Earnings call transcript: MakeMyTrip Q3 2025 misses EPS forecast, stock dips

Published 01/23/2025, 08:44 AM
MMYT
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MakeMyTrip Limited reported its third-quarter fiscal 2025 earnings, revealing an EPS of $0.23, missing the forecast of $0.27. Despite strong revenue growth, the earnings miss led to a premarket stock decline of 1.03%, with shares trading at $102.09. The company continues to expand its international presence and innovate with AI technologies, aiming for long-term growth.

Key Takeaways

  • MakeMyTrip's EPS missed forecasts by $0.04, affecting investor sentiment.
  • Revenue exceeded expectations, driven by strong growth in bookings.
  • The stock fell 1.03% in premarket trading following the earnings report.
  • The company highlighted significant expansion in international markets.
  • Focus on AI innovations and corporate travel segments remains strong.

Company Performance

MakeMyTrip demonstrated robust performance in Q3 fiscal 2025, with gross booking value increasing by 26.8% year-on-year in constant currency. The adjusted operating profit reached a record high of $46 million, and the margin improved to 1.76% from 1.6% the previous year. The company's expansion into international markets and corporate travel segments contributed significantly to its growth.

Financial Highlights

  • Revenue: $267.36 million, exceeding the forecast of $259.6 million.
  • Earnings per share: $0.23, missing the forecast of $0.27.
  • Gross booking value growth: 26.8% year-on-year.
  • Adjusted operating profit: $46 million, a quarterly record.

Earnings vs. Forecast

MakeMyTrip's EPS of $0.23 fell short of the $0.27 forecast, a miss of approximately 14.8%. This deviation is notable given the company's historical trend of meeting or exceeding expectations. However, the revenue surpassed predictions, indicating strong underlying business performance.

Market Reaction

Following the earnings announcement, MakeMyTrip's stock experienced a 1.03% decline in premarket trading, with shares priced at $102.09. This reaction reflects investor concerns over the EPS miss, despite positive revenue results. The stock remains within its 52-week range, suggesting moderate market sentiment.

Outlook & Guidance

Looking ahead, MakeMyTrip targets an adjusted margin of 1.8% to 2% and continues to focus on international market expansion, corporate travel, and AI implementation. The company projects strong growth in emerging travel segments, such as pilgrimage and events.

Executive Commentary

CEO Rajesh Margo expressed confidence in the company's growth trajectory, stating, "We are confident of growing at a higher rate of growth than the industry." He highlighted the company's robust repeat rate and favorable macro trends that support continued expansion.

Q&A

During the earnings call, analysts inquired about potential demand slowdowns and growth across different segments. MakeMyTrip reported no significant demand slowdown and emphasized strong new customer acquisition rates, ranging from 1.5 to 2.5 million per quarter.

Risks and Challenges

  • Potential macroeconomic pressures affecting travel demand.
  • Maintaining growth in a competitive market.
  • Ensuring the successful implementation of AI-driven initiatives.
  • Navigating regulatory changes in international markets.
  • Addressing potential supply chain disruptions.

Full transcript - MakeMyTrip Limited (MMYT) Q3 2025:

Vipul, Moderator/Host, MakeMyTrip Limited: Congratulations at MakeMyTrip Limited, and welcome to our fiscal 2025 Third Quarter Earnings Webinar. Today's event will be hosted by the company's leadership team comprising Rajesh Margo, our Co Founder and Group Chief Executive Officer and Mohit Kabra, our Group Chief Financial Officer. As a reminder, this live event is being recorded by the company and will be made available for replay on our IR website shortly after the conclusion of today's event. At the end of these prepared remarks, we will also be hosting a Q and A session. Furthermore, certain statements made during today's event may be considered forward looking statements within the meaning of the Safe Harbor provision of the U.

S. Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance, are subject to inherent uncertainties, and actual results may differ materially. Any forward looking information relayed during this event speaks only as of this date, and the company undertakes no obligation to update the information to reflect changed circumstances. Additional information concerning these statements is contained in the Risk Factors and Forward Looking Statements section of the company's annual report on Form 20 F filed with the SEC on July 2, 2024.

Copies of these filings are available from the SEC or from the company's Investor Relations department. I would like to now turn over the call over to Rajesh. Over to you, Rajesh.

Rajesh Margo, Co Founder and Group Chief Executive Officer, MakeMyTrip Limited: Thank you, Vipul. Welcome, everyone, to our Q3 call for fiscal 2025. Happy to start the call by sharing that Indian travelers continue to demonstrate their eagerness to travel and experience new horizons in this seasonally strong quarter for leisure travel. Confluence of rising income levels and changing consumer behavior to spend a bigger portion of available discretionary surplus is driving the growth for both domestic and international tourism in India. A recent survey by Visa (NYSE:V) indicates that 62% of Indian consumers plan to increase their spending on discretionary goods and services.

These favorable macro trends, combined with our focused executions, have enabled us to outpace industry growth consistently. We are pleased to deliver strong performance across all our business segments with an accelerated year on year growth rate of 26.8% in gross booking value in constant currency terms during the reported quarter compared to a growth rate of 22.9% during the first half of this fiscal year. Alongside accelerated booking growth, we have also been able to drive operating leverage, and the adjusted operating profit, which is at an all time quarterly high of $46,000,000 has registered a year on year growth of about 38%. On the macroeconomic front, India's GDP growth forecasts reflect a positive economic outlook driven by strong domestic demand and strategic public investments. The World Bank recently said that India's growth is projected to remain steady at 6.7% a year for the next 2 fiscal years beginning April 2025, making it the fastest growing larger economy in the world.

India is undertaking significant investments in infrastructure to bolster economic growth and achieve its development objectives. Travel infrastructure comprising roads, railways and airport infrastructure is a pivotal part of these investments, making point to point travel seamless, convenient and reliable. This seamless connectivity has been one of the major reasons for the growth of travel and tourism in India and will continue to drive growth in the future as more and more domestic and international destinations get connected. Along with domestic Indian travelers, we are increasingly exploring international destinations now. In the first half of twenty twenty four, 15,000,000 Indian travelers abroad Indians traveled abroad, marking a 14% year on year increase and a 12% rise compared to 2019.

