MakeMyTrip Q4 2024 Earnings Call Transcript

There are 7 speakers on the call.

Operator

Hello, everyone. I'm, Vipul Garg, Vice President, Investor Relations at MakeMyTrip Limited, and welcome to our fiscal 24 Q4 and full year earnings webinar. Today's event hosted by company's leadership team comprising Rajesh Magu, 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.

Operator

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 1995. These statements are not guarantee 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 changed circumstances. Additional information concerning these statements are contained in the Risk Factors and Forward Looking Statements section of company's annual report on Form 20F filed with SEC on July 25, 2023. Copies of these filings are available from the SCC or from the company's Investor Relations department.

Operator

I would like to now turn the call over to Rajesh. Thank you.

Speaker 1

Thank you, Vipul. Welcome everyone to our Q4 and full year call for 2024. Fiscal year 'twenty four started on a positive note and only got better over the year. We are very pleased to end the year delivering a strong Q4 performance despite it being a low seasonality quarter for leisure travel. Fiscal year 'twenty four has been a year of many record milestones.

Speaker 1

For the full year, we crossed an all time high gross booking value of $8,000,000,000 and we posted a record adjusted operating profit of $124,000,000 compared to an adjusted operating profit of $70,000,000 in fiscal year 'twenty 3. Our strategy of targeting various demand segments to serve millions of our customers and first time travelers with a comprehensive portfolio of travel and ancillary products with personalized experiences yielding results. Gross booking value for Q4 was more than $2,000,000,000 growing at 23% year on year in constant currency terms and the adjusted operating profit was $32,400,000 registering a growth of over 70% year on year. There are several macro factors that are contributing to the growth of travel and tourism in India. Robust GDP per capita growth is leading to growth in disposable income, fueling more frequent leisure breaks by people, Ongoing investments in transport infrastructure, including airports, roads, railways and public transportation have improved accessibility and travel experience to various tourist destinations within the country.

Speaker 1

Spiritual tourism is also emerging as a crowd puller recently in the domestic travel and tourism market. In the last 2 years, we have witnessed over 97% growth in searches for spiritual destinations on our platform. With further improvement in connectivity and infrastructure, we expect this category to be a long term growth driver. According to the Ministry of Tourism, religious tourism in India has been on an upward trajectory and can potentially grow at a CAGR of over 16% between 2,030. According to WTTC, the overall travel and tourism sector will grow its contribution to the GDP to INR 36,800,000,000,000 by 2,033, approximately 7% of the Indian economy and will employ over 58,200,000 people across the country with 1 in 10 working in this sector.

Speaker 1

As a leading travel services company in India, we continue to see collaborative opportunities to work closely with various government agencies as we strive to nurture the growth of the tourism ecosystem in the country. We recently signed MOUs with state governments of Goa and Madhya Pradesh aiming to foster sustainable tourism development in both states. The collaborative effort with Goa aims to propel tourism in the region into a vibrant year round destination moving beyond its iconic sun, sand and beaches. The MoU with Madhya Pradesh focused on various dimensions of tourism including promoting homestays and intensifying the focus on pilgrimage and wildlife led travel experiences that the state has to offer through its platform While the domestic travel and tourism sector is showing a promising outlook outbound travel is likely to continue in the growth phase this year as well. According to UN World Tourism Organization, India is one of the top 3 fastest growing outbound tourism markets and is expected to become the 4th largest global spender on travel by 2,030.

Speaker 1

With India's emergence as a key source market in major tourism destinations, foreign tourism boards are targeting the Indian population with incentives, campaigns, simplified visa requirements, and new initiatives to attract more Indian outbound travelers. Let me now turn to the business segments, starting with our air ticketing business. Our international air ticketing business registered a strong growth of 33% year on year in this quarter while we continue to maintain our market share of 30% plus in the domestic air business. During Q4, the total number of departures was similar to Q3. As we mentioned last quarter, we expect the domestic supply situation to gradually start improving from the second half of the upcoming financial year.

Speaker 1

Keeping aside the short term headwinds, the long term outlook for the Indian aviation sector is robust, driven by the expansion of aviation infrastructure as well as record planes ordered by the Indian carriers. On the customer experience side, we continue to innovate and enhance our product proposition. We have expanded our flexibility offerings on domestic flights by offering consumers a new add on called FlexiFly, which enables the customers to have a choice of exercising either 0 cancellation or free date change option at a nominal incremental cost. We also revamped our value added bundles to support more inclusions such as seats, meals, cabs, priority check-in, etcetera, along with our existing products like 0 cancellation and free date change. This has helped make these bundles more accessible to our customers.

Speaker 1

To further strengthen our international outbound proposition, we launched a new initiative called Visa Guarantee which ensures a full refund of the flight flight fare to the customer in case the visa gets rejected by the Embassy by some reason. Our accommodation business that includes hotels, home stays and packages witnessed strong 41% year on year growth in adjusted margin in constant currency terms. The outlook for tier2tier3 cities. In the last couple of quarters, large domestic and international chains have announced plans to add over 650 properties in India on a current base of over 1,000 properties. We expect strong additions in the hotel inventory across categories in the future.

