MakeMyTrip Ltd. Q2 FY2025 earnings call

• Business Growth: Gross booking value for the quarter stood at $2.3 billion, registering strong year-on-year growth of 24.3% in constant currency terms. Adjusted operating profit at $37.5 million, registered a year-on-year growth of about 33%. International air-ticketing business posted year-on-year revenue growth of over 39% in constant currency terms and international hotels outbound business revenue grew 62% year-on-year in constant currency terms.
• Product and Service Improvements: Continued localization push with launch of Telugu Funnel on Android and extending the Tamil Funnel on the mobile web; Bus Ticketing in international markets grows faster with international market revenue accounting for 12% of total bus revenue compared to 10% in the same quarter last year; In corporate travel business, completed over 60 integrations with travel and Expense Management Solution Partners and launched the official Q2T mobile application; Deployed GenAI, such as launching Myra chatbot in international flight funnel and enhancing real-time assistance in hotel and homestay booking process.
• Market and Consumption Trends: India's strong economic growth trajectory, expected to become the world's third-largest economy by 2027; increasing consumer discretionary spending; younger generation (aged 25 - 34) has stronger travel willingness; number of Indian passports nearly doubled from 52 million a decade ago to 93 million this year; digital economy development drives e-commerce penetration.

Air Ticketing Business

• Gross bookings for the quarter came in at $1.4 billion, witnessing a year-on-year growth of 20.4% in constant currency. Adjusted margin grew by 21.1% year-on-year in constant currency. International air-ticketing business now accounts for 38% of the adjusted margin in the air-ticketing business compared to 33% in the same quarter last year.

Hotels and Packages Business

• Gross bookings for the quarter in the Hotels and Packages segment came in at about $517.2 million, registering a growth of 21.2% year-on-year on constant currency basis. Adjusted margin growth was 21.4% year-on-year in constant currency terms, resulting in adjusted margin of $90.7 million during the quarter.

Bus Ticketing Business

• Gross bookings for the quarter stood at $263 million, growing at 21.5% year-on-year in constant currency terms. Adjusted margin stood at $27.1 million, registering a year-on-year growth of over 25.6% in constant currency terms.

Other Transport Services

• Investments in other transport services such as Intercity Cabs and Trains helped deliver 17.6% quarter-on-quarter growth in constant currency in a seasonally weaker leisure travel demand quarter.

Corporate Travel Business

• Active corporate customer count on myBiz is now over 59,000-plus, and for Quest2Travel, the active customer count has reached 462 large corporates.

• The profit margins of each business segment are expected to remain in a stable range generally, although there may be some quarter-on-quarter impacts, but overall, it is expected that the profit margins will be maintained within a certain range.
• The company intends to pursue opportunistic share repurchase or buyback programs. Although no meaningful repurchases were made during the reported quarter, it remains committed to the program.

• Prolonged monsoon and significant increase in heavy rainfall impacted demand during parts of the quarter.
• Uncertainties in macroeconomic situation may affect travel demand and business performance.
• Impact of low-cost airlines' direct promotion on the company's business, but the company believes it can cope by continuously improving customer experience.

Q: Regarding hotel booking growth, is the unexpected monsoon mentioned a one-off and will growth return to normal?

A: There was a temporary demand impact in some areas due to excessive monsoon, but from detailed data, it seems temporary. Some affected destinations have started to recover.

Q: There are mentions of consumption slowdown in multiple industries, especially in urban areas, are there signs of consumption slowdown in holiday bookings?

A: No obvious consumption slowdown was seen in the early days of this quarter (October), possibly because the slowdown in September rebounded in October. Early signs do not show consumption slowdown.

Q: With the expansion of GenAI, what revenue benefits and cost savings can be seen?

A: There are productivity improvements in customer service after-sales in the early stage, and improvements in the front-end booking process are expected to bring better conversion rates, but the full impact on profits will take a few quarters to reflect.

Q: Impact of low-cost airlines' direct promotion on the company and how the company copes?

A: The company focuses on continuously improving customer experience, and by continuously launching new functions and paying attention to the overall experience to maintain customer loyalty. Although there are changes in the market, the company's market share remains stable.

Q: About the $60 million repurchase cap, how is it considered and the direction of organic and inorganic opportunities?

A: Currently, there is about $150 million in the repurchase plan, and about 10% has been used. The repurchase plan is not limited by the annual figure. Organic and inorganic investments include both domestic and international markets, such as setting up OT operations in the UAE and carrying out bus ticketing business in multiple countries in Southeast Asia.

Q: Contribution of repeat behavior and new customers to growth and how advertising and promotion expenses are allocated between new and existing customers?

A: About 70% of transactions come from existing customers. Customer acquisition cost as marketing and sales promotion expenses accounts for 4.6% of total bookings, which is efficient. Due to the overlap of customer purchase behavior, it is more appropriate to view the overall customer acquisition cost from the platform level.

Q: Trend of profit margins, will the profit margin in the second half of the year be better than that in the first half?

A: It is expected that the profit margins will generally remain in a stable range, and the impact of seasonal factors on the profit margin structure is not significant.

Q: Share of international and hotel business, situation of direct booking and agency booking, etc.?

A: In international business by value, the proportion of hotels in international business is lower than that of aviation. The international hotel business has a mix of direct contracted inventory and inventory from partners, and the proportion of directly contracted hotels is continuously expanded as business grows.

Q: Technical integration between different products?

A: There is back-end technology integration between products, enabling the connection trip function to meet consumers' different consumption behaviors such as buying tickets first and then booking hotels.