MakeMyTrip Limited Price & Performance (MMYT)

Year to date right now. So and outlook for 25% is and we are hoping sort of that this the pace picks up for the new supply and hopefully This 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 that. Yeah. So I think I can take that one. And this is largely optical.

In line with change in seasonality. As you know, the average selling price during 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 0.8% 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, you look at it across domestic, the industry, then the ASP increase was even higher. So this is largely optical coming in from change in pricing regime.

Got it. Thank you. Very clear. Second question wanted to understand how should we think about your steady state [indiscernible] Guys are already at the 1.7, 1.8% right now. Question out here is what stops you from going to, let's say, 2 and a half to 3% in medium term? You guys are pretty disciplined in cost control, competition is low, Good operation leverage is playing out. And of course, there's an added layer of an efficiency what an AI brings in. Any thoughts out here?

Yeah. So, you know, this quarter generally as you know is a seasonally the best quarter of the of any year. [indiscernible] 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 18% to 20% on an adjusted margin basis. So I'm sure as we kind of get closer to that, range of, you know, that range, we'll have a better view on how margin expansion can kind of play out in the next few years.

Got it. And last question, again, wanted to understand if there's anything specific going at both interest income and, interest expense. Finance income is, down materially from a QOQ basis, much lower than the historical trend. And so is the finance costs, which have been much higher than the historical trend.

Look, this would largely also be factored [indiscernible] so could be coming from that. Maybe, Bhupu, you can share slightly more detailed kind of note on this with you. You.

Okay. Thanks.

Perfect.

Thank you, Sachin. The next question is from the line of Manish Gupta of Goldman Sachs. Manish, may I please ask your question?

Thank you, Vipul. Hi. Good evening, team. Thank you so much for taking my questions and again echoing what Sachin said, congratulations on all on performance in the quarter. Really nice to see that. My first question is actually related to that aspect of the business. I mean growth has been really strong mid-20s, YOOI growth with Rajesh, you've been calling out international remains very strong. North of 13 in air and closer to 60% 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 strong growth over 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 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.

Sure. Thanks, Manish. I think it's a great question. So if you really see what we are sort of calling out, our consistent growth, robust growth rate performance is coming out of you know, sort of 2 things combined. [indiscernible] 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 [indiscernible] [indiscernible] 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, as I was trying to highlight, even in the on the call early on, It's also about experiences like concerts and stuff you know, and 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 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 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 for some reason that changes because just the overall economy is not growing as robust or there is some other macro event that happens because of which the overall sort of demand gets impacted. Maybe that could be one of the reasons why it would relatively slow down. But the way we see it is 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 at, we're confident of growing at a higher rate of growth than that for sure, sort of regardless of the situation. But if there is one aspect that could potentially change the rate of growth would be just this overall macro event and just general slowdown in economy if that happens?

Thank you, Rajesh. Extremely helpful. And my second question is, regarding competition and it has 2 sub parts, 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 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 get your thoughts as to Why Indigo, which is the largest airline in the country despite them being readily more competitive, has had no impact on your business. If you can help us understand the nuances to, you know, why still being able to maintain or grow your market share. And second, on the OTA side, we've now been in the phase for maybe almost 2 years or more than that where [indiscernible] not seen any meaningful competition, definitely not in hotels and maybe even reducing competition in the airlines. 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.

Yeah, Manish. So on the first one, and I think I was I was you know, sharing my thoughts, even on the last quarter call. From our point of view, Panish, the way we see it, is our focus is, and it goes hand in hand, right? So not necessarily we have to take supply direct as a direct [indiscernible] If we start to sort of focus more on the larger pie of the market that is sort of a well [indiscernible] and if we let's say whatever might be the supplier direct share today and even if that is growing incrementally, the rest of the sort of portion of the pie is very, very large. And if we are able to stay focused on that and able to sort of get the lion share of that pie. I think that has been asked strategy. That has been our focus, and and we've been able to execute our strategies well to to ensure that 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 side where there's relatively more competition on the supplier ecosystem.