Speaker 1

We continue to increase our supply. We now have 84,000 plus sellable properties on our platform with an unmatched penetration covering over 2,000 plus cities in India. Our international outbound business continues to scale during the quarter. We sold room nights spread across over about 25,000 hotels in over 156 countries outside India We will continue to dialogue direct contracting in international geographies frequented by Indians in the new financial year as well. During the year, we successfully launched our hotel products on the ICTC website with an encouraging initial response Through platforms such as ICTC, Amazon Pay, HDFC SmartBuy, and My Partner platform, we continue to attract new users from smaller cities.

Speaker 1

On the customer experience side, we made significant strides in the integration of AI within our accommodation business. Now we offer condensed reviews, empowering our customers with crisp summaries. This enhancement enables swift property selection and furnishes instant insights into each property's offerings. On our international hotel platform, we continue to improve the experience for Indian travelers by making the discovery and selection easier for them by scoring properties that are high on parameters like proximity to public transport, Indian food and tourist attractions. Our homestays business continues to grow with increasing coverage of destinations and increasing customer awareness via our category building marketing efforts.

Speaker 1

During the quarter, we sold over 16,500 plus unique properties across 800 plus unique destinations with strong growth across business and leisure destinations While MakeMyTrip brand has been leading the way in the homestay and villas category, we have now kick started the journey on Goibibo as well and have rolled out multiple features for homestays enabling richer information on food and dining, host discovery, etcetera. Our holiday packages business continues to scale driven by our innovating offerings such as launching charter services to Bhutan from Mumbai, which is a key source market. Customer service is an important aspect of the holiday business, and we've been making continuous efforts to improve the post sales experience. Our NPS on holidays is steadily increasing which will improve our repeat rate in the business Our business continues to grow well driven by strong demand and expansion of supply with the total number of average daily bus services on the platform reaching 35,100 from 27,800 a year earlier and an increase of over 26%. With demand keeping up and cutting diesel prices aiding the profitability of the sector, the momentum to add new buses and supply has improved and we hope it will continue in the new financial year as well.

Speaker 1

By providing database intelligence to bus operators for deployment of this additional supply to routes that have a high demand but fewer services, we are playing our part in their network planning. International bus markets witnessed healthy growth in q4 24 on the back of Ramadan bookings in Southeast Asian markets and Good Friday Easter holiday bookings in Latin America. We launched Redbus in 2 new international markets this quarter. We went live in Vietnam on all channels with both English and Vietnamese booking finance. We also launched our services in Cambodia with inventory from 30 plus bus operators flying on routes within Cambodia as well as to cities in Thailand and Vietnam.

Speaker 1

Our rail business continues to grow. We continue to innovate, add product features and strengthen our value proposition. As a result, we continue to gain market share in train bookings leveraging all our brands, including MMT GI and RB. On Intercity Cabs, we continued strengthening the supply side coverage during the quarter. We have progressed well on our integration with Savari post the investment announced last quarter.

Speaker 1

Working together, we are confident of unlocking the growth potential in this segment. Our corporate travel business via both our platforms, Mybiz and Quest to Travel, is witnessing strong growth. Our active corporate customer count on Mybiz is now over 56,300 plus and for Quest to Travel, the active customer count has reached 351 large corporates compared to 249 customers in March 23. We have further bolstered our service offerings by incorporating train bookings into our Mybiz platform as well. To tailor the booking experience even more closely to individual preferences, we have introduced personalized hotel recommendations, streamlining the discovery process for our corporate bookers.

Speaker 1

Our My Partner B2B2C platform for small travel agents now has 44,000 plus travel agents compared to 36,000 agents during the same period last year and is helping us reach out to customers who are largely buying their travel offline. This is particularly meaningful in the case of segments with low online penetration such as international outbound travel. And lastly from my side, at MakeMyTrip, we believe that focus on sustainability is essential for the long term success and resilience of travel companies as it not only protects the environment and sports local communities, but also enhances brand reputation, meets customer expectations and ensures regulatory compliance. Our social development arm, MiQMyTrip Foundation, is dedicated to climate action and community empowerment and has helped us make a substantial impact across 13 Indian states positively affecting the lives of over a 1000000 individuals. The details of our initiatives are available on MicMathra Foundation's website.

Speaker 1

With this, let me now hand over the call to Mohit for the financial highlights of the quarter.

Speaker 2

Thanks, Rajesh, and hello, everyone. During the last few years, we have invested in key strategic areas such as building wider and deeper offerings of travel and travel related services for our customers with improved personalization while scaling up multiple B2C and non B2C platforms so that we can target differentiated demand segments. We have also been investing in technology to build efficiencies and increase our value proposition to our customers. As a result, our business has bounced back strongly post the pandemic and has also delivered better on profitability metrics. Financial year 'twenty four has been a true testament to this long term strategy as we have delivered our best ever financial performance during the year across key metrics.

Speaker 2

With respect to the full year financial year FY 'twenty four, our gross bookings grew 24.9% year on year in constant currency terms to about $8,000,000,000 Revenue as per IFRS grew by 35.7% year on year in constant currency to 782,000,000 from about 593,000,000 in the previous fiscal year. Profit for the year was 216,700,000 compared to a loss of 11,200,000 in the previous financial year. This includes certain one off items, which I'll talk about subsequently. Keeping the one off the side, the adjusted operating profit registered a very strong growth of 76.7% year on year and reached $124,200,000 compared to $70,300,000 in the previous financial year. As to the quarterly results for the reported Q4 of this fiscal year gross bookings grew by 23% year on year in constant currency to about $2,000,000,000 compared to $1,700,000,000 in the same quarter last year.