Skift projections suggest that by 2027, India will become the world's 5th largest outbound travel market, thus presenting a huge opportunity for us. Our international outbound business continues to grow at a faster pace. For q3 fiscal year 'twenty five, our international air ticketing revenue grew by over 32% year on year, far outpacing industry growth. Similarly, our international hotels revenue grew by over 63% year on year, making this one of our fastest growing business segments. Let me now turn to the business segment, starting with our air ticketing business, where near term supply challenges, particularly in the domestic air market, remain.

Despite the slow growth in domestic air supply, we have been able to maintain our leading market share position while outpacing the industry growth rate overall on the back of the underpenetrated international air segment. Our air ticketing revenue grew by 20% year on year in constant currency terms. In our endeavor to keep improving consumer experience, we have recently launched a very customer friendly product feature of part payment on international air tickets, which enables our customers to get a confirmed booking by paying only a certain percentage of total fare upfront. The remaining balance must be paid either before the travel date or within 45 days of booking, whichever comes first. This will help increase affordability and address cash flow issues.

We also launched value bundles for international flights, including relevant fintech products such as Visa, rejection full refund, cancel for any reason and free date change. This has provided more flexibility add ons for the customers and led to more adoption. Our accommodation business, which includes hotels, home stays, and packages, continues to witness strong growth. We recorded 24.9% year on year growth in the adjusted margin on a constant currency basis. While October was a little slow due to the festivals, the season picked up significantly in November December on the back of holiday season and MICE and wedding related demand.

We also witnessed broad based growth this quarter. There was an uptick in demand across all price points in consumer segments and use cases. As a result, we witnessed record check ins in the last 10 days of December during the peak holiday season. Spiritual tourism is emerging as one of the other key growth drivers of tourism in India, with new destinations getting added to the existing popular destinations like Varanasi, Katra, Tirupati, Sheridhi, etcetera, besides specific events like Mahakom related demand for this segment. To cater to this demand, we have enhanced supply depth in these emerging new cities on our platform and help such travelers easily find suitable properties by highlighting key as aspects such as distance from pilgrimage sites, wheelchair accessibility, availability of lift, and vegetarian food options.

These features are now integrated into our product to provide smarter, more personalized property recommendations. As a result, this segment is growing faster for us, reflecting strong customer demand and satisfaction. We are also seeing concerts driven demand across the Tier 1 and metros, which is a relatively new phenomenon in India. As per estimates for the recent Coldplay concert in Mumbai, around 25% of the ticket buyers were local Mumbikkers, while 75% traveled from other Indian states, thus presenting a new demand use case for travel. We're also seeing good demand not only for domestic, but also for international destinations, for example, Coldplay concert in Abu Dhabi and Taylor Swift in Singapore.

Another consumer segment that is showing growth promise for us is inbound, especially from Indian diaspora. You might recall that last year, we made our platform GDPR compliant, making it accessible in 150 countries. Recently, we have also enabled multi currency feature allowing payments in 22 major global currencies, solving an important need of these customers. I am happy to report that we have started to witness growth in inbound bookings, albeit on a small base. As part of our overall Gen AI strategy, this quarter, we expanded Myra, our Gen AI powered chatbot for our accommodation product.

Myra enhances the booking experience by handling real time pricing, availability and specific hotel related queries. It complements our other generative AI capabilities, including image ordering, filters, and user review analysis, helping customers find the best places to stay with ease. Our homestay business continues to scale during the quarter continues to scale. During the quarter, we sold over 21,500 plus unique properties across 920 plus unique destinations with strong growth across business and leisure destinations. The demand from pilgrimage cities grew the highest on the back of increased supply in destinations like Varanasi, Ayodhya, Pariagara, Amritra, Amritra, etcetera.

While property ratings and reviews have always been a cornerstone of our platform, we have taken a step further by introducing subcategory ratings and summarizes across key elements like amenities, food, and location. This enhancement aims to build a deeper trust and transparency, especially in the non standardized category of alternative accommodation, empowering customers to make more confident and informed choices. Our holiday packages business delivered robust performance as well, achieving highest ever gross booking number driven by strong growth in international outbound packages with Malaysia and CIS countries witnessing 2x order growth year on year and Vietnam witnessing over 70% year on year growth in orders. In our bus business, growth has further improved in Q3 on the back of about 15% year on year growth in private bus supply. Demand has, was buoyed in the quarter due to the festive period in October, travel for weddings and auspicious occasions in November, and the holiday period in December.

As a result, market growth has been robust with occupancy rates going up by nearly 5% points year on year. As market leader, our growth was ahead of the market, resulting in share gain for us. During the quarter, we expanded our language offering in Redbird Redburst and now offer a full fledged booking and post sales experience in Hindi, Tamil, Telugu, and Kannada as well. Our international business continues to grow well in all countries as well with a growing contribution to the overall pie. For our Rail business, we continue to bring in new users to the platform besides growth in ancillary revenues, primarily from seed guarantee product.

For our gaps business, we continue to scale both airport transfers and intercity gaps. During the peak season, we were able to scale our fulfillment to over 97%, thus catering to the peak demand. On the product front, we scaled the multi city booking option for outstation camps, enabling seamless itineraries with multiple stops during this quarter. Our corporate travel business via both platforms, Mybiz and Quest to Travel is witnessing strong growth. Our active corporate customer count on Mybiz is now over 64,000 plus compared to 56,000 customers during the same quarter last year.

And for Q2T, the active customer count has reached 493 large corporates compared to 334 customers in the same quarter last year. Our ancillary business is scaling up well. We are witnessing healthy attach rates for products like travel insurance, ForEx, etcetera. We have launched various bite sized insurance to address specific customer needs, lending to an uptick in adoption. Growth in the ForEx business was driven by cross sell campaigns, including reaching out to international flights, hotels and holiday customers, with multiple customer impacting funnel persuasions.

And lastly, our strong performance this quarter was also ably supported by our marketing and customer reach strategy with well thought through brand campaigns featuring 3 films based on deep consumer insights for hotels and alternative eco users, combined with wider customer reach via effective and efficient media mix. This campaign reached 200,000,000 plus consumer across categories, leading to new user acquisition and helping us achieve our highest top of the mind recall in the travel category. With this, let me now hand over the call to Mohit for the financial highlights of the quarter.

