dropping margin, because both have happened, right? Middle East being at 1% growth in this market is also because we drop margins there, but it is also historically a higher-margin market.

Understood.

Understood. Now, my last question is if I just look at the intercompany elimination on TBO sales to Classic, that was around 65 crore thereabout.

Is that the right proxy for the cross-sell today and where do you expect that number to stabilize when the entire integration completes, which is, let's say, end of the year as you are indicating?

Yes, the numbers that you saw is that the sales which is currently being made by TBO to Classic per se. As we are expanding our reach and try to optimize on the inventory which would be selling from the TBO platform to Classic, we obviously look forward to increasing that share and we have seen the early shoots in the last quarter and we hope that that number would keep on increasing from here.

Just follow up on that question is, there would also be some selling that would be happening from Classic to TBO, right?

No, that has not started as yet. Like I mentioned, that requires us to first migrate and integrate the platforms.

That will start showing up once the platform migration has happened, probably early next year.

Understood. That was very helpful.

Thanks again for providing me the opportunity, and congrats on good set of numbers.

Thank you.

Thank you, Samarth. We'll take the next question from Mr.

Divyansh. Please unmute yourself, introduce the firm you represent, and go ahead with your question.

Hi, team. This is Divyansh from Latent PMS.

The first question, I think you mentioned during discussion, but are you seeing players vacating or shutting shop in the Middle East market because of all the events that are happening? If yes, then the second question is how easy or difficult is it for them to, let's say, go active again?

Divyansh, at this point, I think inbound into Middle East is most impacted. As our business is more anchored around outbound, I would say there isn't a massive attrition in our, say what you'll call our direct competitors or peers, but what is under serious stress is inbound businesses which depend on travelers coming into Middle East.

I think there we have serious stress, and hopefully, situation revives soon, otherwise we will definitely see attrition over there.

Does that then imply that for a So, you're saying inbound guys are struggling,

but

these inbound guys will also be, let's say, enabling people to move from, let's say, Middle East to Europe for travel.

No, that's, you see, I think that's a different ecosystem, right? The inbound is more like DMCs and hotels and providers of other services coming into Middle East, which is somewhat distinct.

There's some overlap, but somewhat distinct from the outbound ecosystem, which is players like us who sell the world to people traveling from Middle East.

Got it. Got it.

The second question is when, let's say, I'm a traveler and I go to a TBO agent and he helps me book a place which is actually sourced by Classic, which is what's, let's say, that 64 crores of business that we have highlighted, right? Where does

the Divyansh Divyansh, the 64 crores we have highlighted is the reverse, where TBO inventory is selling on Classic.

TBO inventory is selling on Classic. Got it.

Understood. Then maybe change in question.

Given that TBO has a lower take rate and everything, how does the P&L recognition happen between Classic and TBO? Because while there is a consol basis pay, you will net it off, but we report different take rates, GP, and everything.

Divyansh, we follow a arm's-length pricing between whatever the intercompany sales is happening. While the GTV gets eliminated, but from the transfer-pricing perspective, we keep the required margins, which is required to be kept by the selling entity.

There would be some margins which would be booked in the TBO Dubai entity, and then the revenue which is generated by the Classic entity is getting booked in the legal entity level at the Classic level.

Got it. Understood.

Just the last question. In the opening comments, we had mentioned that typically the currency depreciation impact is, let's say, I think the number mentioned was 3% and this time it is 11%, is it just purely driven by the volatility of the currency or was there a let's say opportunistic benefit or change in policy which led to such a big difference?

No, no, this is primarily what Gaurav mentioned in the opening comment is that in the Q1 of this current quarter, FY27 versus FY26 last year same quarter, when we translate the GTV of hotels business in the currency form in the last year numbers, there was a 11% growth coming just because of the currency translation. The 3% was for the Q1 FY26 versus Q1 FY25.

What we are highlighting is that this quarter is impacted too much by the currency fluctuations, and that's why we wanted to transparently present the constant-currency numbers.

No, no, my question is a bit different. I'm saying was there a change in policy or it's just

No, no, there's no change in policy.

It is just that rupee has depreciated.

Yes. Understood.

Understood. Got it.

Thank you. That's it.

Thank you.

Thank you. We'll take the next question from Mr.