Speaker 2

Revenue as per IFRS grew by 38.1% year on year in constant currency terms to $202,900,000 from $148,500,000 in the same quarter last year. Adjusted operating profit has registered a growth of 70.4% year on year and reached to a number of $32,400,000 during the quarter compared to about $19,000,000 in the same quarter last year. Moving on to our segment results, our eticketing gross bookings for the quarter came in at $1,300,000,000 witnessing an year on year growth of about 20.9% in constant currency terms. Adjusted margin stood at $83,700,000 registering a growth of 13.7 percent year on year in constant currency. The take rates for the air ticketing business continue to be in line at about 6.5%.

Speaker 2

For domestic air ticketing, we delivered performance in line with the market and have continued to hold on to our market share of about 30%. The highlight of the quarter and the year has been the growth in the international air ticketing businesses, which has posted segment growth of over 50% compared to the last full fiscal year. The mix of international air ticketing business has also grown by about 50% during this year to about 1 third of the air ticketing segment. We believe that the international ticketing business will continue to lead the growth in this segment. Gross bookings for the quarter in the Hotels and Packages segment were at $495,600,000 witnessing a strong growth of 28.8% year on year in constant currency.

Speaker 2

Adjusted margin growth was much stronger at 41.3% year on year in constant currency, resulting in an adjusted margin of $88,900,000 during the quarter. The take rates in this business continue to be in line at about 7.9% during the quarter. We continue to drive supply expansion by going deeper and wider in the Indian market and growing directly contracted hotels in key international markets, which are of interest to Indian overseas travelers. Our coverage and penetration in India has expanded meaningfully, and we now sell accommodation room nights in over 1800 cities across the country. Our directly contracted international hotel count has been increasing in line with the launch of direct flights to new international destinations.

Speaker 2

This year, apart from offering wider options across existing cities, we have also initiated direct contracting in about 8 cities globally. In our bus ticketing business, gross bookings for the quarter were $260,600,000 growing at 23.3 percent year on year in constant currency. Adjusted margin stood at $26,100,000 registering a strong year on year growth of over 36.6% in constant currency terms. The take rates for the Buzz business continue to come in line at about 10% for the quarter. Large part of the growth has been driven by supply expansion whereby our private bus operators count has increased by over 20% year on year.

Speaker 2

Given the short term headwinds on the domestic air supply side, we witnessed travelers moving preferring other modes of transport, which was reflected in the strong growth in our ground transport segments. We continue to remain focused on operating cost efficiencies. Our marketing and sales promotion expenses or our customer exchange costs for the year came in at about 4.7 percentage points of gross booking compared to 5.1 percentage points in the previous year. Apart from this, continued operating leverage coming in from the significant fixed cost optimizations through the COVID impacted years has helped us expand our operating margins over the last few years. As the business is scaling, our cash generation continues to be robust.

Speaker 2

During full year of financial year 24, our adjusted operating profit was about $124,200,000 and we added net cash of about $101,000,000 As a result, our year end cash position stands at over $600,000,000 Besides maintaining a healthy watches, we will continue to leverage the strong cash position to invest in potential organic and inorganic niche growth opportunities as demonstrated in the recent past. Apart from domestic air ticketing, online penetration across travel services in India is still very low. As a result, we believe there can be meaningful growth opportunities for us to pursue in the coming years. In view of the improving cash generation in the business, we may also pursue opportunistic sale repurchases or buybacks. As reported in the past, we have been and will continue to leverage our employee stock option plans to be an important part of our people strategy.

Speaker 2

We could start with opportunistic buybacks to mitigate the dilution from our share based compensation programs. Before we get into Q and A, I would like to call out 2 exceptional items or 1 off items impacting the current quarter as well as the full fiscal year being reported. Firstly, in view of the established trend of profitability over the last couple of years, the company has recognized net deferred tax assets to the tune of $126,100,000 based on an estimated utilization of carried forward losses and other deductible temporary differences against future taxable income. The other one off gain is due to change in the carrying value of 2028 0 coupon convertible notes. We had issued these notes in February 21 with a life of 7 years and the put options in the note were at end of year 3 year 5.

Speaker 2

Initial accounting treatment at the time of issuance was to true up the potential redemption value by the end of the 3rd year, which was the first put option time. However, none of the notes were put in for redemption during the first put option, which came up in Feb 24, with the next put option being due 2 years later at the end of year 5 of the notes. The redemption value on the notes has been discounted to arrive at the current carrying value resulting in a gain to the tune of about $30,600,000 which will be expensed over the next 2 years or before the next put date. With that, I'd like to turn the call to Vipul for Q and A.

Operator

Thanks, Mohit. Any participant wishing to ask a question can raise their hand now and we will take questions 1 by 1. The first question is from the line of Sachin Salgamkar of Bank of America. Sachin, your line has been unmuted. You may please ask your question now.

Speaker 3

Thanks, Vipul. I have 3 questions. First question, you know, wanted to understand a bit on domestic air supply. Rajesh, I hear you comment that in second half, we should see an improvement in supply. But the question out here is, with now Air India pilots as well after the Vistara pilots going on for strike and, you know, we saw obviously the impact of that, how bad could we see the impact in the near term?

