TBOTEK — earnings call

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Prepared remarks

Moderator · Conference Operator

MS. VANESSA FERNANDES, ADFACTORS PR:INVESTOR RELATIONS

Vikas Jain

TBO Tek Limited February 11, 2026 Good evening everyone.

I am Vanessa Fernandes from the Adfactors PR Investor Relations team.

On behalf of TBO Tek Limited, I would like to welcome you all to the Earnings Conference call for Q3 and 9M FY26. Today on the call, we have with us from the Management, Mr. Ankush Nijhawan - Co- Founder and Joint Managing Director, Mr. Gaurav Bhatnagar - Co-Founder and Joint Managing Director, Mr. Vikas Jain - Chief Financial Officer, Mr. Anil Berera – Advisor, Mr. Akshat Verma - Whole Time Director and CTO, Mr. Pramendra Tomar - General Counsel and Mr. Shreshth Mahajan - Associate Director-Investor Relations.

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 risks and uncertainties that could cause the actual results or projections to differ materially from those statements.

TBO Tek 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. Vikas Jain for his opening remarks.

Thank you and over to you, Mr. Vikas.

Thanks, Vanessa.

Good evening everyone and thanks for joining us.

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.

As a result, we believe it is important to provide shareholders with additional clarity regarding some matters.

Regarding the accounting policy, Classic Vacations recognizes revenue from hotels and ancillary services on a check-in basis, unlike TBO Tek, which recognizes such revenue at time of booking.

This treatment is consistent with classic vacation's historical accounting practice and aligns with the nature of its business, even the longer booking to stay window and continued post-booking services until check-in.

Revenue from air transactions, however, is recognized at time of booking, consistent with TBO Tek's policy.

Accordingly, all revenue and related matrices for Classic Vacations have been reported on the above basis, while TBO Tek's organic business continues to report revenue and matrices on a booking basis.

Revenue from operations of Rs.

784 Cr for the quarter translates into an enterprise take rate of 8.08%.

The organic business delivered a take rate of 6.04%, while Classic Vacations reported a headline take rate of 24.94%.

It is important to note that Classic Vacation's take rate includes a 12.4% commission component that is passed to the travel advisors, which is structurally much lower in TBO's core platform.

As a result, these take rates are not strictly compliable on a like-to-like basis and introduce noise into the blended take-rate TBO Tek Limited February 11, 2026 matrices.

For this reason, we believe gross profit as a percentage of GTV is a more analytically robust measure of value capture.

Gross profit strips out pass-through commissions and better reflects the net economic value retained by the platform.

The second critical cause of platform health is the conversion of gross profit into adjusted EBITDA, which reflects operating efficiencies and execution discipline.

Gross profit to adjusted EBITDA conversion at enterprise levels stood at 23.7% for the quarter, compared to 25.3% in Q3 of FY25. Within this, the organic business delivered a conversion of 25.3%, while Classic Vacation delivered a conversion of 19.6%.

On a holistic basis, Enterprise GTV to Adjusted EBITDA conversion improved to 1.18% in Q3 FY26 from 1.05% in Q3 FY25, supported by contribution from Classic Vacation, which delivered a 2.46% GTV to adjusted EBITDA conversion for the quarter.

Thanks, and with this, I hand the call back to Vanessa for opening the floor for the questions.

Vanessa Fernandes

Thank you, Mr. Vikas.

We will now begin the Q&A session.

Participants are requested to raise their virtual hands to ask questions.

We request you to introduce yourself and the firm you represent before going ahead.

We shall wait for a minute for the question queue to assemble.

We have our first question from Mr. Karan Uppal.

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

Karan Uppal

Hi guys, can you hear me?

Vanessa Fernandes

Yes, we can.

Karan Uppal

Yes.

Couple of questions from my side.

Firstly, the air business recovered very strongly, 16% Y-O-Y growth on an organic basis.

So, just wanted to check, how are you seeing the air business from here on?

Is the growth rate sustainable?

That is the first question.

Ankush Nijhawan

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.

Karan Uppal

Okay.

Secondly, this quarter we have Ramadan.

So, there is some distortion in the numbers because of this, especially in the Middle East geography.

So, how are we thinking about the impact this quarter?

It is Q4, FY26.

Gaurav Bhatnagar

See, on a quarter-to-quarter basis, Ramadan fell pretty much in the same quarter last year as well.

So, while there will be a monthly deviation in numbers because Ramadan is straddling February and March this time.

Last year, it was completely in March.

But from a full quarter perspective, there will not be a very material change.