Mohit Kabra, Group Chief Financial Officer, MakeMyTrip Limited: Thanks, Rajesh, and hello, everyone. We are pleased to report all time new highs in quarterly gross bookings, revenue and adjusted operating profit during the quarter, which was a seasonally better quarter for leisure travel. We saw a strong performance across all business segments and more importantly from emerging pockets of demand that we have been focusing upon as well as for new services that we have been adding to our platforms in the last few years. As shared by Rajesh, the highlight of the quarter has been acceleration in bookings growth along with improvement in operating margins in comparison with the previous quarters for the year. Adjusted operating profit for the quarter came in at $46,000,000 and adjusted operating profit margin as a percentage of gross bookings came in at 1.76%, which is significantly better than 1.6% during the same quarter last year and 1.65% in the first half of this year.

Moving on to our segment results, 8 ticketing gross bookings for the quarter came in at $1,500,000,000 witnessing a year on year growth of 23.1% in constant currency. Adjusted margin stood at $93,800,000 registering its year on year growth of 20% in constant currency. While Rajesh has updated about the continued outperformance in international ticketing, let me share some more color on domestic ticketing. The domestic air market, while daily departures were broadly at similar levels as last quarter, the market growth picked up to almost 9% year on year on a flown basis in this seasonally strong quarter. We continue to grow slightly ahead of the market with a continued 30% plus share of the domestic flight ticketing market.

Gross bookings for the quarter in Hotels and Packages segment came in at $681,500,000 registering a growth of 23.4 percent year on year in constant currency. Adjusted margin growth was 24.9% year on year in constant currency terms, resulting in adjusted margin of $121,900,000 during the quarter. Our continued efforts around adding more properties across the country have resulted in us being able to sell room nights across more than 18 50 cities through the country and compared to about 1750 cities during the same quarter last year. This spread has more than doubled from pre pandemic levels. This argues well for us as new supply expansion has been faster in Tier 2 and Tier 3 cities, almost 120 new hotels have opened in the 1st 10 months, adding about 8,000 rooms in the branded segment in these tier cities.

We have spoken about scaling up direct contracting for international hotels in the recent years. And this strategy has helped us get accommodation bookings in over 160 countries during this quarter. Earlier during the fiscal year, we had called out efforts put in to become compliant with GDPR and similar requirements in certain international geographies, which now allows our platforms, including our mobile applications to be accessed in over 150 countries. As a result, our inbound gross bookings crossed the initial 1,000 room per day milestone during this quarter. We believe that the combination of inbound and outbound bookings growth will lead to an increase in the portion of international hotels business in the coming years, which currently stands at around 19% compared to 14.8% during the same quarter last year as part of the segment.

In our bus ticketing business, gross bookings for the quarter stood at $328,900,000 growing at 23.6% year on year in constant currency. Adjusted margin stood at $35,000,000 registering a strong year on year growth of over 31.3% in constant currency with demand driven by festivals and holiday seasonality. Take rates continue to remain stable and in line across all our business segments. Similarly, our customer acquisition costs, that is marketing and sales promotion expenses, remain efficient and in line with the same quarter last year at 4.9% of gross bookings. This is slightly higher than the 4.6% reported in the previous quarter linked to change in seasonality.

In addition to driving strong bookings and margin growth, we remain focused on building operating cost efficiencies and driving operating leverage in our fixed costs, including personal, selling or general legislative expenses. Our disciplined approach to cost management combined with targeted investments in technology and customer experience has enabled us to capitalize on this growing travel demand and drive profitable growth. For instance, backed by our investments in automation and artificial intelligence, our post sales cost center costs for the quarter increased by just about 7% year on year compared to almost 26% year on year increase in bookings and revenue, thus driving cost efficiencies. Pathetic that this was a seasonally high travel quarter, coupled with the fact that the pickup in demand improved during the later half of the quarter. There has been higher than expected deployment in working capital, which is likely to reverse in the coming quarter.

Our cash and cash equivalents stand at over $700,000,000 Besides maintaining a healthy watch list, we will continue to leverage this strong cash position to invest in potential organic and niche inorganic growth opportunities, as well as opportunistic stock buyback programs. In line with this strategy, we signed a business transfer agreement to acquire the Happe expense management platform from Incred. Happe is a leader in expense management with over 900 corporate customers and robust capabilities in product development, data driven insights, and scalable solutions that consistently drive value and efficiency for corporate clients. Under the agreement, the Happy brand and its expense management business, as well as the dedicated team for this particular business will transition to MakeMyTrip. This acquisition reinforces our commitment to becoming the go to platform for comprehensive corporate travel and expense management solutions.

We expect the transaction to close in the coming quarter. With that, I'd like to turn the call back to Vipul for Q and A.

Vipul, Moderator/Host, MakeMyTrip Limited: Thanks, Mohit. Any participant who wants to ask a question can click on the raise hand button, and we will ask we will take the questions 1 by 1. The I already have a few participants. First question is from the line of Sachin Salgaonkar of Bank of America. Sachin, you may please ask your question now.

Sachin Salgaonkar, Analyst, Bank of America: Thanks, Vipul. Congrats, management, for another set of fantastic and strong numbers. I have three questions. First question is on air. I remember in the past, you guys have said that the engine issues in air for the airplane operators might get resolved, but by the looks of it, you know, this gets delayed.

So I wanted to get some color on that in terms of how should we look at the growth at air for calendar year 2025. And a related question, of course, is on the take rate. We do see take rate going down in the quarter. I presume it's largely seasonality. But I also wanted to understand if there's any pressure from Indigo's direct booking out here.

Rajesh Margo, Co Founder and Group Chief Executive Officer, MakeMyTrip Limited: Alright, Sachin. Thank you. Thank you, firstly. And, yes, you're right. You know, we had spoken about the, you know, supply constraints or the short term headwinds on the supply side, specifically for domestic market, probably getting and we had called that out and we were hoping that it will get solved in the coming 1 or 2 quarters when we had spoken about it last time.