Speaker 3

And, an extension of that question is, should we see some impact of that as we go into the summer holiday days? That's question number 1. Let me pause here.

Operator

Rajesh, you're on mute.

Speaker 4

You're still on mute.

Speaker 1

Yeah. Yeah. Sorry. Sorry. Sorry.

Speaker 1

Sorry. Thanks for the question, Sachin. And observation is right, you know, as we've sort of called it out as well. If you look at, like, full year data, you know, fiscal year 24 over 23, and you look at the departures data and you would notice that all things considered it has still improved 5% year on year. So, you know, despite all the issues and the noise that we hear, it has still managed to overall improve.

Speaker 1

And, you know, and you know that the go first has been sort of grounded, and and there's no sort of hope of that coming back, etcetera. So it seems like that despite all those issues that see and hear, both Indigo and Air India and also SpyJET have been able to sort of also get alternative alternatives in place in terms of just replacing some of the planes where there were engine issues earlier or the new planes coming in as part of their expansion plans, etcetera. So, so my view is obviously the potential of the growth is higher. We all know that and that's the reason why from the long term outlook standpoint, they placed record orders, etcetera. And therefore, you know, so I'm not necessarily overly worried about mid term to long term outlook on domestic air supply expansion.

Speaker 1

I think that will fall in place. This recent issue of strikes, thankfully on Air India Express got controlled very, very quickly. We didn't really see, obviously, there will be an impact on day or 2, but we didn't really see significant sort of impact beyond the couple of days that we saw. And the other thing, I think in Mohit's script that he was trying to highlight, we noticed a very interesting sort of trend as well that if there is temporary disruption that happens on the AI side, we see all the other modes of transport sort of gaining share as well. So, I don't know if you noticed that, you know, we highlighted that the bus volumes growth at about 17% on our platform.

Speaker 1

Rail growing at about 30%, and intercity cab also growing at a very healthy percentage. So so my sense is the demand momentum is because there is there is momentum in demand. And if there is and the fact that the overall experience on the other modes of transport have also improved significantly, and for any reason, whether it is supply disruption or let's say fares going up because and the year on year fares have been up if you look at quarter this quarter compared to the last year same quarter about 15% to 17%. And then the demand moves on to the other channels, and we do have alternatives today. So overall, I would say that there will be a balancing act and should not even have, even from a short term standpoint, or sort of big impact on the general demand momentum that is there in the market.

Speaker 3

Thanks, Rajesh. Very clear and articulate. 2nd and third questions are to Mohit. Mohit, just wanted to understand personal expense and ESOPs increase into this quarter. Are there any one offs or any specific reason which led to that?

Speaker 3

And third question is, you know, any thoughts on, potential share buyback? Sure.

Speaker 2

Sure. Thanks, Sachin. You know, when it comes to the share based compensation programs, like we have been mentioning, our overall full year number on this count is like to remain in the same range. So if you look at it over the last 3 years, this has remained around the range of about $36 to $37,000,000 And the current year has also come in at about $36,900,000 Generally, what happens is the, the, the trueing up at the end of the year for, for a variety of variables, such as, you know, attrition rates, etcetera, leads to a scenario where historically we've seen that the initial 3 quarters, the charge out is higher. And in the Q4, the charge out tends to be lower.

Speaker 2

In a manner of search, this has been a reversal of trend whereby because of, you know, improving, attrition rates, you know, and and much better retention rates. The actual charge out in the Q4 has been higher compared to the 1st 3 quarters. But if you look at it overall for the full fiscal year, the trend remains, you know, intact and the absolute dollar amounts remain the same. Got it.

Speaker 3

So that's on share based compensation. I presume same logic for personal expense or anything more to look into that?

Speaker 2

Not really. Largely in line because, you know, no no significant kind of, you know, additions on the on the other personal expenses as well. Got it.

Speaker 3

And thoughts on buyback?

Speaker 2

On the buyback side, like I've just called out, you know, we do have, you know, good cash surpluses down. And therefore we would be open to kind of pursuing opportunistic buyback. And the initial intent is that we do have the share based compensation plans. You know, the one we just discussed close to about $36,37,000,000 of kind of, you know, expense that comes in or the issuance that comes in every year. So if nothing else, we should be able to start with trying to mitigate the dilution coming in from the share based compensation programs going forward.

Speaker 2

So that could be the initial start in terms of, for you on the, share repurchase side.

Speaker 3

Any timeline in mind next 6 months or more?

Speaker 2

Not really. I mean, we'll keep an open mind. There is no kind of, you know, urgency around it. And therefore, we'll keep an open mind. And like I said, this will be more opportunistic in nature rather than kind of steady state buyback programs.

Speaker 3

Got it. Thank you. I'll return back to the queue.

Operator

Thanks, Sachin. Next question is from the line of Manish Adhukia of Goldman Sachs. Manish, you may please ask your question now.

Speaker 5

Thanks, Suppul. Hi. Good afternoon, team. Good to chat with you. So first question on demand.