The only difference is that there is an uptick in business towards the end of Ramadan and then going into the Eid period, so that will straddle.

Last year, it was straddling Q4 and Q1. This time, it is largely going to be within Q3 and Q4. So, that is the only difference.

It should not have a very material impact this time because it is all within the same quarter.

TBO Tek Limited February 11, 2026

Karan Uppal

Okay.

Thanks.

Gaurav, just one question on Classic Vacation.

How is the integration playing out?

Any early signs of cross-sell, whether TBO business to Classic Vacation or Classic Vacation to TBO?

Any early signs there?

Gaurav Bhatnagar

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.

So, when it starts to convert into travel because there is a long window between which this business can cancel as well.

But the early signs are quite promising.

The Classic Vacations buying from TBO has, well, I cannot share any numbers, but it is becoming meaningfully large.

So, if I were to look at Classic Vacations as a standalone customer of TBO, it will already be amongst like a top 20 customers.

So, from that perspective, it is promising.

TBO buying from Classic Vacations is going to start in a matter of time.

There is a bigger integration that is required to enable that to happen.

Apart from that, the overall platform migration is happening, but that is a several quarters long project because it is complex.

And the system, the legacy on the very legacy on the Classic side.

So, the platform migration will probably take two or three quarters, but the cross-sell from both platforms will start sooner.

Karan Uppal

Okay.

Just last question to Vikas.

Sir, depreciation and finance costs have inched up this quarter because of Classic Vacations integration.

So, from here on, should we assume these numbers to be steady state?

Vikas Jain

Yes.

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.

Karan Uppal

Okay.

Thanks.

Thanks a lot.

I will fall back in the queue.

Ankush Nijhawan

Thanks Karan.

Thank you.

Vanessa Fernandes

Thank you, Karan.

We have our next question from Mr. Prateek Kumar from Jeffries.

Prateek, I requested you to introduce yourself and unmute your line.

Prateek Kumar

Yes.

Good evening and congrats for good results.

It’s Prateek from Jeffries.

First of all, may I request that the call be hosted slightly later in the day or the next day because you just posted results and the shareholder letter like 10 minutes back.

Just impossible to go through them and discuss during the call.

My first question is, Q3 again was impacted by Forex element.

How are we seeing the Forex element now and are there any changes in policy which we are introducing to reduce this impact on a sustainable basis?

TBO Tek Limited February 11, 2026

Vikas Jain

So, year-on-year, Forex impact has reduced per se, Prateek.

If you see the overall number has gone down materially.

Having however said that since till last year Q4 we were not doing any material hedging, especially for international business, and this as a practice we started after the Q4. So, hedging would obviously involve some cost wherein, wherever in currencies where we have difference in payables and receivables, to cover that risk we would have to incur such cost and that cost is getting captured in that Forex line per se.

Prateek Kumar

Okay.

So, it is the hedging cost which is there and not the MTM impact or something which is part of that line item.

Vikas Jain

So, that line would have all the hedging cost as well as MTM impact of the hedges as well as if there are any unhedged positions, if there is any gain or loss that is also included and plus, since we had given a foreign currency loan from TBO Tek- the holding company to Tek Travels DMCC Dubai entity for the CV acquisition any benefit or cost pertaining to the devaluation of those loans also get captured in this line.

Prateek Kumar

Okay.

Second question is on CV's integration.

So, while of course last quarter was particularly impacted by integration cost but is there any specific integration cost or some specific immediate synergy which we may realize like in Q4 versus Q3 and is there something specific which had impacted this quarter as well?

Gaurav Bhatnagar

Prateek, very early days.

So, our Q3, but calendar year Q4 for CV was in line with what they had projected as part of diligence.

So, it has played out as we expected it to.

These synergies are like earlier I mentioned, we have already started selling the TBO inventory into CV.

How that will materialize into incremental revenue or margin expansion is very early to say because like I said the booking windows are very long.

It will only be June, July, August, September when bulk of the travel will happen.

So, by that time we will know what part of the business that we have booked today is actually materializing and is it materializing at a higher take rate.

So, that is I think a few months away.

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 which like I said is a complex project.

So, that is a several quarters long project but that is where we will actually start to see both cost synergies as well as we are able to employ our TBO growth playbook onto the CV platform.

So, that I think is a few quarters away.

For now, we try and maintain a steady state and try and make sure that we accelerate our integration projects.

From an additional cost perspective, we do not envision any additional cost for these integrations.

We are managing it within our current resources.

Prateek Kumar

Thank you.

Our question is on your commentary and expectation which we have given out earlier on organic business revenue growth accelerating versus SG&A growth from next quarter onwards.