And, you know, our our understanding is that, you know, this improvement is happening right now. Improvement improvement is definitely happening on the overall supply because supply new supply is definitely trickling in. But it is at a slow pace. And therefore, you know, I I guess, you know, for it to get completely resolved, it's getting pushed for, you know, for another quarter or 2, for it to get completely resolved. The engine issues, you know, the planes that have been grounded are, you know, again, and they continue to sort of remain grounded because that problem is also not necessarily fully addressed.

But I think, you know, where there is a better progress between the 2, you know, the new supply versus, you know, existing supply, which is grounded, thanks to the the engine issues. I think there are there is there is positive progress happening on the new supply, and not necessarily as the expected progress on the on the existing supply with the with the engines down. And the and that is sort of making it up. So overall, I think you have to see this in perspective. In the beginning of the year, the overall projection on, you know, the growth rate of supply on a net basis was was x, let's say.

And it is about, you know, there is a lag of about 10%, 15% on on that, you know, year to date right now. So, you know, and and outlook for 25 is, and we are hoping, you know, sort of that this, the pace picks up for the new supply and hopefully the situation gets resolved in the next couple of quarters, but but certainly there is some delay there. As far as take rate is concerned, maybe Mohit, you can take Yeah.

Mohit Kabra, Group Chief Financial Officer, MakeMyTrip Limited: So I think I can take that one, and this is largely optical, you know, in line with change in seasonality. As you know, you know, the average selling price, you know, during, you know, q3 tends to be much higher than q2. Therefore, if you look at it from a comparative purposes with q2, the take rates have come down from about 6.8% to 6.1%. But this is largely close to about 13% overall, 12, 13% kind of increase in ASPs on a blended basis. And in fact, if you look at it across domestic, you know, the industry, then the ASP increase was even higher.

So this is largely optical coming in from change in pricing regime based on seasonality.

Sachin Salgaonkar, Analyst, Bank of America: Got it. Thank you. Very clear. Second question, wanted to understand how should we think about your steady state adjusted EBIT margin. You guys are already at a 1.7%, 1.8% right now.

Question out here is what stops you from going to, let's say, 2 a half to 3% in medium term? You guys are pretty disciplined in cost control. Competition is low. Good operational leverage is playing out. And, of course, there's an added layer of an efficiency what an AI brings in.

Any thoughts out here?

Mohit Kabra, Group Chief Financial Officer, MakeMyTrip Limited: Yeah. So, you know, this quarter, generally, as you know, is, you know, seasonally the the best quarter of the of any year, q3. And therefore, probably q3 by itself is not necessarily an indicating of, how much the margins will kind of play out. But yes, we have seen good consistent growth in kind of operating margin expansion on the bottom line side. And like I said, we currently our aim is to kind of reach the 1.8% to 2% or close to about, you know, 18% to 20% on an adjusted margin basis.

So, I'm sure as we kind of, you know, get closer to that or the lower range of, you know, that range, we'll have a better view on, you know, how margin expansion can kind of play out in the in the next few years.

Sachin Salgaonkar, Analyst, Bank of America: Got it. And last question, again, wanted to understand if there's anything specific going at both interest income and interest expense. Your finance income is down materially on a q o q basis, much lower than the historical trend, and so is the finance cost, which have been much higher than the historical trend.

Mohit Kabra, Group Chief Financial Officer, MakeMyTrip Limited: So, this will largely also be factoring in some amount of, you know, forex fluctuations. So could be coming from that. Maybe, you know, Bupul can share a slightly more detailed kind of, you know, note on this with you, you know, offline.

Sachin Salgaonkar, Analyst, Bank of America: Okay. Thanks.

Mohit Kabra, Group Chief Financial Officer, MakeMyTrip Limited: Perfect.

Vipul, Moderator/Host, MakeMyTrip Limited: Thank you, Sachin. The next question is from the line of Manish Rookia of Goldman Sachs. Manish, may you please ask your question?

Manish Rookia, Analyst, Goldman Sachs: Thank you, Vipul. Hi. Good evening, team. Thank you so much for taking my questions. And again, echoing what Sachin said, congratulations on all around performance in the quarter.

Really nice to see that. My first question actually related to that aspect of the business. I mean, growth has been really strong, mid twenties y o I growth with Rajesh, you've been calling out international remains very strong, north of 30 in in, air and, you know, closer to 60% in in hotels. My question here is, like, what can cause this number to, let's say, meaningfully come down in the foreseeable future? I mean, in the international travel in particular, which is now sizable for your business, is there, like, any kind of one off that is really driving this consistently stronger growth through the last 2 or 3 quarters and it could start tapering off and so your overall growth may come down?

Or do you foresee your overall, let's say, gross booking or revenue growth sustain at these levels? Just wanted to get your thoughts and push on the pushes and pulls here and how we should think about that. That's my first question, please.

Rajesh Margo, Co Founder and Group Chief Executive Officer, MakeMyTrip Limited: Yeah. Sure. Thanks, Manish. No. I think it's a great question.

So if you really see what what we are sort of calling out, you know, our consistent growth, robust growth rate performance is coming out of, you know, sort of 2 things combined. 1, macro and the other one, micro. You know, on the execution front, I think we've been able to, to put our best foot forward across the board, you know, including sort of mopping up demand from various segments, various channels, thanks to our omni channel strategy and so on. But it is also sort of supported by the overall macro trend where fundamentally the consumer behavior and habits are changing in terms of on the back of rising income, rising disposable income, in favor of spending more you know, like or rather a larger portion of disposable income in favor of travel and experiences. And it's not only travel, you know, as I was trying to highlight even on the call early on, it's also about experiences like concerts and stuff, you know.

And and we are also getting the sort of side benefit of, under travel that is happening because of some of those events as well. So, you know, so to answer your question of what could possibly go wrong, which could slow down this growth a bit, I would I would say it's largely macro. You know, so if let's say, you know, for some reasons, if the if the, you know, sort of spending goes down or the consumption pattern changes, with respect to spending more on travel and experience. While we do believe, because we've been now seeing consistently, like, you know, more sort of fundamental change in the in the spending pattern for travel. But let's say for some reason that changes because just the overall economy is not growing as robust or, you know, there is some other macro event that happens because of which the overall sort of demand gets impacted.

