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Analyst Meet / AGM
26-Oct-23
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Conference Call
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Dreamfolks Services
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Strong travel demand
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Dreamfolks Services conducted conference call on 25 October 2023 to discuss the financial results and performance of the company for the quarter ended September 2023. Ms. Liberatha Kallat – Chairperson & Managing Director, Ms. Giya Diwaan – Chief Financial Officer, Mr. Balaji Srinivasan - Chief Technical Officer and Executive Director and Mr. Sandeep Sonawane – Chief Business Officer of the company addressed the call
Highlights of the Concall
- Revenues grew 65% to Rs 282.49 crore in Q2FY24 from Rs 171.24 crore in Q2FY23 led by pick up in volumes in this quarter driven by strong travel demand
- Last quarter the company had mentioned that there is a timing difference between cost increases for lounge operators and price changes for customers. This mismatch has now started to correct itself which as a result improved margin on a sequential basis.
- The domestic passenger traffic, as reported by the DGCA, has witnessed a growth of 20% on YoY basis in H1FY24, while the Dreamfolks pax has increased by 47% in the same period, indicating the growing demand for lounge services in India as well as changing attitude of people towards having new experiences.
- Domestic revenues were 76% of total revenues in Q1FY24 while international revenues were 24%.
- The company has partnered with one of the biggest card issuers in the country to provide Golf services to their customers which are a positive step in diversifying its revenue mix and increasing the wallet share of other services. This partnership streamlines golf booking and access to elite courses for premium card holders
- The company has also entered Malaysian market with offering technology solutions to the clients in SEA. It has on-boarded one of the key players in the airport lounge space in Malaysia, by offering its technology w.r.t. card-based lounge benefit management. This is a different model where the lounge operator, in addition to being a service provider, also acts as a client for the company to provide such lounge benefit management platform.
- The company has also collaborated with a leading visa service provider to offer premium lounges at Visa processing centers and doorstep visa services.
- The industry is also going through a structural change where card issuers are changing the program structure of the benefits to a spend-based structure. At an industry level, this optimization in benefits for non-premium cards may have a short-term impact on card issuance. Due to this change, while in the short run the company expect a reduction in the revenue trajectory, but for the longer term, the move to a spend based benefit mechanism will be sustainable for all the stakeholders concerned. The broader change put forth by the banks would be visible begining November-December at the industry level.
- The company expects travel industry to grow at around 9% CAGR and expected to reach US$ 125 billion by FY27 from US$ 75 billion in FY20.
- India is expected to see a significant growth as number of credit cards is expected to grow by 33 times in next two decades driven by increasing shift towards digital payments.
- During the quarter, the company has on-boarded one of the largest network providers to offer E-SIM solution to its customers. The recently announced partnership with a top E-SIM solution provider, allows its clients offer their customers to purchase international SIM Cards at affordable rates for global destinations in a hassle-free manner.
- The company has no major expansion need for the time being and is confident of financing any future acquisition or expansion through internal approvals.
- The company expects gross margin of 11-13% in FY24
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