Speaker 5

Now it's been quite strong in this quarter like you called out, Rajesh, despite it being a seasonally weak quarter and, like you said, maybe second half of this year, supply situation should further improve international's quite strong hotel momentum has been great. So I mean, what trying to understand what kind of, let's say, visibility do you have on medium term demand outlook for make my trip? I mean, in the past, you said you can grow it, you know, 1 and a half to 2 x of the underlying market given online penetration is low. But I'm just trying to understand, can this 25% kind of a growth sustain for the next 2, 3 years? What are maybe the upside or downside risks?

Speaker 5

Just maybe your thoughts on that. That's my first question.

Speaker 1

Yeah. Thanks for asking this question, Manish. I wouldn't really change from what we had shared it earlier and you called that out as well. We do believe that if the market is able to hold on to the projected numbers of double digit growth overall, this this I'm talking about travel and tourism market and some of the reports I've spoken about anywhere between 10% to 13% growth. And we, like in the past, we should be able to grow higher than the overall travel and tourism market growth rate, you know, by 1.5x or thereabouts.

Speaker 1

So I don't think there is, at this point in time, there is anything pointing towards of changing the view on that, from a midterm standpoint. Because like I was just saying it earlier also, even in this quarter, it's supposed to be a low season leisure quarter. You know, and where we were able to, if you look at the overall adjusted margin on an absolute terms, you know, a very close to the season quarter absolute number. So and that's partly also because that we've been, you know, our investments into various other segments have also sort of yielding results. But it also points to the fact that there is momentum in travel in every particular use case.

Speaker 1

Now whether it is, you know, VFR or leisure or, you know, business travel or spiritual travel and so on. So at this point in time, I would say, Manish, that, you know, our view remains the same, and there's nothing that I can see at at least at this point in time that points towards just, you know, forming a different point of view.

Speaker 5

Thank you, Rajesh. That's very helpful. Maybe a follow-up on that. I did, like, your marketing and promotions spend obviously has remained below 5% for some time. Competitive environment seems really good.

Speaker 5

So that 1.5 to 2 x, which is the growth of the underlying market is great from the shift to online, but do you think there is opportunity over the next 2, 3, 4 years to actually grow even faster because you may win more market share given how benign competition is? Or do you think your current market share is steady state or stable market share and you don't foresee? And I'm talking about specifically the online cohort. Within the online, do you think the market share now has stabilized, or do you think there's more room for that to, you know, move higher?

Speaker 1

You know, I would I would, Manish, put it as slightly differently. I mean, rather than just, you know, going with any kind of a preconceived thing or notions, I would say, and this is how we operate, by the way, or have been operating in the past as well, that we would not necessarily miss any opportunity that we see. Wherever and whichever segment we see an opportunity, and we are not holding on our investments. And, you know, and in the overall brands have become more and more reliable and popular, and our repeat rates have been very, very robust. But wherever we see, and you know, you've seen some of the recent investments where we have been powering different platforms to be able to get to the, you know, expand our reach for the new user acquisition, etcetera.

Speaker 1

So I I don't think we are we are saying that we will hold on to any potential investment that will be required. Obviously, trying, you know, need to do that intelligently, need to do that, you know, data data and more sort of looking at, you know, what kind of return on investment that you could potentially get, etcetera. So doing it more intelligently, but but definitely not going to leave any opportunity that might be out there staring on our face and saying, you know, in this particular segment that we could grow more. For example, like international segments, you've seen there is more headroom and we are growing at a faster rate. You know, our homestay segment has been growing at a faster growth rate.

Speaker 1

Potentially, we've called out that there is potential, and we will continue to keep investing behind those.

Speaker 5

Thank you, Rajiv. That makes sense. My last question maybe, to Mohit. So, Mohit, on the cash addition, maybe a follow-up to the question that Sachin asked earlier. When you think about you've called out some of the number that, okay, maximum buyback of, let's $60,000,000 but you also talked about in your opening remarks that you would also or you could look at organic and inorganic opportunity.

Speaker 5

So specifically on the inorganic opportunity, is there like a threshold cap number that you have in mind that you will not, let's say, buy assets at a larger than a certain number? Given, of course, the cash balance is really large and you could, you know, potentially invest a lot. So just trying to get some sense as to could inorganic be like a large investment area or would it not? And maybe another follow-up was on ESOP also. So just to clarify, this 35 to 40,000,000 will also be the run rate for the next year, or is the 13,000,000 for the quarter annualized the new run rate for ESOP?

Speaker 5

Wanted to just confirm that.

Speaker 2

Sure. Maybe I'll take the second one first. So into the $35,000,000 to $40,000,000 full year number is the run rate that I was talking about. So it's best to look at it in the full year terms and not necessarily by the quarter because you could have, you know, a slight variations across quarters based on, you know, vesting schedules, etcetera. So it's more the full year run rate.

Speaker 2

And, you know, coming to the, to the inorganic growth opportunities, Unfortunately, I don't think there's any cap in mind, and we don't necessarily need to kind of put in a cap in mind right now with the kind of, you know, cash reserves that we have on the balance sheet and even otherwise the appetite to be able to raise, you know, cash if need be for any inorganic growth. I think the the the the realistic thought over there is that we don't necessarily see any large consolidation opportunities per se. And like we've been saying, the large consolidation opportunity has already been laid out in that case, wherein we have kind of already, you know, seen brands like Ibibo and Redbus coming into the forms are coming into the group. And therefore going forward, the inorganic investments are likely to be more in niche spaces, which can help us, you know, drive faster growth or kind of, you know, accelerate our plans in some of these segments. Now, whether it could be, you know, like, say, for instance, the last few examples have been in the intercity cab market or say for instance, in the corporate, you know, kind of, you know, demand segment or say for instance, on the hotel SaaS side or on the Forex side.