And from an Internet penetration standpoint, it is underpinned and iterated. We've just doubled down on improving the customer experience or sort of attacking 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 overall online penetration overall continues to sort of grow. And with because there is still, you know, sort of 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 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 B2C very strong retail segment that we've been sort of consistent at, you know, from a growth perspective, from retention perspective on the back of the experience and the innovation that 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 their business already in the short span of time. And similarly, our travel agents, my partner channel, similarly are, you know, sort of other affiliate strategy with the other affiliate partners, from where we've been able to sort of get the long tail demand as well. And penetrate deep into the market to get the new users on a consistent basis every quarter. So every quarter, if you really see the customers transacted on us, a combination of the very high repeat rate and and very healthy new user acquisition every every single quarter. Because of, you know, sort of this [indiscernible] and reaching out to the new consumer segments is sort of helping us sort of grow our pie and get better sort of share from the market. I think that is perhaps the single largest reason for it. And besides, obviously, relentless execution across the board, is sort of helping us, stay ahead in the curve and stay ahead in the market.

Fantastic, Sujit. Thank you so much, Rajesh, and all the best.

Thank you, Manish.

Thanks, Manish. The next question is from the line of Bitesh Jain of Citi. Vijit, you may please ask your question.

Thanks, Supol, and congratulations team, like to everyone else. Great set of results.

My first question question is, you know, typically this current quarter is somewhat seasonally weaker, right, coming off after 3q. But as you called out earlier, you know, both, with these events, Coldplay and Markham are 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?

Well, you know, Vijit, 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 of seasonal quarter for us. Favorable 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 cons consumers for our all kinds of, use cases, including a lot of their 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 has no season. That is across the year, the pilgrimage travel that happens Similarly, business use case, business travel use case, and and so on. Right? So and some of the new use cases that, you know, off late that's sort of have been emerging as well like celebration of occasions, you know, linked to let's say, staying in alternative accommodation kind of a use case.

And so now our business is a combination of all these use cases from a consumer demand standpoint. And therefore, 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 we can sort of look at the pattern for the for the last, historical few years and quarters for to be able to sort of draw some pattern out of it. But specifically, a 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.

Correct. Thanks, Rajesh. Rajesh, my second question is, so, you know, while your customer inducements 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 you know, the other head marketing and sales promotion expenses are now in the up $40,000,000 a quarter range. Right? So I guess my question 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, you know, top of the funnel type [indiscernible] what would be called pure brand marketing, so to say. I'm just trying to get a sense of, you know, that, what is the percent of, marketing spend, which is not directly attributed to any bookings as such?

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

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'll be able to do end to end is so your thoughts on that, I guess the quality agent [indiscernible] 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 Very much, Vijit. And as part of our Gen AI strategy for the last several quarters now, 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. I and that includes what you just 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 Echo Funnel as well.

That is actually 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. While on the face of it, everyone is sort of so excited and and brush passionate about Gen AI in particular. But it's going to be journey on two 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'll continue to keep sort of marching ahead and and try and ensure that we we sort of lead this at least from a travel use cases standpoint of 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, Gen AI based interactive front ends that you would end up sort of developing. And that has to be also adopted 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 interface and then the other one has to be a really compelling 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, sort of partnering with the right, sort of partners both from content standpoint standpoint and technology standpoint, and making sure that we we, 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 [indiscernible] And we are adopting all of that. So we had absolutely sort of deep into it already. And pretty much every quarter, you will see something or the other Ongenai coming Got it. Thanks, Rajesh. Those are my questions. Thank you so much.

Thanks, Vijit. The next question is from the line of Gaurav Rataria of Marvell and Stanley. Gaurav, you may please ask your question now. Cora, we are not able to hear you.

Is not on mute, but something wrong with this. Now he's on mute, I think. Maybe we give the opportunity to the next Yeah.

In the meantime, we'll take the next question. Question is from the line of Ankur Rudra of JPMorgan. Ankur, you may please ask your question now.

Thank you and a 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 bus 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. Hey. 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 consumption slowdown?

No, Ankur. It's a good question. Question. I think it's a good observation with respect to some of the other categories as well. You know, there have been rumors around some slowdown in some of the discretionary categories, specifically, But as far as travel and tourism, sort of spend from a consumption pattern is concerned. We've been lucky. You know, October, as I was trying to highlight even even as part of the the you know, the script. And in October, we it was muted for us by November December. It picked up really well. The overall seasonality for the quarter actually played out quite nicely. And there's nothing hidden. To your point on 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 category is also an aberration. But, you know, having said that, we'll we'll keep watching the watching the space very carefully.

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 the app Go, Ibibo, users versus MakeMyTrip users in any sense?

You know what? And we looked at that because, you know, that's 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 with 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. And clearly, it's a function of you know, pricing income, more disposable income, you know, and 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 Goebibbo, 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 you know, particular specific cohort you know, slowdown in any of those cohorts, actually?

