Welcome to MakeMyTrip's Fiscal 2017 First Quarter Earnings Call. The company wishes to remind you that certain statements made on this call are considered forward-looking statements within the meaning of the Safe Harbor provision of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of future performance and by their nature are subject to inherent uncertainties. Actual results may differ materially. Any forward-looking information relayed on this call speaks only as of this date and the company undertakes no obligation to update the information to reflect changed circumstances. Additional information concerning these statements is contained in the Risk Factors and Forward-Looking Statements section of the company's Annual Report on Form 20-F filed with the SEC on June 14, 2016. Copies of this filing are available from the SEC or from the company's Investor Relations department. And with that, I would now like to turn the call over to your host, Deep Kalra, Chairman, Group CEO and Founder of MakeMyTrip. Sir, please go ahead.

Thank you. Thank you and welcome everyone to our fiscal 2017 first quarter earnings call. As we report on our first quarter’s results, I want to share our enthusiasm for the long term business opportunities within the OTA industry in India and for MakeMyTrip, in particular. As the clear market leader and with a brand that’s synonymous with online travel in India, we believe MakeMyTrip is very well positioned to benefit from the country's massive $350 million and burgeoning mobile Internet user base. In addition, India's high annual GDP growth forecast of 7.7% according to Fitch Ratings is expected to provide a strong tailwind for the already healthy domestic consumption behavior and demand for discretionary leisure travel. As a travel intermediary, we also welcome the recent policy reforms announced for our domestic civil aviation industry. The latest reforms announced last month will allow up to 100% foreign direct investment in both domestic airport operations and airlines and seek to boost regional connectivity by leveraging underutilized airports in smaller cities and towns. These reforms, according to the government, are intended to take flying to the masses by making it affordable and convenient and aim to have 300 million annual domestic passenger trips by 2022 and 500 million by 2027, up from 81 million last year. At MakeMyTrip, we will undoubtedly benefit from these long term macro tailwinds that will drive higher travel demand and faster online bookings adoption. We are also firm believers that our focus on delivering customers the best experience, especially on mobile, will differentiate us from competitors, widen our leadership position within the market and ultimately drive long term sustainable and profitable growth. To make all of this happen, we've taken great care and effort to drive a winning company culture that's focused on transparency, innovation, creativity and…

Thanks, Deep, and hi everyone. As you just heard from Deep, we've had a very busy start to the new fiscal year, working across multiple fronts to provide customers the best possible experience with MakeMyTrip. I would like to start by summarizing the progress we have made on mobile, which has been a key enabler to growth across our businesses as illustrated by the 73% share in transactions of domestic hotels and 44% of domestic flights transactions booked via mobile in quarter one fiscal year 2017. I'm also pleased to share that our total cumulative apps downloaded to date has exceeded 23 million at the end of Q1 2017 and we now have over 5 million monthly active mobile users. Q1 was also the first quarter where more than half of MakeMyTrip’s total online visitors came to us via their mobile devices. In the quarter, we made continuous improvements to enhance the experience across our mobile apps. For example, our teams worked very hard to reduce the latency of our mobile experiences down to less than 5 seconds of initial app launch and less than 3 seconds on subsequent launches, which is impressive and important given the speed of Internet connectivity in India. Also, with each new version of our mobile apps, our team keeps lowering the total app size in order to accommodate lower-end smartphones with smaller on board storage. Lastly, our team is continuing to test and squash out bugs within the apps to ensure nearly 100% crash-free performance. In addition, to building great mobile apps to attract users, we are also personalizing the mobile experience in order to reengage and retain our mobile users. For example, our new app-based fare alerts service notifies users when flight prices fall for a fare they were searching for, which has…