Speaker 2

So we would be open to kind of looking at investment opportunities pretty much across the board, except for the fact that we have historically never made any inorganic investments on the ticketing side or on the side. So most of the other segments is where we kind of, you know, keep looking for opportunities to augment our growth or accelerate our plans. So that is where I would leave it.

Speaker 5

Thank you. Thanks, Mohitrajesh. Thanks for taking my questions.

Speaker 2

Thank you, Manish.

Operator

Thank you, Manish. The next question is from the line of Aditya Suresh of Macquarie. Aditya, you may please ask your question now.

Speaker 6

Thanks, Pupul and good afternoon, Mohit and Rajesh. Rajesh, for you, in terms of your cash position and the impactful ambitions, maybe if you can just clarify on what the impactful ambitions are for MakeMyTrip, please?

Speaker 1

What's the ambition on? Sorry?

Speaker 6

The international side, there was some, news flow in the quarter. So if you can just clarify on the international aspirations.

Speaker 1

Yeah. Yeah. Yeah. No. Of course.

Speaker 1

No. I was just trying to I I think the audio was not that, that clear. See, international, Aditi, what I was trying to to highlight was there are 2 types of international use cases here in our business. Right? So one is outbound travel.

Speaker 1

And the one, that you see the numbers that, you know, we particularly highlighted, actually both for flights and hotels, it's the international outbound travel for flights and the hotels and even the packages, which is part of the hotel and packages reporting segment. There we there we see a lot of headroom, both from an online penetration standpoint, but also, you know, rising income and, you know, and people are looking to to sort of get back to their foreign travel as well as the supply situation improves and that has been improving over the last year significantly. Also the fact that the visa operations for many, many countries and they're trying to 5 or 6 are flying distance, Southeast Asia, Middle East, many countries, new countries, even some parts of Europe, they have opened up the visa operation trying to sort of woo Indian tourists and travelers into their countries. And we've seen tremendous amount of inbound sort of interest coming in from all the tourism ministries of various countries as well. So that is something that we were trying to to say that, you know, there is there is good potential opportunity of growth there.

Speaker 1

And, you know, our ambition there is is clearly, see, our overall vision is for the Indian travelers. You know, whether traveling within India or traveling outside of India, we would like to provide all kind of travel services and the travel related services. And that's really, you know, our focus has been. And we'll continue to sort of keep driving that. And then the other part of international business that we have is for the different markets.

Speaker 1

So the GCC launch, for example, for MakeMyTrip brand starting with the UAE market is for that source market. Now that has been steadily growing as well, starting with air and then, you know, we want to also grow hotel business sort of organically growing, that as well. Now that travel might be, you know, coming to India and back and forth between India from that region, but that travel could also be the expats from that market going to various, you know, sort of other leisure destinations for their break or for their holidays. So that is the other sort of aspect of our international business growth, if you will. And last but not the least, I would also mention, I think it's there in the script, which we called out as well, is our red bus trying to go to various international destinations.

Speaker 1

In this quarter, we launched in Vietnam and Cambodia as well. So wherever we see there is large bus market, we already have a playbook that has worked very well in India. We are taking it to those markets as well, which is again our midterm to long term play, but that is another sort of aspect of our international business growth, if you will.

Speaker 6

Thanks, Rajesh. And the second piece was on margins, right, or commissions in the Air business, which has kind of steadily improved and has remained healthy. So any trends here for us to think about in terms of how commission rates in in the air business could kind of shake up for this year?

Speaker 2

So, are you kind of, you know, medium term kind of, you know, estimate is, you know, this could kind of, you know, see the the the overall rate ticketing rates could go southwards, but not in a very large manner. So they should largely remain around the, you know, the 6% mark. It could be small plus or minus, you know, over that number. But we do believe that most of the, you know, margins, you know, across segments are likely to remain stable. So whether it is a ticketing, you know, around the 6% level, whether it is hotels and packages around the, you know, 16, 17% levels or whether it is bus ticketing around the 9a half to kind of 10%, you know, levels.

Speaker 2

We do believe that margin should largely remain stable in the coming years.

Speaker 6

Thanks, Mohit. And the final piece was on other expenses, right? Obviously, that's increased strongly and as a reclassification of your distribution costs and other expenses. There's been an ongoing theme, Mohit, but if you just like shed more color here on this and should we expect, for example, sales marketing to remain at that within that 5%, but perhaps other expenses are going to grow stronger? Any any thoughts on this?

Speaker 2

Yeah. I think, you know, this is a, you know, better view, better presentation, which is kind of, you know, being started from this year onwards. And therefore, we had started calling her out from the from the last few quarters. And this is a continuation. So no no real change over there, but it is more than appropriate representation.

Speaker 2

And, you know, these aren't these aren't really kind of, you know, marketing or promotional expenses. These are actually in the nature of distribution costs and therefore being kind of, you know, reported accordingly. You may not have a very, you know, a good comparable in this year compared to the previous year. But going forward, we'll have a, you know, a clear cut comparable, because already the 1st full year of kind of, you know, anti city classification has has gone through. So I think we'll have good comparables over there.

