MakeMyTrip Limited (NASDAQ:MMYT) Q3 2024 Earnings Call Transcript

MakeMyTrip Limited (NASDAQ:MMYT) Q3 2024 Earnings Call Transcript January 23, 2024

MakeMyTrip Limited isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Vipul Garg: Hello everyone. I’m Vipul Garg, Vice President, Investor Relations at MakeMyTrip Limited and welcome to our fiscal 2024 Third Quarter earnings webinar. Today’s event will be hosted by our company — by our leadership team comprising Deep Kalra, our company’s Founder and Chairman, joining him is Rajesh Magow, 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&A session. Furthermore, certain statements made during today’s event may be considered forward-looking statements within the meaning of Safe Harbor provision of the US 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. Additionally, information concerning these statements are 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 25th 2023. 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 to Rajesh. Over to you Rajesh.

Rajesh Magow: Thank you Vipul. Welcome everyone to our third quarter call for fiscal 2024. We are pleased to report another quarter of strong operating performance during this high season quarter for leisure travel. We witnessed robust demand for leisure travel for domestic as well as outbound travel and are pleased to report our highest ever quarterly gross bookings, revenue and profit till date. Gross bookings for the quarter reached $2.5 billion, growing at 21.7% year-on-year in constant currency terms while our adjusted operating profit or adjusted EBIT grew by 70% year-on-year to $33.4 million as compared to $19.7 million in the same quarter last year. As per government estimates, domestic aviation traffic is expected to double from current levels by 2030.

To cater to this increasing traffic, there is continued and increasing investment across all categories of travel infrastructure, resulting in significant upgrades across all categories of transportation, including airports, highways, rails, and thus offering customers more convenience and choice. The current commitments of close to $11 billion in airport modernization should only help meet the near-to-medium term requirements, but for the first time planned airport capacity we’ve put in place could exceed the projected demand for next five to seven years, which bodes well for the travel and tourism industry. According to Bernstein report, India has gradually been gaining share of the global travel market, now representing 2% of tourism receipts globally up from 0.7% in 2000.

Domestic travel in India is already the fifth largest globally and is expected to become the third largest by 2027. The size and diversity of India contribute to the strength of domestic market and the government’s efforts to develop new tourism destinations will help in maintaining this growth momentum. Outbound travel from India has also recovered to pre-pandemic levels now and the growth momentum is expected to pick up pace in the coming quarters and years. India is expected to be the fifth largest outbound market by 2027. This should lead to India outbound being the fastest growing component of overall India travel spends. We are excited about these opportunities and remain committed to excellence and innovation, meeting and hopefully exceeding the diverse travel aspirations of Indian travellers.

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Q&A Session

As for our business segments, let me start with our air ticketing business. During the last quarter, I talked about near term supply challenges, particularly in the domestic market due to the insolvency of Go First and the grounding of airplanes due to P&W engine issues. The Indian carriers are taking various steps, including addition of large number of planes in the coming years to fill the supply gap. As per estimates, collectively airlines are expected to add about 150 planes during next year which will be the highest number of additions in a single year. We are hopeful that the supply situation will start improving from the next financial year. Despite the short term headwinds, our growth on a flown basis was at 7.2% quarter-on-quarter, outpaced the market growth of 6%, allowing us to consolidate our market share at 30% plus levels in the domestic air market.

As to our international air ticketing business, we have not only fully recovered but have started to grow above the pre-pandemic peak. We continue to innovate and enhance our product proposition. With demand for business and premium economy tickets showing an increasing trend, we have now completely revamped the business class funnel for international flights to provide an enhanced booking experience to our premium users and cater to their specific needs and preferences. We have introduced an industry-first enhanced booking process for business class flight tickets where customers can preview visuals of cabin comfort, meals, in-flight entertainment and other amenities. Customers also have a comprehensive view of the extensive business fare inclusions including lounge access, shopper services and priority services and can also preview airline miles points before finalizing the booking.

It is early days but we have started to see increasing engagement on our listing pages. Additionally, we have further strengthened our UAE proposition wherein customers now have the option to seamlessly buy e-visa for UAE during their international flight booking process on our desktop site. The initial response to this has been positive and this feature will soon be launched on our apps as well. Finally, we have further enhanced our price lock feature to now include multi-contract price lock where customers can choose from different time durations for which the prices can be locked. Our accommodation business which includes hotels, homestays and packages witnessed strong year-on-year and quarter-on-quarter growth in the seasonally strong quarter as well.

During the quarter, we touched our highest ever single night check-ins of close to about 200,000 people on the back of strong holiday demand. We sold over 63,000 unique domestic hotels across 1760 cities giving us unparalleled reach and penetration within India. On the supply side, we continue to expand our supply and we now offer over 78,000 domestic properties on our platform. Our international outbound business continues to scale well. During the quarter, new direct flights to various destinations like Tashkent, Baku and Bali have been announced and key international holiday destinations like Thailand, Sri Lanka and Malaysia have announced waiver of visa for Indian travellers. This is likely to fuel greater demand for these international destinations in the times to come.

On customer experience side, we enhanced the multi-room booking experience. Users are now shown more suitable room combination suggestions and they can specify their preferences explicitly thus simplifying their decision making process. We have also started offering super value packages, bundling various value added services with the hotel room which will help bring more value for the customers. Our homestay business continues to grow with increasing coverage of destinations and increasing customer awareness via our category building marketing efforts. During the quarter, we sold about 16,500 plus unique properties across 800 plus unique destinations. Our holiday packages business continues to scale on the back of our innovative offerings. We have started building on our spiritual tourism product.

During the quarter, we launched Ayodhya train charter product with 800 passengers. We plan to scale this and other similar offerings in the coming quarters. For outbound packages, Bali and Singapore were the top destinations and witnessed strong growth while new destinations like South Africa, Japan and Kenya have started to grow meaningfully. Our bus ticketing business witnessed robust growth in Q3. RedBus is now also available in Hindi, giving us a higher share of new customers from tier 2 and 3 towns particularly for bookings on RTCs. We continue to work with various state road transport corporations to bring them online. The government controlled bus inventory on our platform has increased meaningfully with onboarding of UP state RTC and additional inventory being made live by Kerala and Telangana RTCs. A new RTC Chandigarh transport undertaking has also come onto the platform in this quarter.