Thanks, Rajesh, and hello everyone. I'd like to start by highlighting the record revenue less service cost of $58.9 million achieved in the first quarter of fiscal 2017, which was ahead of expectations. This represents a constant currency year on year growth of 62.6%. I’m pleased to report that this is amongst the highest year on year net revenue growth rates we’ve reported in a quarter in the last few years. This quarter, we have also reported the highest quarterly mix of non-air net revenues at 59.4%. Our air ticketing business achieved year on year transaction growth of 34% and net revenue growth of over 38%. As market leaders, we continue to grow ahead of the industry which recorded a year on year growth of about 21%. We will continue to focus on volume growth in this business segment in the remaining quarters of the fiscal year 2017. I'm pleased to report that our year on your constant currency net revenue growth in the hotels and packages business stood at about 90%. This was the result of a strong transaction growth at 260%. This transaction growth was driven by 478% growth in India standalone hotels booked online, expectedly driven by over 870% growth in mobile transactions. This was made possible with our increasing app download base which now helps us get online standalone hotel orders from 1,000 cities in India. It is also heartening to note that our online standalone hotel transactions grew 21% over the previous quarter, which has also seen about 507% year on year growth. During the reported quarter, our adjusted operating losses were to the tune of $24.3 million, which is a $5 million quarter on quarter improvement over last quarter’s reported loss of $29.3 million. As we have called out in the last few quarters,…

[Operator Instructions] And our first question comes from the line of Sachin Salgaonkar with Bank of America.

I have three questions. First question is when we look at your take rate at hotels and packages, it has declined on a Q-o-Q basis. Any particular reason what is driving that?

Sachin, last quarter was also the end of the fiscal, wherein you typically kind of see some amount of performance-linked bonuses coming in and it was also low season quarter. Q1 tends to be a high season quarter, where the focus is more on ensuring that there is optimal inventory availability...

Hello, Mohit? I can’t hear you.

Sachin, it’s [Sarath] and I believe – trying to get him back on the line, just bear with us for a second.

John, this is Deep, Deep is back on. Yes, we got disconnected. Sorry about that.

Sachin, are you still on the line?

Yes, I am.

Rajesh and Mohit are here too, sorry about that Sachin. Rajesh was just saying we should take...

Sachin, sorry, I just wanted to add to what Mohit said, we should just take the same explanation even for air. You would have noticed quarter on quarter a small drop there as well. So it tends to happen towards the end of the year for sure, but also if you go back in history, you would probably also notice that and I've always said that in the past that in a quarter on quarter or between the quarter, sometimes low season/high season, you would see some fluctuations because sometimes it's a functional specific deal with a particular supplier that you would be getting in a particular quarter. So I think we should just bear that in mind and overall analyze margin on a year on year basis.

My second question is generally on your cash burn, now is it fair to say that your cash burn has sort of peaked in 4Q and going forward we could see a decline in that?

Sachin, for the reported quarter, we’ve seen a decline and that's what I called out of close to $5 million compared to the last quarter. This is also kind of based on our growth expectations and competitive dynamics. So while we expect that we will continue to be on this part, we will have to take it as we kind of get into the subsequent quarters. And then take a call on it. But directionally, yes, we do believe we’ll try and continue reducing the cash burn on a quarter on quarter basis.

If I could just add one more time, so fundamentally what we're trying to do, Sachin, is to obviously constantly keep working on finding out avenues where we can with the less burn deliver more revenue, which is what we try to deliver this quarter and that would be our endeavor. And specifically, I think it’ll be in that ballpark range, but we should see it close to – see it rather linked to the growth numbers that we’re delivering. So I would think that it will kind of go hand in hand with the kind of growth numbers, I mean largely you would see last quarter and this quarter 400%, 500% kind of growth being delivered, but similar kind of growth numbers delivered at the lower cash burn. So that’s how you should think about it.

And my last question is generally on competitive intensity, with Yatra getting new investment, the company clearly wants to focus on the budget hotel space in a much more aggressive manner than what it used to focus historically. So does that increase the competitive intensity out there? What are your thoughts generally on the competitive landscape out here?

