Dreamfolks Services conducted conference call on 24 May 2023 to discuss the financial results and performance of the company for the quarter ended March 2023. Ms. Liberatha Kallat – Chairperson & Managing Director, Ms. Giya Diwaan – Chief Financial Officer and Balaji Srinivasan - Chief Technical Officer and Executive Director of the company addressed the call

Highlights of the Concall

• Revenue grew 174% to Rs 773.25 crore in FY23 primarily on the back of continuing uptake in passenger volume, steadily growing ticket size and increasing preference to avail lounge access facility.

• Domestic air traffic grew drastically in FY23, approximately 60%, which has surpassed pre-COVID levels. For Q4FY23, it improved by approximately 52% as compared to Q4FY22 to 37.5 million domestic passengers. The awareness around facility to use airport lounges has also significantly increased over the past year.

• The government of India recently announced the UDAN 5.0 schemes, with the objective of improving air connectivity to regional areas, democratizing the aviation sector and connects small airports to some key foreign destinations, and boosts the overall tourism sector in the country. Till date, 425 plus new routes have been added under this scheme, and the number of airports have increased from 74 in 2014 to 147 as of date.

• Number of passengers availing lounge access and other touch points to us has grown at a healthy rate of approximately 131% year-on-year in FY23 and approximately 76% in Q4FY23. In FY23, passengers accessing the airport lounges stood at 8.15 million compared to 3.5 million in FY22.

• In terms of the lounge infrastructure, number of lounges continues to grow in India, along with an increase in size of existing lounges. The company sees a very strong uptake in sustainable air traffic levels and thereafter, a preference to opt for value-added services such as lounges, spa services, F&B outlets and more.

• Currently, only a small percentage of eligible credit/debit cardholders are availing the access to airport facilities. Thus with the growing awareness and percentage, the future growth potential is phenomenal.

• The credit card penetration in India is low and expected to increase exponentially over the next 2 decades. Research suggests that the estimated increase in credit card users is 33 times.

• The company also on boarded 11 corporate clients for whom it aims to provide customized services offerings and assist them run their loyalty programs

• The company has incorporated a wholly-owned subsidiary in Singapore with a view to expand the global footprint. The main objective of the new subsidiary is to carry out the operations related to airport operation services including lounge operations and access, running of loyalty programs.

• During the last quarter, the company extended its association with Vidsur Golf and acquired a 60% stake in the company at an aggregate consideration of Rs 1.5 crore to capitalize on a growing golf market in the country and expand its portfolio of service offerings to now include golf sessions and golf lessons.

• The company continues to have strong client relationships that are helping in building scalable, predictable, stable and sustainable revenue and operating margins

• The driving factor for Dreamfolks business is the airport passenger traffic and the credit card issuance.

• Currently there are 12 railway lounges across the country and the company expects to add more such lounges in coming months. However, in terms of the revenue, it is a very miniscule numbers coming from there. But it is growing by 25% to 30% month-on-month in railway business. Bit all depends on that how many lounges would be coming up. The government decides on which railway stations they would want to have these benefits. So depending on whichever lounge would be coming up, Dreamfolks plans to have a tie-up with these lounges.

• The company expects sustainable Ebitda margins of around 13-15%.