Speaker 2

I think we'll continue to keep looking at, you know, these expenses very differently, because they're, you know, kind of not necessarily interchangeable per se.

Speaker 6

Thanks, both. If I can, may I ask one more question?

Speaker 2

Sure.

Speaker 6

Just thinking about the operating leverage of the platform and thinking about sales and staff expenses, should our expectation be that the staff expenses, employee expenses, that line grows in tandem with revenue? Or do you see that as a potential area for operating leverage as your cross bookings grow?

Speaker 2

Some small amount of operating leverage should keep coming in, you know, on the personal cost side because, you know, we don't really kind of expect to add any significant number of headcount. So it will predominantly be more, you know, inflationary increases, which will come through, on a on a ongoing basis in the next few years. And hopefully, the growth kind of, you know, in the business should be, you know, you know, should be higher than that.

Speaker 6

Thanks, Harish. All the best.

Speaker 1

Thank you.

Operator

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

Speaker 4

Thank you, Vipul. Hi, everyone. Congratulations. Great shot of numbers again. My first question is, just looking at the other component, right, now this quarter, if I look at just comparing it with the last quarter, generally, this is seasonally weaker quarter.

Speaker 4

So all GBVs are lower versus last quarter, but there's a pretty decent jump here and it's been a story for a while. So just trying to understand what is the most sensitive travel segment which seems to affect the other businesses? Is that related to the air side where the pricing has been slightly higher? So some of the products you have, like, lock in, etcetera, is doing very well. Just trying to get a sense of what the key drivers for that pieces.

Speaker 2

Really, the the other is, you know, has been increasing in terms of the number of offerings that we kind of, you know, reporting out there. Right? And, you know, historically, if you would regulate, it used to be predominantly, you know, the insurance related income, which used to be kind of, you know, coming in over there. We have added a variety of, you know, travel related services, including some travel services. So say, for instance, I was talking about, you know, other ground transport kind of, you know, improving very meaningfully, you know, through the, so things like, income from rail ticketing, income from intercity cabs, etcetera, right now is all kind of reported in the in the other segment.

Speaker 2

You would recollect we had launched the full trip money platform, which is more of a fintech platform wherein we have also kind of, you know, built in a variety of, you know, options for offering previous other ancillary services, such as Forex, etcetera. All of that is also kind of, you know, part of the other services. I think one, it is kind of, you know, natural growth coming in in the existing kind of offerings in that particular segment. And also, the increase in the breadth of services that are now being kind of captured under that segment. So that's what is driving it.

Speaker 4

Got it. Thanks, Pankaj. And my second question is just sticking to the air side of the business and the international outbound part, that do much better this quarter versus last quarter? And how much of the air business that you see this quarter is advanced booking for the upcoming holiday season? If if you can relate it to that, just share what your market share in domestic aviation is now.

Speaker 2

Sure. I think the market share in domestic aviation, like Rajesh call out continues to be around the 30% level. And, you know, if I talk about, you know, the mix of international versus domestic, I think the much faster growth in international has been the has been the kind of, you know, the highlight that I had called out not only for this quarter, but across the year. So for the full year as well. And just to give you some color, our mix coming in on the adjusted margin side in the ad ticketing business from international used to be hovering around, you know, about 24, 25%.

Speaker 2

It's already kind of gone up to about 33% plus. So it's seen a significant improvement through the fiscal year. And therefore, that's been a story for the year across quarters, not just for q 4. And secondly, it is also to some extent coming in from the fact, like Rajesh had called out, that the growth in the domestic aviation, you know, industry has been muted, you know, from the last year in view of a variety of kind of, you know, one offs that the industry is facing. And as a result of that, also, you know, the the mix has been moving, you know, more in favor of, you know, international rate ticketing.

Speaker 2

So those are the 2 two two large reasons.

Speaker 4

Sorry. Thanks, guys. And my last question, on the bus side, you know, I I heard when you mentioned the launches in Cambodia and Vietnam. In general, overall for the bus business, specifically what would be the share of international versus domestic right now? Which one is growing better?

Speaker 2

I've been ballpark about 10%. And, you know, the the the expansion or kind of, you know, the 4 into Cambodia and Vietnam Vietnam is pretty much in line with our overall strategy where we've been calling out that, you know, we do see an opportunity, of getting into multiple markets in Southeast Asia on the bus trading side. And, you know, you would recollect, we had started with Singapore, Malaysia, then, you know, we've kind of, you know, added more countries to it, launched it in Indonesia, and now we're kind of launching it in Vietnam and Cambodia. So we do believe overall, Southeast Asia offers a good opportunity for expanding the iridis brand.

Speaker 4

Can I get to

Speaker 1

sorry, Vivek? I was just going to add one additional comment on that, that, you know, our sort of aim is to double that contribution from 10% to 20% in the midterm as well.

Speaker 3

Got it.

Speaker 4

Great. Thanks, Rajesh. Just the last question then from my side. In the in the budget hotels segment, right, any any change, any new momentum that you see there in I know you've said before that the super budget continues to ail, but the cheaper part of the market has done relatively better. And I'm just wondering with all these price increases in the premium category, have you seen any change in activity in low price tier point as well on the hotel side?

