Release Date: February 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dreamfolks Services Ltd (BOM:543591, Financial) reported a revenue from operations of INR305 crore for Q3 FY24, marking a 50% year-on-year growth.
- The company has a strong market share of around 90% in card-based domestic lounge access in India.
- Dreamfolks Services Ltd (BOM:543591) has expanded its service offerings beyond airport lounges to include railway lounges, meet & assist, golf games & lessons, airport transfers, visa services, spa services, airport dining, transit hotels, nap room access, and eSIM.
- The company has launched the DreamFolks Club, offering a range of membership packages aimed at providing luxury and comfort for all budget ranges.
- Dreamfolks Services Ltd (BOM:543591) has received several awards, including Economic Times Best Brands 2023 and India's Impactful CEO 2023 awards, reflecting its strong market presence and leadership.
Negative Points
- The company is experiencing initial pressure on volumes due to structural changes in the credit card industry, with many banks moving to a spend-based structure instead of fixed benefits.
- Gross margins have slightly decreased, standing at 12.54% for Q3 FY24 compared to previous levels.
- The transition to a spend-based benefit mechanism by banks is still in early stages, creating uncertainty about its long-term impact on volumes and margins.
- Despite the growth in revenue, the company remains cautious about macroeconomic uncertainties and their potential impact on the travel industry.
- The contribution from non-lounge services remains negligible at present, though the company aims to increase this to 20% of its top line in the next four to five years.
Q & A Highlights
Q: How do you see air traffic growth playing out over the next few years?
A: We envisage air traffic growth to be in the range of 15% to 16% CAGR for the next four to five years. (Balaji Srinivasan, Chief Technology Officer, Executive Director)
Q: Despite industry turbulence, margins seem stable. Will there be disruptions in margins in the next few quarters?
A: We aim to maintain margins between 11% to 13% for the next few months. However, it is still early to comment on the long-term impact of the spend-based model. (Liberatha Kallat, Executive Chairman of the Board, Managing Director)
Q: Can you elaborate on the new membership program and its growth prospects?
A: The membership program aims to increase service discoverability, offer contemporary services, and tap into consumer cohorts without cards. We do not have specific sales targets but aim to drive these objectives. (Sandeep Sonawane, Chief Business Officer)
Q: How will the shift to a spend-based model impact volumes and growth?
A: We have already started seeing changes with top issuers implementing the spend-based model. While there is an impact, growth remains strong, and we expect other segments to pick up. (Liberatha Kallat, Executive Chairman of the Board, Managing Director)
Q: What is the unique number of domestic lounge visitors per quarter or year?
A: Typically, unique users are in the range of about 4% to 5%. (Balaji Srinivasan, Chief Technology Officer, Executive Director)
Q: How is the new partnership with Healthians and MyFlowerTree structured?
A: We act as an aggregator, offering these services to consumers of our clients through our technology platform. (Balaji Srinivasan, Chief Technology Officer, Executive Director)
Q: What is the cash on the balance sheet at the end of December, and how do you plan to spend it?
A: The cash on the balance sheet as of December 31 was INR49 crore. We have a capital allocation policy for future investments, acquisitions, and business expansion, with a focus on returning value to shareholders through dividends. (Giya Diwaan, Chief Financial Officer)
Q: How do you see the impact of the spend-based model on conversion rates and growth in FY25?
A: We believe the spend-based model will stabilize over time as users adapt. In the short term, we are observing migration and selection patterns among users. (Balaji Srinivasan, Chief Technology Officer, Executive Director)
Q: What is the price point of the new membership cards, and how will they be marketed?
A: The membership cards range from INR6,999 to INR99,999. We target both consumers and enterprises, with a focus on driving B2B business. (Sandeep Sonawane, Chief Business Officer)
Q: How do you plan to manage potential cannibalization of your B2B clients with the new B2C membership product?
A: The membership program is primarily a marketing tool to bundle services for enterprises. We do not focus on direct B2C sales and ensure our pricing is not competitive with our banking clients. (Liberatha Kallat, Executive Chairman of the Board, Managing Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