You know, maybe that could be one of the reasons why it would relatively slow down. But, you know, the way we see it is, you know, that that, of course, any macro event we can't really control. But what we are confident about is that, you know, whatever rate of growth that the industry will be growing growing at, we are confident of growing at a higher rate of growth than that for sure, you know, sort of regardless of the situation. But if there is one aspect that could potentially change the or change the rate of growth would be just this overall macro event and just general slowdown in economy if that happens.

Manish Rookia, Analyst, Goldman Sachs: Thank you, Rajesh. Extremely helpful. And my second question is regarding competition, and it has 2 subparts, 1 from the airline direct side and second on the OTA side. Now on the airline direct, we've all seen in the last few months, you know, just Indigo being slightly more competitive than what they used to be historically. But despite that, it seems to have had no impact on your numbers.

Your market share is up. Your growth looks phenomenal. Right? So one would love to, you know, get your thought as to why Indigo, which is the largest airline in the country despite them being relatively more competitive, has had no impact on your business. If you can just help us understand the nuances to, you know, why you're still being able to maintain or grow your market share.

And second, on the OTA side, we've now been in a phase for maybe almost 2 years or more than that where we've not seen any meaningful competition, definitely not in hotels and maybe even reducing competition in the airline side. And again, your thoughts as to why that's the case? I mean, travel seems to be doing really well. I mean, international travel, domestic travel, all around growth is very, very strong. But despite that from the OTA side, it looks like a very stable competitive intensity environment, maybe even declining.

So, again, your thoughts to why that's the case and if if you foresee that changing in the foreseeable future. Thank you.

Rajesh Margo, Co Founder and Group Chief Executive Officer, MakeMyTrip Limited: Yeah, Manish. So, you know, it on the first one, and I think I was, I was, you know, sharing my thoughts even on the last quarter call. You know, from our point of view, Manish, the way we see it is our focus is, and it goes hand in hand. Right? So it's not necessarily we have to take supply direct as a direct competition.

If we start to sort of focus more on the larger pie of the of the market that is sort of available for the intermediaries as well. Right? So, and and, you know, if we let's say, whatever might be the supplier direct share today and even if that is growing incrementally, the rest of the the, you know, sort of portion of the pie is very, very large. And we if we are able to stay focused focused on that and able to sort of get the lion's share of that pie, I think that is that is that has been our strategy. That has been our focus.

And and, and we've been able to execute our strategies well to to ensure that, you know, that continues to happen. And that is sort of consistently reflecting on our overall market share, let's say, on the domestic market holding on or incrementally improving. And on the underpenetrated market on the, on the international pride where there's relatively more competition on the supplier ecosystem. And from an Internet penetration standpoint, it is underpenetrated. We've just doubled down on improving the customer experience.

You know, all sort of attacking the that particular segment 360 degree, and sort of tapping on to the potential. So that has been our strategy and that, you know, we'll continue to keep doing that. And, you know, it might happen with more players going online is that, you know, overall online penetration overall, continues to sort of grow. And with because there is still, you know, sort of a lot of headroom that is left for, lot of the business that could potentially move online. So I think that's the way we've seen it, and we'll continue to keep seeing it that way.

And and, you know, it's sort of working out well for us. Now as far as the second part is concerned, again, I think I was, I would link it back to the, you know, the answer that I was giving to to your first question. I think one of the factors that has also worked in our favor is to just, you know, besides our b to c very strong retail segment that we've been, you know, sort of, consistent at, you know, from a growth perspective, from retention perspective on the back of the experience and the innovation that we keep doing on our product side. We've also been able to very successfully execute, our reach to the other customer segments. You know, corporate business, for example, which is relatively a very young business for us 4, 5 years old.

But we've significantly sort of scaled that business already in the short span of time. And similarly, you know, our travel agents, you know, my partner channel, similarly are, you know, sort of other, you know, affiliate strategy with the other affiliate partners from where we've been able to sort of get the long tail demand as well. And, you know, penetrate deep into the market to get the new users, you know, on a consistent basis every quarter. So every quarter, if you really see the customers transacted on us, you know, a combination of the very high repeat rate and and, you know, very healthy new user acquisition every, every single quarter. Because of, you know, sort of, this multiple channel strategy and reaching out to the new consumer segments is sort of helping us, you know, sort of grow our pie and get better, sort of share from the market.

I I think that is the that is perhaps the single largest reason for and besides, obviously, relentless execution and, across the board. It's sort of helping us, you know, stay ahead in the curve and stay ahead in the market.

Manish Rookia, Analyst, Goldman Sachs: Fantastic, Susie. Thank you so much, Rajesh, and all the best.

Rajesh Margo, Co Founder and Group Chief Executive Officer, MakeMyTrip Limited: Thank you, Manish.

Vipul, Moderator/Host, MakeMyTrip Limited: Thanks, Manish. The next question is from the line of Bijit Jain of Citi. Bijit, you may please ask your question.

Bijit Jain, Analyst, Citi: Thanks, Upul, and congratulations team. I echo everyone else. Great set of results. My first question is, typically this current quarter is somewhat seasonally weaker, right, coming off after 3Q. But as you called out earlier, both these events, Coldplay and Makumba multiple day events in January.

And I think Indian hotels in the call called out spillover of some new year end demand into the 1st week of Jan as well. So do you think, generally speaking, 4Q, at least from your vantage point right now in January, seems like it's going to be less seasonal versus previous years?

Rajesh Margo, Co Founder and Group Chief Executive Officer, MakeMyTrip Limited: Well, you know, Vijith, I don't think it's going to be any different from the previous, you know, years. We don't really anticipate that just from a seasonality standpoint. You know, and and that is specifically, and we should keep that, you know, sort of Nuance point in mind that when we call, that April, May, June, and October, November, December, seasonal quarter for us, favorable seasonal seasonal quarter for us. That's mostly for leisure use case. Now in our business, we've got, you know, pretty much sort of addressing and reaching out to the consumers for all kinds of use cases, including a lot of that non leisure use cases as well.