Shaurya. Shaurya, please unmute yourself, introduce the firm you represent, and go ahead with your question.

Hi. Shaurya here from GrowthSpire Ventures.

Thanks for the opportunity. Just have one question from my side.

Beyond the agent-facing AI tool, could you walk us through how AI is specifically being applied on the supply side, particularly the contract rate negotiation with hotel and airlines and inventory loading, etc.? Because if you see the hotel supply chain below tier 1 markets globally are highly fragmented and traditionally it require a large manual on-ground team for the hotel name and listing, etc.

As we see AI adoption in the travel and tourism sector across the whole ecosystem, not just the TBO, but also the supplier and competitors, how much structural leverage do you think that TBO can capture from the usage of AI?

See, Shaurya, I think on the specific thing that you mentioned, contracting long tail through AI-led negotiations is not a big focus area for us to be honest, because a lot of our contracting is with either with chains or with large luxury hotels, because that is really where we operate. Also, for long chain, the whole hotel distribution ecosystem has significantly created an ecosystem of channel managers and aggregators who do this for you in a way.

To be very fair, this isn't a area of focus for us at this point in time.

Thank you.

Thank you.

Thanks, Shaurya. We'll take a follow-up question from Mr.

Karan. Karan, please unmute yourself and go ahead with your question.

Thanks for the opportunity again. Just wanted to check the split of the GTV in retail versus the B2B side of things, the API business, how's the split in this quarter?

We don't disclose specifically the GP percentages between

No, the GTV number.

The GTV number would broadly be between 50-50 only as the last quarter.

Just a feedback. If we can share further details on the B2B side of the business or the API business given that 50% of the GTV is derived from API, and last time also we had mentioned that APAC growth was mainly led by this API partnerships, if we can share some further details around that, how should we know the trends are moving in that part of the business, that could be very helpful for us.

We'll take that

We will take that point, and

we will see what best we can do from the disclosure perspective. Sure,

sure. Thank you.

Thank you, Karan. We'll take the last question from Mr.

Kavish. Kavish, please unmute yourself and go ahead with your question.

Hi, Kavish here from 360 ONE Capital. Thanks for the follow-up.

Sir, in the context of AI, we would appreciate your perspective on how the broader travel ecosystem is evolving. While there had been concerns that AI could potentially disrupt business models across the value chain, an alternate view is that the impact may be more pronounced for OTAs while travel aggregators and B2B players like TBO could remain relatively insulated or even benefit from that shift.

How do you assess the likely impact of AI across different participants in the ecosystem, and are there any recent, say, industry developments or trends that you believe are relevant here?

Kavish, I think you're right. There has been a fair bit of speculation on how the AI business models will evolve and then who do they impact.

What has happened in the last couple of quarters, I guess, is that both Anthropic and OpenAI haven't really tried to create a transactions or a payments framework within their apps, which basically means that there isn't a significantly easier way to make a booking via an agentic interface vis-a-vis just going on the website of an OTA. On the other hand, OTAs have started to participate through MCPs within these channels, but I don't think anybody has indicated or disclosed any numbers to say that there is a meaningful conversion happening through those channels.

As of now, it just feels like a status quo. There was a fair bit of trepidation and concern maybe two quarters ago.

At this point, it does feel like priorities have shifted for the frontier labs to not so much focus on, say, cannibalizing OTA businesses or anybody else, rather than focusing on other more enterprise use cases, I guess. From our perspective, we continue to experiment with all of it.

We're keeping on keeping track of what's happening in the ecosystem. We're experimenting with the similar MCP infrastructures and travel and itinerary planning tools, but it'll be fair to say that I think most of the predictable gains in the business are really going to get driven by what we have already talked about, like the implementing CX in AI and in sales effectiveness.

Understood and pretty interesting. Got it.

That's it from my side. Thank you.

Thank you.

Thank you, Kavish. I'll now hand over the call to Mr.

Ankush. Sir, please go ahead with the closing remarks.

Thank you, everyone, for joining the call today, and truly appreciate your time. Any further follow-up questions, please feel free to reach anyone of us.

Look forward to see you in our next earnings for Q2. Thank you.

Thank you.

Thank you.

Thank you, everyone. You can now disconnect your line.