Speaker 4

Do you think that is going to happen eventually or do you think that part will remain a little bit lackadaisical?

Speaker 1

You know what, Vijit, what has happened is and as we realize over the quarters, you know, analyzing the data very, very deeply, Any any hotel with a with a price point of around 1,000 or beyond, there is no problem. It has come back. The growth has come back and that segment is also growing. And you see the growth in line with, let's say, the other segments as well. And maybe premium is growing relatively higher than maybe mid segment and budget.

Speaker 1

And just about, you know, with a small gap relatively. But all of the segments are growing now. If they if they the the trend that we had seen it in the past on the ultra budget, which we have been speaking about, less than 1,000 was unfortunately artificially less than 1,000. You know, they were they were they were operating or they were getting sold at some 400, 500 rupees or 600 rupees, you know, at a ridiculously low levels was only because of the investments being made in the marketplace in that segment. Right?

Speaker 1

And then and those investments have stopped and those price points for those hotels have also come back. So if you really see effectively the same set of hotels, which were just artificially being sold at a ridiculously low price, are now or that correction on the price has already taken place, which means that they are getting or inching towards or moving beyond 1,000 rupee a night as well. And that that segment is definitely growing. Like I mentioned, in line with the other segments as well. So I don't think I think that is a thing of the past.

Speaker 1

Maybe there was a little bit of a fraud because of just very, very aggressive, you know, sort of price points in in the market. And that is now behind us and that is that part, you know, which artificially came in, has gone away. But otherwise, all other segments are now smooth.

Speaker 4

Got it, Raj. My last question, if I can squeeze that in. On the international outbound travel from India, right, apart from, you know, maybe you adding supply on the hotel side across new cities and new geographies, is there anything else that is kind of missing from your product bouquet you think that you need to still invest in to kind of, you know, accelerate share shift to online or to kind of, you know, support your international outbound business. Just trying to think of whether there are any major investment areas that you still have to look into.

Speaker 1

You know, the online product on b2c is a continuous improvement, and we'll continue to keep doing that. We obviously will use, you know, the latest technologies to enhance the front end experience and that's an ongoing innovation that will continue to happen. I wouldn't say, I would actually say on the platform side, we are ready. We on the channel side also, we are ready. We actually have my partner, channel that is sort of helping getting the b2b2 c growth, especially for outbound international segments as well, both for flights and hotels.

Speaker 1

Because of the ticket price, there is that market that is sort of offline sitting out there, and we've been able to sort of reach out to that market as well. I think the area of investment from, you know, for future sort of fueling the international growth both for flights and hotels is going to be continuously going to be on the supply side. You know, like we called out in some of the international markets and hotels, we are adding new destinations where the Indians are going to do the direct contracting, you know, more and more. Like every quarter, we will add a couple of destinations and so on. And similarly, on flight side, we continue to keep working with, you know, sort of the different or multiple sources of supply and then see what are the kind of, you know, sort of permutation and combinations, including virtual interlining, for example, that we can offer to our customers, which will help them, you know, sort of get value for their money, if you will.

Speaker 1

So so so those are the kind of areas. But the large area of investment there is going to be more on the supply side. On product side, the continuous innovation will continue. But on channel side, I think overall, we are we are in good shape there.

Speaker 4

All right. Great. Thanks, Rajil. Those are my questions. Thank you.

Operator

Thank you, Vijit. We're almost out of time. We'll take the last question from Dennis O'Kane of DG HC. Dennis, you may ask your question now. Dennis, you'll have to unmute yourself.

Speaker 1

Not sure. Dennis is still on.

Operator

In that case, we'll end the call now. There are a few questions in the queue. We can take them separately offline and Rajesh, over to you for your closing remarks.

Speaker 1

Thank you, Vipul, and thank you everyone for your time and thank you so much for your patience as well.

Speaker 2

Thanks, everyone.

Operator

Thank you, everyone.

Key Takeaways

  • MakeMyTrip posted a record fiscal 2024 Gross Booking Value of $8 billion and an adjusted operating profit of $124.2 million (vs. $70.3 million prior year), with Q4 GTV of $2 billion (+23% CC) and op profit of $32.4 million (+70% yoy).
  • Strong Indian travel macro trends—rising GDP per capita, infrastructure upgrades, and a 97% surge in domestic spiritual tourism searches—alongside MoUs with Goa and Madhya Pradesh governments are fueling long-term demand.
  • The international air ticketing business grew 33% yoy while maintaining >30% domestic market share, bolstered by new products like FlexiFly and a Visa Guarantee; accommodation revenue jumped 28.8% with >84,000 properties and AI-powered booking tools.
  • Diversification across segments includes a 26% increase in bus services (launching in Vietnam and Cambodia), 30% growth in rail bookings, expanded intercity cabs, and corporate travel platforms MyBiz (56,300 SMBs) and Quest (351 enterprises).
  • With $101 million net cash added in FY 24 and a year-end balance exceeding $600 million, MakeMyTrip plans opportunistic buybacks to offset ESOP dilution and pursue organic and niche inorganic investments.
AI Generated. May Contain Errors.
Earnings Conference Call
MakeMyTrip Q4 2024
00:00 / 00:00