Like, for example, pilgrimage tourism, you know, which is sort of emerging as a new growth segment in India, particularly. Now that that has no season. You know, that is across the across the year that the pilgrimage travel that happens. Similarly, business use case, business travel use case, and and so on. Right?

So, and, you know, some of the new use cases that, you know, off late that sort of, have been emerging as well, like, you know, celebration of occasions, you know, linked to, let's say, staying in alternative accommodation kind of a use case. And and and, you know, so now our business is a combination of all these use cases from a consumer demand standpoint. And and therefore, you know, when we look at the seasonality aspect of it, we should just, with respect to our numbers, we should keep that thing in mind. And and, you know, sort of look at the pattern for the for the last, you know, historical few years and quarters for us to be able to sort of draw some pattern out of it. But specifically, this quarter, will it be significantly different on seasonality as we see coming out of October November, December, because this is relatively low season quarter from a leisure use case standpoint, we don't see any different sort of pattern, at least as of now.

Manish Rookia, Analyst, Goldman Sachs: Got it.

Bijit Jain, Analyst, Citi: Thanks, Rajesh. Rajesh, my second question is, so while your customer inducement spends the way you split your A and P spending, right, that has been fairly stable in that low 3% of GBV number. The brand marketing expenses or the other head marketing and sales promotion expenses are now in the upper $40,000,000 a quarter range. So I guess my question, I think, is how much of those expenses are directly attributable to bookings? And if you can give a broad sense of how much are you spending on top of the funnel type of things, what would be called pure brand marketing, so to say.

We're just trying to get a sense of that what is the percent of marketing spend, which is not directly attributed to any bookings such.

Mohit Kabra, Group Chief Financial Officer, MakeMyTrip Limited: So Vijit, maybe I can take that. And, you know, I would say another way to look at, you know, the overall, customer action costs or marketing and sales promotion would be to kind of look at the trends by seasonality. So over this year, largely these spends have kind of trended at around 4.6% to 4.7% in the seasonally kind of lower leisure travel kind of seasonality quarters and have trended at closer to about 4.9% to 5% in the seasonally better off quarters from a leisure travel demand point of view. And, you know, as as you can imagine, we tend to kind of, you know, tweak these in line with seasonality because it makes so much more sense to kind of, you know, spend slightly more in a in a better seasonality. And and, you know, the other the reason I'm kind of saying is, you know, if you look at it even from an absolute dollar spend on on direct brand marketing, you know, the size and scale of these, you know, kind of, you know, campaigns would keep evolving in line with the changing kind of, you know, size of the of the business and the and the emergence of kind of, you know, brands.

So and that has a, you know, kind of a slightly longer life cycle. So I think just looking at the trends over respective seasonalities by quarter would give you a good indication.

Bijit Jain, Analyst, Citi: Okay. Great. Sure. My next question is, you know, just the last bit of question. You did mention, you know, on the Gen AI side, you talked about Myra.

A lot of, you know, discussions that I see on Gen AI seems to also suggest that one of the first things that it will be able to do end to end is travel bookings. So your thoughts on that, I guess they call it agentic AI. First use case will be in holiday bookings and travel bookings and stuff. Your thoughts on that, and is that something that you guys are experimenting with?

Rajesh Margo, Co Founder and Group Chief Executive Officer, MakeMyTrip Limited: Very much, Vijit. And, you know, as part of our Gen AI strategy for the last several quarters now, you know, our focus has been just picking up any potential application of this, on in the context of our business. We've been just sort of, you know, deploying our engineering bandwidth on that and and, you know, implementing that and going live with. And that includes what you just mentioned, using the agentic AI. You know, if you look at some of our chatbots that are already live and, you know, and I mentioned, you know, recently we've gone live with our, on our hotel and eco funnel as well.

That is actually it it is completely a new user interface, interactive user interface, for hotel booking, and addressing all kinds of queries, you know, related to the hotel booking and then eventually sort of helping, doing the booking as well. So, you know, my take on this is that this is a journey, you know, while on the face of it, you know, everyone is sort of so excited and and passionate about Gen AI in particular. But it's going to be journey on 2 counts. 1, of course, and from our point of view, we are, you know, this is one of the key strategic items for us as far as overall business strategy is concerned for the last several quarters. And we continue to keep sort of marching ahead and try and ensure that we sort of lead this, at least from a travel use cases standpoint or whatever, you know, promise this this, this technology has to offer.

But the other aspect, which is equally important is also going to be adoption. Because some of these, you know, sort of new, let's say, based interactive front ends that you would end up sort of developing. And that has to be also adopted, you know, by the consumers. And that will all that is always a journey, you know. And our endeavor is to make it more and more intuitive, more and more accurate, more and more relevant, personalized, you know, super convenient, etcetera.

So that the adoption is faster. But it is also a question of, you know, I'm very used to the existing user interface. And then, you know, the other one has to be a really compelling, you know, sort of alternative for me for for for for me to be able to make the shift. So so it's always a journey because you have all kinds of consumer cohorts in our country. And but from our point of view, we are, like I said, that it is a core part of our strategy.

We will definitely and we're looking at, and working very closely in terms of, you know, sort of partnering with the right, sort of partners, both from content standpoint and technology standpoint, And making sure that we we, you know, add not only we develop and go live, but also learn from, you know, it and then keep making the improvements. Because there are still lot of open, ended things that still need to be solved, whether it is latency or accuracy, etcetera, which is, and, you know, it's also the cost, which is which is getting solved every alternative, you know, sort of new model that comes into the the picture. And we are adopting all of that. So we are absolutely sort of deep into it already. And, you know, pretty much every quarter you will see, you know, something or the other, you know, on gen AI coming from coming from IQMTRID.

Bijit Jain, Analyst, Citi: Got it. Thanks, Rajesh. Those are my questions. Thank you so much.

Vipul, Moderator/Host, MakeMyTrip Limited: Thanks, Vijith. The next question is from the line of Gaurav Lutheria of Morgan Stanley (NYSE:MS). Gaurav, you may please ask your question now. Gaurav, we are not able to hear you.

Mohit Kabra, Group Chief Financial Officer, MakeMyTrip Limited: Gaurav

Rajesh Margo, Co Founder and Group Chief Executive Officer, MakeMyTrip Limited: is not on mute, but something wrong with this. Now he's on mute, I think. Maybe we give the opportunity to the next caller.