How are you looking at that comment now?

TBO Tek Limited February 11, 2026

Gaurav Bhatnagar

No, I think we stick to our conviction.

You would have already seen that every quarter the growth of SG&A has been tapering down and we expect that to continue in Q4 as well.

At the same time, from Q3 to Q4, we usually see a significant growth in the top line because Q3 is traditionally our weakest quarter and Q4 is our second-best quarter.

So, 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.

Prateek Kumar

And last question, is there any thought process around bringing both CVs and your accounting to same standards on top line GTV and EBITDA margins?

Gaurav Bhatnagar

Yes, Prateek.

We tried that but it is simply not possible.

The main reason being that CVs business books much in advance and then because of the nature of that business.

So, it is luxury and complex.

So, unlike the TBO business where each booking is essentially one hotel or one flight, bulk of what CV books is multi-hotel, multi-product itineraries.

Now, between the time when the booking happens and when the travel happens, the booking goes through several iterations, people will add additional room, add a hotel, add an excursion.

So, there is no point in time when you can nail down the revenue and say this is the revenue on this booking until the time the travel actually happens.

So, it would be hard to translate that into our model where when a booking is reconfirmed, we count it as revenue because of the nature of that business.

So, if we try to do that, I think it will create a fair bit of complexity.

So, we will try and run the business on an as-is basis, rather than try and force fit it into our business model.

Prateek Kumar

Sure.

Thank you.

And these are my questions.

Gaurav Bhatnagar

Thanks, Prateek, your comment was well taken on time.

So, we were anticipating our board meeting to finish a lot sooner today.

And hence, the delay between when we published, but we will keep that in mind going forward.

Prateek Kumar

Thanks Gaurav.

Vanessa Fernandes

Thank you, Prateek.

We have a next question from Mr. Manik Taneja.

I request you to kindly unmute yourself and proceed with your question.

Manik Taneja

Hi, thank you for the opportunity.

While I do understand this quarter's performance is colored by the consolidation of the Classic Vacations business, but just stepping back on the airlines business, we have seen a strong GTV performance in the current quarter unlike the weak seasonality that we typically tend to see in this business in this quarter.

If you could spend some thoughts as to what drove the strong performance over here in this particular quarter and how should we be thinking about these trends on a go-forward basis?

That is question number one.

The second question that I have, is with regards to EBITDA as a percentage of GTV, which also has an impact of the classifications higher TBO Tek Limited February 11, 2026 profitability.

How should we be thinking about this matrix if you were to think about over a two-to-three-year period?

Those would be my two questions.

Ankush Nijhawan

On the air, I think there were some learnings, you know, which we obviously learned from in the last previous quarters.

So, we kind of fixed that.

One thing good is that we did not compromise on our GP.

We still maintained the same GP, what we were maintaining in the same quarters.

But I think we did some things correct, which we wanted to.

So, I think that kind of played up in our favor.

Also keeping in mind, Manik, we also had this disruption in December with one of the carriers, which all of us know about, yet we kind of pulled through with a good growth.

And we anticipate the same momentum as we go into Q4. And hopefully it should be in the same lines, at least double digits.

And I think that is the plan, what we have internally.

Manik Taneja

Just to clarify.

Ankush Nijhawan

Yes.

Go ahead.

Manik Taneja

Yes.

So, just on that double-digit growth outlook from the air business, you are saying air GTV will essentially grow in double digits over the medium term.

Is that correct?

Because this quarter seems to be almost like a 20% growth.

Ankush Nijhawan

I think let us focus on Q4, at least the short term.

And then I think once we are confident on maintaining the momentum, then probably I can give a better color for the medium term as well.

Gaurav Bhatnagar

Yes.

How to look at EBITDA as a percentage of GTV.

See, it is a bit nuanced, but directionally, it will go in the same direction as EBITDA as a percentage of GP.

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.

So, earlier, the flow through from revenue to GP conversion was quite high for the TBO organic business.

But it is materially lower for the Classic Vacations business.

And hence, what we are anchoring around is that the GP is a kind of true net revenue for us in a way.

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.

So, what one we are anchoring around saying that let us look at EBITDA as a percentage of GP to truly understand the conversion from revenue to a bottom line.

We are also starting to talk about EBITDA or adjusted EBITDA as a percentage of GTV because that is a metric many of our peers are also using.

The nuance there is that not all GTV is equal.

As you know that the airline GTV, while significantly large in volume, actually delivers much lower take rates.