Thank you, Rajesh. Rajesh, we've seen a significant amount of current 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?

Ankur, at least, you know, in this seasonally strong quarter, we haven't seen any impact. Like 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.

Okay.

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, Rupi becomes weaker and, you know, some 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 you know, less, let's say, you know, less impact on the all of the currency fluctuation whether it is overseas or or domestic. But, you know, we haven't really seen people particularly changing the plans for travel at least historically.

Thank you. You know, you've called out this repeatedly that there's gonna huge amount of support and growth on the B2B the B2B2C segments and also your international business. Could you remind us how much of you know, 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.

On the international side, you know, our mix of business coming in from all bond or in bond or international put together, that mix has now moved to about 25%. [indiscernible] coming to B2B, particularly on the corporate side, we had shared some numbers, if I recollect in the first quarter of this year, we had called out that corporate bookings have kind of, you know, 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.

Any estimate of how your share over here will be? Versus the rest of the business?

So corporate, like Rajesh had said, is in a early stage for us. We have been in the B2B side of things only for the last 4, 5 years. And therefore, we're kind of pretty much underpitched to the market. Our estimate is at least a fourth of the market should be business driven or corporate driven, if not higher. So there's a long way to go in terms of trying to catch up on on that ratio.

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.

Yeah. Actually, pilgrimage, as such, or some of the other kind of new emerging demands like like say for instance, all these concept related kind of demand that has now started coming off are Our share of volume coming from these kind of travel requirements historically has been pretty low. And therefore, these are now new opportunities that we are kind of dialing up and therefore doing a a full holistic kind of [indiscernible] kind of improvement in these areas. So we're kind of shoring up supply very significantly in these cities and also kind of trying to build the right kind of, platforms or channels to be able to cater to the demand that emerges for these kind of specific travel requirements. B2B and B2C. So I think this is more slightly longer term. [indiscernible] to end cash, just like on the corporate side, right now pretty nascent.

Okay. Appreciate it, Tyler. Thank you so much, and best of luck.

Thanks. Thanks. Thanks, Ankur. Thanks, Ankur. We'll take the last question now from Gaurav from Morgan Stanley. Gaurav, please go ahead.

Hi. Hope I'm audible now. [indiscernible] 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.

Actually, pretty robust, Gaurav, there as well, and happy New Year to you too. [indiscernible] 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%, last quarter was about 73%. You know, and this is live to date, you know, this is, like, 73 percent of the transactions coming from the live 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 1,000,000, you know, up from 77,000,000 and typical contribution from new users has been in the range of between 25% to 30%. And so effectively, it just continues at the same at the scale. Every quarter, we are obviously adding more and scale is only going up in one direction. But, but we, the ratio hasn't really, changed a lot. [indiscernible] you know, going to, let's say, 70 73, 27, 72, 28, kind of a so broadly, remains the same range.

Also, in absolute terms, Gaurav, the the net new addition to the platforms generally ranges anywhere between 1.5 to say, 2 and a half 1000000 customers. During any quarter. That's the typical kind of new addition that we see.

Got it. [indiscernible] keeping this into mind and the comment that you explained about your focus on how you look at the market and beyond near term competition issues, etcetera, Why the ad spend as 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 new competition? Just trying to understand.

You're talking about the the marketing spends, only versus say for instance marketing and sales promotions put together?

Yeah. Like, put together, I'm looking at the number combined.

The combined number largely has kind of trended in line with I would say, last year. And 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 trended at about 4.6 percent 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 hasn't really been any Any kind of substantial change or increase per se?

Okay, got it. Lastly, you know, it'll be great to get some color on competition in the hotel segment, If you could layer it for your 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.

Got a little difficult to kind of, you know, call out, you know, 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 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 in the hotels or in the accommodation space, say, vis a vis to the decorating space because pretty much all the all the OTAs have a much larger kind of skewed towards ticketing compared to accommodation. And therefore, to some extent, competition on on the hotel side is also with the the global OTS because they tend to kind of be, you know, more focused on on the accommodation space and particularly in the 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.

Baurie, thank you, and all the way west.

Thank you, Varun.

Thank you, Varun.

Thank you, Gaurav. This was, our last question Thank you, Vipul, and and thank you, everyone. Just Great set of questions from everyone, and thank you for appreciating Hi. And thank you for your patience, and we'll we'll see you again next quarter. Thanks, bud.

Thank you, everyone. You may now disconnect the call.

Thank you.