Vipul, Moderator/Host, MakeMyTrip Limited: Yes. Yeah. In the meantime, we'll take the next question. Next (LON:NXT) question is from the line of Ankur Rudra of JPMorgan. Ankur, you may please ask your question now.

Ankur Rudra, Analyst, JPMorgan: Thank you. And very strong quarter indeed. Just first question is on the demand side. Clearly, the demand from your side looks extremely solid and extremely strong, but several sections of the consumption basket continue to point out signs of some sort of weakness, including parts of your platform peers. You don't seem to be seeing this in the last quarter.

A, can you confirm that is something being hidden by the strong headline numbers because of pricing? And B, in the current quarter, have you seen any signs of that in any of your customer cohorts which are seeing any impact of, you know, consumption slowdown?

Rajesh Margo, Co Founder and Group Chief Executive Officer, MakeMyTrip Limited: No, Ankur. It's a good question. I think it's a good observation with respect to some of the other categories as well. And, you know, there have been moments around some slowdown in some of the discretionary categories specifically. But as far as travel and tourism, you know, sort of spend from a consumption pattern is concerned, we've been lucky.

October, as I was trying to highlight, even as part of the script, that October, it was muted for us. But November December, it picked up really well. So the overall seasonality for the quarter actually played out quite nicely. And there's nothing hidden. To your point on pricing, there's absolutely nothing hidden because if you see the volumes growth, that is actually quite robust as well.

So part of that, as I was just responding to the earlier question as well, part of that is also from our side, obviously, you know, it's just expanding our reach to different different consumer segments as well. But we haven't really seen, at least in the October, November, December quarter, which we are reporting out, you know, any sort of material signs of, you know, slowdown, if you will. Now we will have to obviously watch the situation, how it develops, let's say, for the the other categories as well. Because if you look at the overall economy projections, even for the next couple of years, they continue to be robust. So I'm hoping whatever is happening to the other categories is also an aberration.

But, you know, having said that, we'll we'll keep watching the watching the space very carefully.

Ankur Rudra, Analyst, JPMorgan: Thank you. And Rajesh, is there any difference in the nature of the strength of demand you see between the budget traveler category and the more premium traveler category? Perhaps by, you know, the app go and be both users versus make market users in any sense?

Rajesh Margo, Co Founder and Group Chief Executive Officer, MakeMyTrip Limited: You know what? And we looked at that because, you know, this is quite natural for us to sort of look at different cohorts as well. And the good news is, at least for this quarter, we saw all segments growing. And I was alluding to that again in the script as well. We saw pretty much budget, mid segment, premium, etcetera, all of them doing.

And premium segment growth has been, you know, as we've been sort of calling out for the last few quarters as well, it's been very robust, you know. And clearly, it's a function of, you know, pricing income, more disposable income, you know, and and sort of habit changing to spend more on travel and experience more so for premium category and higher upper middle class category. But even for budget, you know, budget segment specifically for hotels, for example, between MakeMyTrip and Goibibo, we saw that growth sort of coming back as well. So at least for us on our platform, both brands put together, in the last quarter, we didn't really see any sort of particular specific cohort slowdown in any of those cohorts actually.

Ankur Rudra, Analyst, JPMorgan: Thank you, Rajesh. Rajesh, we've seen a significant amount of currency volatility in the last few months of the quarter. I don't know whether it's happened anything this quarter, but looking at past cycles, have you seen any kind of impact of this either directly or with a lag in consumer behavior when they see headline prices change for certain destinations?

Mohit Kabra, Group Chief Financial Officer, MakeMyTrip Limited: Ankur, at least, you know, in this seasonally strong quarter, we haven't seen any impact like, you know, Rajesh called out, when it comes to international flights as well as international hotels. We've continued to see strong demand. And particularly from those regions where visa has been made more easier or kind of visa relaxations have been offered, the demand continues to remain pretty strong.

Rajesh Margo, Co Founder and Group Chief Executive Officer, MakeMyTrip Limited: If I may just add one one one just additional point to what Mohit just said. I mean, just the historical perspective, what we've seen in the past. You know, whenever there is this fluctuation, I mean, it's natural for if, you know, rupee becomes weaker and, you know, as a particular destination becomes more expensive. What we've seen is that, you know, I there we we don't see change of people dropping the plans for travel. They just look for an alternative destination, you know, which is relatively sort of cheaper where, you know, less, let's say, you know, less impact on the of the currency fluctuation, whether it is overseas or domestic.

But, you know, we haven't really seen people particularly changing the plans for travel, at least historically.

Ankur Rudra, Analyst, JPMorgan: Thank you. You've called out this repeatedly that there's been a huge amount of support and growth on the B2B and the B2B2C segments and also your international business. Could you remind us how much of this of your business is from there? Also, if you can estimate what sort of share MakeMyTrip has here, perhaps it's a bit lower than your traditional consumer segments.

Mohit Kabra, Group Chief Financial Officer, MakeMyTrip Limited: On the international side, our mix of business coming in from, outbound or inbound or international transactions per se overall, all put together, that mix has now moved to about 25%. And, on coming to B2B, particularly on the corporate side, we had shared some numbers. If I recollect in the Q1 of this year, we had called out that corporate bookings have kind of scaled up to close to about $200,000,000 run rate on a quarterly basis. So those are the 2 kind of things that I could call out as indicative.

Ankur Rudra, Analyst, JPMorgan: Any estimate for how your share over here will be versus the rest of the business?

Mohit Kabra, Group Chief Financial Officer, MakeMyTrip Limited: Corporate, like Rajesh had said, is, you know, early stage for us. We have been in the, in the B2B side of, you know, things only for the last 4, 5 years. And therefore, we're kind of pretty much, under pitched to the market. Our estimate is at least, you know, a 4th of the market, you know, should be, you know, business driven or corporate driven, if not higher. So there's a long way to go in terms of, you know, trying to catch up on on on on on that ratio.

Ankur Rudra, Analyst, JPMorgan: Understood. Just last question, you again spoke about events and pilgrimage. Is it possible to quantify what size of the travel market or, I mean, if you can, estimate also for your own bookings is coming from there?