Sachin, I think clearly with this reverse merger of back door entry on the NASDAQ, I guess Yatra will have now funds anywhere between this range of I guess it’s $100 million plus/minus $20 million depending on how the deal pans out. And obviously this is a time to come back into the space. They have been quiet. We do believe that typically it’s the weaker players who tend to get hurt much more. I think we have cemented our position very strongly both in air and hotels. So we don't expect that we're going to get that impact, but we do of course expect Yatra to definitely up the marketing and the promo kind of trajectory that they've been on, we do expect to see some increase out there, but I think it will be more other players who would be probably hurt by that.

And our next question comes from the line of Gaurav M with Citi.

Just had a few questions. One is that you did not give details of ETB transaction number this quarter, so can you just share that number with us?

Sure, happy to do that. Increasingly, the reason why we were not – increasingly ETB was being – as we had also shared in the past, if you would recall being consolidated with hotel travel and therefore we probably would have excluded that, but we’re happy to share that number.

We specifically called it out last year, Gaurav, because we were kind of directionally suggesting that we’re kind of ramping down that particular business. But what we have clocked in this quarter is close to about 29,000 transactions.

The growth without excluding 300 something, right?

And the growth in hotels and packages, excluding ETB, is about 322%, yes.

The next question is while you’ve mentioned on packages, there was some modest growth in the transaction segment and you’re focusing more on the profitable part of the business. So does that mean that it's going to be more outbound versus domestic? How should we look at packages now?

Precisely? I mean, definitely more focus on outbound and certain key destinations are domestic where the packages product is still very important. For example, Andamans and Ladakh are still very prominent destinations. Kashmir, definitely when there is no disturbance happening, it’s also a package destination. And maybe one or two other key destinations in domestic, but a lot more focus on outbound packages because there the demand for packages is much higher and that this strategy is obviously linked to – this strategy linked to the scenario that we are witnessing is standalone à la carte online hotel booking growth, right. I mean, this goes hand in hand with that because it's so much of transaction growth that we're delivering on one side obviously and especially in the domestic market. So obviously trying to encourage behavior of booking more and more à la carte and that's what is happening, which is in any case from just an operating business model standpoint is much better from a long term standpoint and therefore more and more going forward you would see within packages focus moving towards outbound and only certain key destinations of domestic.

Just last couple of questions; I think Mohit mentioned 5 million active monthly users during the last quarter, what was this number for the fourth quarter, just to get a sense of how...

It was about – in fact, the overall average for the last quarter was about 4.2 million and this quarter it moved up to 5.2 million.

Just last question, while you mentioned about the competitive intensity and Yatra, between you and Ibibo, you were the two players with any amount of funding and were sort of competing on the ground, other players, I would have assumed would have become too marginalized over a period of time given lack of funding. So with Yatra coming into the picture, wouldn't the market share have to be necessarily taken from the top two players because the smaller players really don't matter as much or they don't have that much market share to take from?

I think the way to look at that is slightly differently. So if you look at the air market, yes, we have a very large share in the OTA, which is about 51% as I called out. And then the next competitor out there would be probably about 20 percentage points, so lower. And then there is a long-tail. We still have six or seven players. The positive impact of this is of course that market tends to grow as we've seen new players come in focus on new segments et cetera, it grows the market for sure, which we have seen in the past. On hotel actually it’s further fragmented. So if you come to hotel and you see the market share and you're seeing as we reported 28%, 21% and then you'll have a few players in the teens and then also some single digits. So I think of course we'll see how it plays out, but we are obviously – I guess we've already shared given some kind of guidance on not only on growth, but even on, one, we are going to continue with our strong growth focus and we don't believe that we are going to lose any of the share.

Can you give us any update on how you’re seeing OYO, Stayzilla, those kind of players in the market now, are they competing – competition has reduced?