So, it is a bit, this number can fluctuate a little bit more than the EBITDA to GP number because in a quarter where we have high growth in the airline business, this number may actually shrink a little bit.

So, directionally in the long run, this number will move in TBO Tek Limited February 11, 2026 upwards in the same pace as EBITDA to GP.

But our conviction still remains that EBITDA to GP is a more consistent number to measure compared to EBITDA to GTV.

Manik Taneja

Sure.

That is quite helpful Gaurav.

Just to prod you further, because that will basically show up the true value of the platform.

From an EBITDA to GP conversion, if you could give us some sense of your operating expenses below gross profit, what proportion of your other expenses or operating expenses below gross profits are essentially variable in nature, which will fluctuate in line with the volume of business, to what may essentially be fixed cost.

Gaurav Bhatnagar

Vikas?

Vikas Jain

So, Manik, as we have started disclosing the breakup of the SG&A cost below gross profit level, from I believe last shareholder letter, we have shared those details in our letter as well.

If you see there are broadly four, five components in that piece.

So, primarily the variable nature of the expense is hosting bandwidth cost and the payment gateway charges.

So, that expense would primarily grow in line with the growth in the revenue of the GP or the GTV numbers.

But the other cost, which is the employee benefit cost and the business support service and the others, those would primarily be looked at fixed nature of cost, And therein we are saying that operating leverage would get generated as we scale our business more.

Manik Taneja

Great.

Thank you.

All the best for the future.

Gaurav Bhatnagar

Thank you, Manik.

Vanessa Fernandes

Thank you, Manik.

We have our next question from Mr. Kavish Parekh.

We request you to kindly unmute yourself and proceed with your question.

Kavish Parekh

Hi, thanks for the opportunity.

This is Kavish Parekh from B&K.

My first question is on Classic Vacations.

So, at the investor event, you outlined a roadmap highlighting certain low hanging initiatives, some of which you have already started to tap into.

While benefits remain some time away, do you have any timelines in mind with respect to execution year?

And how would you envisage the growth trajectory for Classic over the next, say, three to four years?

That is the first question.

Gaurav Bhatnagar

Okay.

So, Kavish, like I said that the lowest hanging fruit is cross-sell on both sides.

Cross- sell from TBO into Classic has already started and we are seeing quite promising results.

Cross-sell from Classic into TBO is a few weeks away because it requires a little bit of work on the tech.

The other big integration that we are working on is the platform migration where we will introduce our booking platform into the Classic ecosystem.

That is a several quarters long project.

It will be a phased-out project as well.

So, the benefits of it will start to accrue probably in H2 and not before that.

Over a three-to-four-year period, Kavish, the way to think of growth is not just on the classic but the overall North America business for TBO Tek Limited February 11, 2026 TBO.

And that was our investment thesis at the beginning as well.

What has happened with classic is that one, we have gotten access to about 10,000 active, high luxury travel advisors in the North American markets.

The second access we have gotten is, access to very deep consortium relationships in that market, namely Virtuoso, Signature, Travel Leaders, Travel Savers, etc. So, both these are relevant for unlocking growth in the core TBO business and the organic TBO business as well.

So, our view would remain that, we will expect over the next three or four years, our North America business to continue to grow in double digits, just like all other geographies have demonstrated growth in the early phases with a caveat that we are already starting with a large base.

So, for example, you would see today markets like APAC or Europe are growing a good north of 30%.

But coming from a smaller base, APAC is coming from a base a couple of hundred million dollars.

Now in North America, we are already starting with a base of more than 600 million dollars.

But having said that, we would definitely endeavor to find high double-digit growth in North America as a whole over the next three or four years.

Now some of it may come in the TBO organic business and some of it may come into the Classic business.

But from our perspective, the value of this acquisition and the ROI on this acquisition will be measured by finding that growth for North America as a whole, not just standalone Classic or standalone TBO.

Kavish Parekh

Fair enough.

Thanks for the detailed explanation.

My second question is on the margins.

So, you have indicated that EBITDA growth is expected to outpace GP growth starting next quarter.

Here, should we interpret this largely as a function of operating leverage at Classic where EBITDA growth would inherently exceed GP growth as scale improves?

Or would organic business be the larger contributor?

So, further on, absolute margins while TBO standalone margins could potentially reach around 17%, 18%.

Classic had margins of about 11% last year.

So, should we expect this to act as a drag on consolidated margins in the near term?

Or what are the thoughts on Classic’s margins converging closer to TBO's levels?

Any timeline, any indication here would be great.

Yes, that is the second question.

Gaurav Bhatnagar

So, Kavish, on your first question, the Q4 growth that we are talking about is pure operating leverage on the organic business, right?