Mohit Kabra, Group Chief Financial Officer, MakeMyTrip Limited: Actually pilgrimage, you know, as such, or some of the other, you know, kind of, you know, new emerging demand segments, like say, for instance, you know, all these concert related kind of, you know, demand that has now started coming off. Our our share of volume coming from, you know, these kind of, you know, travel requirements historically has been pretty low. And therefore, these are now new opportunities that we are kind of dialing up. And and therefore, you know, doing a a full holistic kind of, you know, kind of, you know, improvement in these areas. So we're kind of shoring up supply very significantly, you know, in these in these cities, and also kind of, you know, trying to build the right kind of, you know, you know, platforms or channels to be able to cater to the demand that emerges, you know, for these kind of specific travel requirements, both B2B and B2C.

So I think this is more slightly longer term to win cash just like on the corporate side. Right now, pretty nascent.

Ankur Rudra, Analyst, JPMorgan: Okay. Appreciate it, Talal. Thank you so much, and best of luck.

Rajesh Margo, Co Founder and Group Chief Executive Officer, MakeMyTrip Limited: Thanks. Thanks. Thanks, Ankur.

Vipul, Moderator/Host, MakeMyTrip Limited: Thanks, Ankur. And we'll take the last question now from Gaurav of Morgan Stanley. Gaurav, please go ahead.

Gaurav, Analyst, Morgan Stanley: Hi. Hope I'm audible now.

Vipul, Moderator/Host, MakeMyTrip Limited: Yes, Gaurav.

Gaurav, Analyst, Morgan Stanley: Yeah. Happy New Year and congratulations on great set of numbers. I have a few questions. I want to understand what's the pace of new customer addition per quarter that we are seeing now, let's say versus what we were seeing last year?

Rajesh Margo, Co Founder and Group Chief Executive Officer, MakeMyTrip Limited: Actually, pretty robust, Gaurav, there as well, and happy new year to you too. Our and just to give you maybe one data point and you can calculate that. So our repeat rate has been on a quarterly basis, have been pretty robust. I mean, it used to be about 70%, 71 percent. Last quarter was about 73%.

You know, and this is life to date. You know, this is like 73% of the transactions coming from the life to date customers. And our overall, you know, customer base has now, you know, live to date, all 3 brands put together has touched about 80,000,000, you know, up from 77,000,000. And typical contribution from new users is has been in the range of between 25 to 30%. And and so so effectively, it just continues, you know, at the same at the scale.

Every quarter, we are obviously adding more and the scale is only going up in one direction. But, but with the ratio of new users and the repeat, hasn't really changed a lot, you know. And so the it is 70:30, you know, going to, let's say, 70, 73, 27, 72, 28 kind of a so broadly, remains the same range.

Mohit Kabra, Group Chief Financial Officer, MakeMyTrip Limited: Also, in absolute terms, Gaurav, the the the net new addition, you know, to the platforms generally ranges anywhere between 1a half to say 2a half 1000000 customers, during any quarter. So that is a typical kind of, you know, new addition that we see.

Gaurav, Analyst, Morgan Stanley: Got it. So, you know, keeping this into mind and the comment that you explained about your focus on how you look at the market and, you know, beyond near term competition issues, etcetera, why the ad spend as a percentage of gross booking in this 9 months of fiscal year appears higher than the last year? What explains this increase? Is it more investment led? Is it more defending any, you know, new competition?

Just trying to understand that.

Mohit Kabra, Group Chief Financial Officer, MakeMyTrip Limited: You're talking about the the marketing spends only, you know, versus, say, for instance, marketing and sales promotions put together?

Gaurav, Analyst, Morgan Stanley: Yeah. Like put together, I'm looking at the number combined.

Mohit Kabra, Group Chief Financial Officer, MakeMyTrip Limited: The combined number largely has kind of trended in line with, I would say, last year. And, you know, like we had said, we would want to kind of keep this at at below 5% levels. And like I was just mentioning on another question earlier, this number has tended at about 4.6% of gross bookings during, say, seasonally weaker quarters, say, for instance, Q2, Q4, and generally trended at around 4.9% to 5% in seasonally stronger quarters like Q1 and Q3. So there hasn't really been any kind of substantial change or increase per se.

Gaurav, Analyst, Morgan Stanley: Okay. Got it. Lastly, it will be great to get some color on competition in the hotel segment if you could layer it for different sub segments, whether it's for premium, whether it's for budget. And what would be your rough market share within the overall online market in these segments? Thank you.

Mohit Kabra, Group Chief Financial Officer, MakeMyTrip Limited: A little difficult to kind of, you know, call out market shares in the hotel segment, as you know, because there's no kind of industry report, unlike we kind of get it from DGCI in case of domestic flight ticketing. Our high level estimate would be that ballpark about 18% to 20% of the market would have moved online and would possibly be about closer to about half of that. That is our very high level broad estimate in terms of the size of the market. Again, if you look at it in terms of competitive dynamics, comparatively kind of better in the hotels or in the accommodation space, say vis a vis compared to the ticketing space, because pretty much all the OTAs have a much larger kind of skew towards ticketing compared to accommodation. And therefore, to some extent, competition on the hotel side is also with the global OTAs because they tend to kind of be more focused on the accommodation space and particularly in the, I would say, mid to premium segment.

But again, there a larger share of their kind of volumes will be more inbound, whereas we focus a lot more on domestic and outbound.

Gaurav, Analyst, Morgan Stanley: Got it. Thank you and all the very best.

Rajesh Margo, Co Founder and Group Chief Executive Officer, MakeMyTrip Limited: Thank you, Gaurav.

Vipul, Moderator/Host, MakeMyTrip Limited: Thank you, Gaurav. This was our last question. Over to you, Rajesh, for your closing comments.

Rajesh Margo, Co Founder and Group Chief Executive Officer, MakeMyTrip Limited: Thank you, Vipul, and thank you, everyone. And great set of questions from everyone, and thank you for appreciating. And thank you for your patience, and we'll see you again next quarter.

Mohit Kabra, Group Chief Financial Officer, MakeMyTrip Limited: Thanks. Bye.

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