And even before that, I would like to actually just call out the strength of consumer base and a well-engaged consumer base. So while we’re talking about 23 million downloads, just to your previous question on MODs or the monthly active downloads is very important once you build in a personalization kind of platform. So now we're able to reach users, engage them beyond their purchase cycles and also reach them with relevant offers. As we had mentioned with Jeeves, we're able to give them fare alerts which keeps them engaged and they’re seeing enhanced features like what they can do now with this to check in, to web check in, to share a check in experience at hotels, et cetera. So a lot of the personalization actually helps especially when you have a large base. And that’s going to be the focus. So it’s two pronged. One is to acquire new users; grow the base through marketing campaigns and also other promos and incentives; and the second is then to work very closely with the base we have, as we know what segments – what are the particular preferences not only the geolocations, but the preferences where they like to travel, how they like to travel and then we frame them with the right kind of offers at the right time. So I think that itself is a very big advantage that we now enjoy. So we intend to hold on to that. Coming to your question on other competitors, OYO, I think what we have noticed is a change in strategy and I think they've also spoken about it. They’re seeing more and more pre-booking has come down and this is now more about taking a full place I guess towers et cetera on lease and then trying to run that. So I think there's definitely been a slowdown out there and I think it would be a function of just the kind of high burn that they've done and then obviously the recent raise was not in the same amount as was expected. I think there were some reported numbers and then eventually I think it was smaller. So they have definitely come down in intensity. Stayzilla, we see a bit in the right-stay model, so in our alternate accommodation, short term rental market et cetera. We see them focusing more there in the ultra-budget segment. We don't actually see them so much in the three star and above, which is the area where we have maximum focus.

[Operator Instructions] And our next question comes from the line of Arya Sen with Jefferies.

Firstly, I wanted to understand the transaction growth number a bit better. I mean, where do you think it is coming from, because clearly the overall market of hotel booking is not growing as fast, so is it to do with the share of online growing? And if so where do you think the penetration of online needs today as a proportion of the total hotel market?

Clearly the larger part of this growth is coming in from the shift from offline to online because as you said clearly the market is growing at this rate. Although, in terms of what segments are we getting this growth from, I think there is...

Arya, are you still there?

Yeah, I’m still there, yes.

However, as to the key segments from where this growth is coming, as Deep was calling out, we continue to be focused more on the mid to the premium segment and even in the current reported quarter with the high growth rate, our transaction mix continues to be skewed almost 70% of the transactions coming in from mid to premium segment of hotels.

What I'm trying to ask is so because you know we had this broad number of penetration of online booking in India being – online hotel booking in India being somewhere between 5% to 10%, I think there was a report long time back which talked about 10% to 12%. But clearly that seems to have been – that does not seem to have been the correct number, right? So I'm trying to get a sense of where that number is today because that will determine how fast we can grow going forward, right?

That number has clearly changed, Arya. So clearly that's what I was trying to allude in the first part of my response that clearly this growth is coming in more and more from offline shifting to online. So clearly the online penetration number is now increasing; we don't really have a ready kind of estimate or a third-party number to call out what the online preparation is in the case of the air industry. But we believe we should be anywhere closer to about mid-teens.

It has definitely improved and with this kind of a growth and you see this kind of a growth, Arya, is happening not only with us, with other players in the marketplace as well. So the penetration is improving and that is kind of driving the growth. And fundamental reason for that, underneath reason for that is mobile penetration. And as we called out that number, I don’t know if you would have noticed that, we are now getting bookings from about 1,000 cities in India. So it's a deeper penetration and people who are booking offline, people who are either booking on phone calling up directly or walking in because that was a large segment that was there about 35%, 40% would actually show up on destinations and book. So they were like walk-in bookings about 35%, 40%. So that's one segment that's kind of moving mobile because you could book on the move, even if it is last minute. So from a headroom perspective because I guess you were trying to get a sense of that as well, we think that this penetration, let's say it is close to 15% number today, we expect this penetration to improve to about 40%, 45% in the next three to four years and that’s the headroom for growth, because we do very firmly believe that now this is only going in one direction which is what had happened with air bookings a few years ago. They shift from offline bookings to just using mobile and booking on Internet would continue to gain momentum.