So, obviously with Classic consolidation, the numbers will look larger.

But what we have been committing for the last couple of quarters is that we will demonstrate significant operating leverage and flow through of incremental GP to bottom line in Q4. And that is on the organic business.

And we are sticking to that commitment.

So, on the organic business, we will see a significant margin expansion happening, hopefully, in Q4. Now, on your other comment, you are right that the Classic business, if you looked at as a percentage of revenue, feels dilutive.

And which is why my previous comment that the true representation of the business will be looking at EBITDA conversion from GP, which is more in line with the TBO business, right?

Both are about mid-20s, right?

Ankush Nijhawan

Yes, Classic is 20% and we are at 25%.

TBO Tek Limited February 11, 2026

Gaurav Bhatnagar

Yes.

So, the Classic business is converting from GP to EBITDA at about 20%, TBO business is converting at about 25%.

And this convergence, we do expect that to happen, I cannot give you a timeline right now, it is very early days.

But we do expect to see efficiencies, and Classic has the same operating leverage.

I think the business from a cost basis is fully paid for in the sense that maybe there is some incremental sales team expansion that will happen on the Classic business.

But we are not expecting the cost in that business to grow substantially.

So, any incremental top line growth will convert heavily into the bottom line.

And hence, this margin expansion should happen.

So, while I do not have a timeline for it, we would expect GP to EBITDA conversion to converge for the TBO core business as well as Classic.

Kavish Parekh

Got that.

Lastly, on our take rates.

So, organic TBO hotel take rates have remained strong for several quarters now.

While the geographical mix has been largely stable, what is really driving this sustained strength organic TBO hotels?

Has there been a shift in the underlying hotel mix towards more premium categories?

And if so, how sustainable are these take rates?

Because historically, we have seen some volatility in this matrix.

So, any color on that stability would be helpful.

And if I can just squeeze in one more, could you share some color on what drove the sharp jump in the others revenue segment?

So, is this the new initiative that you have been trying to grow or does this also pertain to Classic?

Gaurav Bhatnagar

Okay.

So, on your first question, Kavish, I think part of the take rate fluctuation that you see is also in a similar nature at the revenue level as what we are explaining on Classic because some of our suppliers are commissionable suppliers.

So, what happens is we receive a commission on every booking and then part of a portion of that commission to the travel advisor which gets netted off at the GP level.

So, a fairer and kind of more honest view would be to look at GP as a percentage of GTV as against revenue as a percentage of GTV to get a more consistent view of take rates.

Having said that, we have worked hard to maintain take rates at a fairly consistent level.

Part of it is that there are smaller businesses like the ancillary businesses which operate at a slightly higher take rate.

So, while they are small in size, they do add a few bps to our overall take rate as they grow faster than the core hotels business.

Second is that in certain quarters where the mix between our enterprise business and our retail business moves towards the retail business, the take rates also improve at that point.

And then we have incremental margin that we are accruing from programs like the Platinum program which we have talked about in the past.

So, the Platinum program is a meaningful program right now and the override commission that we earn over there they add to positively to our take rate.

So, that has allowed us to maintain or improve our take rates a little bit.

What was your second question?

Kavish Parekh

The ‘Others’ revenue segment.

I think about Rs.

40 Cr out of it.

Vikas Jain

So, the other revenue segment if you see on the consolidated basis it is obviously driven by some growth from the organic business.

But primarily those numbers have been stuck primarily because of the Classic’s consolidation.

TBO Tek Limited February 11, 2026

Kavish Parekh

Understood.

And you mentioned that there tends to be some variation in the mix between enterprise and retail.

So, is there some seasonality here that we have been seeing over these years in terms of contribution from enterprise and retail customers?

Gaurav Bhatnagar

No Kavish.

There is no seasonality over there.

What happens on the enterprise side is customers are large.

So, sometimes their business can be a bit spiky.

It can significantly go up or significantly go down, which just changes the mix by a few percentage points here and there which will reflect in the overall take rate by a few bps.

Kavish Parekh

Got it.

Thank you so much.

All the very best.

That is it from my side.

Gaurav Bhatnagar

Thank you.

Vanessa Fernandes

Thank you Kavish.

We have a next question from the line of Mr. Chirag Kachhadiya.

Chirag, request you to kindly unmute yourself and proceed with your question.

Chirag Kachhadiya

Yes.

So, one question on other expenses breakup which you have given in the shareholder letter.

If you look at the year-on-year plan which is almost about 18% and there is a drop.

Can you provide trajectory in next quarter?