And would it be possible to give some broad guidance of the transaction growth? I mean you were doing that through last year, but now you seem to have moved back to giving only the revenue growth guidance. So possible to give any sort of broad number in terms of the transaction growth in standalone hotels?

Arya, the reason we are now staying away from it is because the trend is – the historical trend is visible and for the last few quarters – since the time we've kind of changed our strategy. So now I think there's enough historical data for you to be able to linking it with the sales promotion as well as the marketing spend and all and the kind of growth being delivered, I think it will be easier to predict and that is why thought it doesn't really make sense for us to just give guidance on transactions.

And also secondly, on the margin, on the take rate front, so I know there was a reclassification of some sort last quarter, so just wanted to understand because now for the whole hotels and packages segment you're almost at 17% and packages are clearly lower, right, so is it fair to assume that hotels is like 20%-plus? And if so, how much of this is classification-related and how much of it is the classification and how much of it is improvement in take rates in hotels?

Arya, actually the whole purpose of the reclass last quarter was to try and show supplier margins clearly in the take rate rather than covering it with any sales promotion expense that we do. So therefore I don't think this is getting driven by any reclassification process. So I think this is the right way to look at it, we believe, so that you get supplier margins clearly known from the margin side and whatever is market-facing, consumer-facing, customer-facing promotions, those are getting reported in the marketing and sales promotion. So that was just to try and kind of – in terms of how we kind of look at supplier-driven margins. Clearly, the reported segment margin stands at about 17% and considering that hotels tend to be higher than packages, the margin on the hotel segment will be higher than the reported margin for the full segment. Just keep in mind that now effectively as we had called out close to about 90% of the transactions coming from hotels and therefore that will give you an indication of what the margin spread is between the two components of the segment.

It’s driven by the mix change significantly. It is driven by the mix change, because hotel and packages earlier used to be, from a transaction perspective, if you go back in history, like very close to 50/50 or more skewed towards packages, even if you go back a little bit back in history. And now it has just completely changed on the other side. So therefore the margin is kind of reflecting that mix.

But is there also any margin improvement that you’ve seen in the hotel side over the last say three or four quarters, the take rate improvement?

Margin improvement overall, within the hotel segment, we've always been calling out that as we kind of scale up volumes, our ability to drive performance bonuses in the hotel segment will also continue to improve and this is kind of something that we've seen also in the air segment. And needless to mention we'd see, continue seeing it in the hotel segment as well where the supplier base is much larger. So yes, that has been happening over the years. I would also recollect, we’ve always been guiding that we expect to take the overall business blended margins closer to about 10% as the hotels and packages segment grows in the business mix and gets more and more driven by standalone hotels or domestic hotels. I think we're seeing that play out and therefore I had called out that we're seeing for the last two quarters our blended margins coming at about 10%-plus.

And our next question comes from the line of Lloyd Wamsley with Deutsche Bank.

This is Kevin LaBuz on for Lloyd. Just wondering aside from the growing standalone hotel mix, is there anything else that drove the improvement in take rate this quarter? I’ve got a follow-up as well.

Predominantly the expansion is kind of coming from the growth in hotels and that is what we've been calling out for a long time. We do believe the sustainable margin improvement will happen as we kind of keep increasing the mix of hotels within our business mix.

And now that exclusivity period on TripAdvisor, just wondering if you guys have any interest in joining that program?

Well, we’ve been actually – that's a good question, we've been thinking about it and I don't know if they have already called out the exclusivity period is getting over. We’ve been kind of in constant touch with them. At this point in time, frankly, we don't think there is any merit for us to join in India, in the Indian market the situation is different as you know, we've invested in HolidayIQ as well and we're getting used to content reviews more from them and they have actually helped us quite well as well because we're trying to kind of influence and get more and more relevant kind of content, user-generated content through HolidayIQ. And specifically on insta-book participation, we at this point in time, we will continuously keep evaluating it. But we don't think it makes sense at this point in time.

And our next question comes from the line of Ashwin Mehta with Nomura.

Just wanted to get a sense in terms of what would be the approximate mix of your H&P revenues between packages and hotels now, you gave out a number in terms of transactions?

Ashwin, clearly, with the significant growth coming through in hotels, the revenue mix is getting more and more loaded in favor of hotels within the H&P segment. That's close to about I think two-thirds of the segment now comes in from hotels.

Secondly, in terms of the take rates in the air ticketing business at around 6.5%, we’d earlier indicated that over a period you see them going down to 5% to 5.5%, but is there anything changing in terms of the market which could make the take rates stay higher, especially given the number of players that are emerging or the expansion in terms of the market and your 51% market share in the OTA space, does that change things in terms of take rate or you still stand by your view of take rates falling over a period?

It's a great observation, Ashwin, and I would still say from a mid-term to long term perspective that we would standby with what we had been talking about. We would see some pressure. I think we've been kind of lucky in the past few quarters where overall aviation market has just been booming because of the fuel prices being down and the transaction, overall market has been growing phenomenally and our volumes have been going better than the market overall growth et cetera. And therefore you feel less pressure from the airlines overall. And also if the prices are down, even the convenience fee kind of holds on, if you will. But I would not take like a firm long term view on something fundamentally changing in favor of increasing in air margin. I would still – we will keep kind of watching this space quarter by quarter. I think we would continue to get some benefit as the market is steady and improving, but there will be time at some point where there would be pressure. So therefore maybe a quarter or two short term view is that it would hold around these levels, maybe around 6%, but mid to long term I would still think that there will be depression on this.

Just to add, this optical percentage increase, percentage margin which is holding out higher than expected also comes in from the fact that air prices have been low over the last quarter in line with the crude oil situation. So it's also a factor of what kind of pricing prevails and how long this low fare pricing will continue.

And just one last question in terms from a competitive dynamics perspective, so you have now got effectively three players who are funded. Does that make the market more rational going forward in your view or you would think the guys who possibly lost out and now they've got funding, they start to get much more disruptive versus what they have been earlier?

It's a good question and I think it's the nature of the funding of Yatra which makes it quite interesting because it is a listing, whether it's reverse-margin back door entry, whichever way. So they’re going to be listed on NASDAQ. So we actually welcome a comp the first time we're getting a public comp from the same market. We think that will be good and that will work well for us given where the product mix now is with hotels, how the growth has been going et cetera. But in the private space, there's of course still Goibibo. So I think it's very, very hard to predict given what we've seen in the last two quarters, also promise funding is not necessarily happening, a lot of change in a lot of dynamic, lot of stuff going on in the market. So I think next few quarters are quite crucial and it's hard to actually I think crystal gaze, but I think just the fact that the hotels market has opened up appreciably, best estimate could be 15%, 16%, in some cases even 20%-plus, in the segments we care about, probably online penetration is close to a quarter. So I think it’s done its job in a good way. So even if discounting were to come down, I don't think people who booked a hotel online in India through a good channel are going to go back to buying it offline if some amount of the discounts go down. So further out, definitely expect a tempering down. I don't think the party can last forever from a consumer point of view. And from a company point of view also, I think like we called out, we are very closely watching the efficiencies and we shaved off almost $5 million in cost with around keeping same to same quarter on quarter. So I think you're going to see more of that happen from our side for sure and I'm sure others will also be looking at similar stuff.

And I'm showing no further questions at this time. Ladies and gentlemen, thank you for participating in today's call. This does conclude the program. You may all disconnect. Everyone, have a great day.