Welcome to MyTrip's Fiscal 2017 Second 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 U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of future performances 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 Statement sections of the company's Annual Report, Form 2 -- 20-F filled -- 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 introduce your host for today's conference, Deep Kalra. Sir, you may begin.

Thank you, and welcome, everyone, to our fiscal 2017 second quarter earnings call. I'd like to start the call today by commenting on our historic announcement to consolidate the Ibibo Group with MakeMyTrip. The team and I cannot be more excited for the value creation that this consolidation can bring to our customers, industry partners and shareholders. For our customers, we believe the newly-combined MMYT will truly become a one-stop shop for all Indian travelers, whether they are traveling by air, bus or rail and staying at a 5-star luxury hotel in a metro city or a homestay property at a hill station for the holidays, we will be able to offer the right travel products, at the right price point, and across multiple familiar brands like MakeMyTrip, Goibibo and RedBus. As for our supply partners, we believe the increased scale and customer reach possible, with access to easily scalable platforms for distribution, will be beneficial in the form of increased business volumes and customer service. We also believe that by combining the best practices and human talents of both companies, we will be able to innovate and solve a traveler's pain points much faster and accelerate the natural shift from offline to online in various travel segments, all while driving operational efficiencies with high growth. Now let me share some key highlights from our fiscal second quarter, as our operational and financial achievements reflect the success of our strategy of balancing market share gains in the online hotels business, while we continue to find ways to improve our customer satisfaction and retention and drive strong business growth. In Q2, we achieved very strong year-over-year growth in transactions for the hotel and packages segment, driven primarily by MakeMyTrip India's standalone online hotel bookings, which now represent over 93% of all…

Thanks, Deep, and, hi, everyone. As you just heard from Deep, we are very excited to welcome the ibibo team to the MMYT family post closure of the transaction, after shareholders and regulatory approvals. We consider this a very strategic move to help us achieve new business heights in our future. Now let me elaborate on our Q2's achievements and performance. During the quarter, we continued to drive growth in our domestic hotel segment and command an industry-leading market share in the domestic air segment. We also achieved a record number of standalone hotel transactions booked on lower overall hotels' marketing spend in the typically slower Q2 travel season. Our growth rate was over 292% year-on-year in standalone online hotel transactions, and over 453% in mobile standalone hotel transactions for the quarter. We were also able to achieve robust growth of 51% year-on-year in revenue less service cost in constant currency terms. In addition, our domestic air business continued to outpace overall market growth, and achieve market share of over 16% in Q2. As highlighted in the previous quarters, we've been pushing for mobile adoption in a big way with our mobile first approach across all our business lines. Our continuous effort on this front is helping grow the transactions booked on the mobile platform. During Q2, over 76% of our domestic standalone online hotel, and 49% of domestic flights online transactions were booked via mobile. This achievement represents a material improvement in mobile penetration as compared to the same quarter a year ago. Our total cumulative apps download to date has increased by 4.5 million sequentially since Q1 to 27.5 million cumulative downloads, and we continued to see increased growth in monthly active mobile app users to 5.4 million in Q2. In addition, we have also launched progressive web…

Thanks, Rajesh, and hello everyone. I'm pleased to share that we have achieved strong year-on-year revenue less service cost or net revenue growth of 51%, and report $53.2 million of net revenue in the second quarter of the fiscal, and this was above consensus estimates. Our air ticketing business achieved year-on-year transaction growth of 31%, and net revenue growth of over 33% in constant currency. As the market leader, our air ticketing business has consistently outpaced domestic industry growth rates which recorded a year-on-year growth of about 24%. At the same time, the average transaction value of our total air business dropped by about 17% year-on-year, and by about 9.5% on a quarter-on-quarter basis. As a result, our air take rates expanded to about 6.9%, as not all of our air net revenue sources are directly a proportion of the gross value of the transaction. I'm also very happy to report that our year-on-year constant currency net revenue growth in our hotels and packages business was about 73% in the seasonally weak travel quarter being reported. This growth was driven by strong transaction growth of nearly 173%, as we continued to pursue our market share gain strategy in the online hotels business. This transaction growth was powered by over 292% growth in India standalone hotels booked online and by over 453% growth in mobile transactions in the same segment. I'd like to call out that we had embarked on a high share gain strategy about 4 quarters back, and it's heartening to know that we have been able to grow our India standalone online hotels volumes to almost 4x since Q2 2016. More encouraging is the fact that despite this being a low travel season, and hence revenues dropping about $5.7 million over last reported high travel season of Q1,…

[Operator Instructions] And our first question comes from Lloyd Walmsley from Deutsche Bank.

This Aki from -- on behalf of Lloyd. Couple of questions from our side. So I guess, the first question would be, in terms of your market share on the hotel side -- how do you think about your market share on the hotel side between travel within India and outbound? And then, how do you compare that versus the other international OTAs that are operating in India at this point in time?

Yes, Aki. So the reported market share as per the latest MB, Millward Brown survey, is -- like I shared, it's 27% market share, this is domestic. So this is Indians traveling within India, and this also takes out the impact of the inbound travel. So this is what we have been -- what we have tasked the research agency to do, and it's kind of a syndicated survey. So this is domestic. International is really hard right now to get a fix on, because we've got -- it is very hard to poll it. We can look at some key destinations, we could look at some key hotels, but it becomes really difficult because these guys are getting travelers, again, from all over. So we've not been able to actually get a fair share of it. But suffice it to say that's still small, and we are definitely putting more emphasis now on ex-India hotels. As you would imagine, we -- they have -- large inventory that's there, most of it is not direct. Direct inventory strategy is being followed in key markets. We have basically shortlisted about 20 markets, where -- 20 cities, which are frequented by Indians, and which are more prone to à la carte hotel bookings versus packaged kind of products. And these are the places where we are doing direct inventory now. We have a bunch of Market Managers out there, doing that. And I think, over the next few quarters, we should be able to show a traction, and also try to find a way of showing market share -- getting market share for those markets.

Okay, that's really helpful. And then, my second question was regarding your long-term positioning about outbound travel. How do you compare that? How do you compare your position on that versus some of the international OTAs that are operating in India?

Long-term positioning versus, sorry?

The international OTAs.

Like how do you compare your positioning versus international OTAs in terms of outbound travel from India?

Right. Right. As you know, both booking.com and Expedia have now been in the market now for a while -- several years. Some of the other international OTAs are still, I think, they have very thin presence out here like Agoda, et cetera. But both these companies have a -- have been operating now in the market. Clearly, they have an edge over -- I mean, they are more known for international travel over domestic travel. But that being said, when we look at the numbers. Be it for air or whatever we get for hotel, the kind of information we get, it doesn't seem like anyone is actually that well entrenched. I think for international air, it's pretty safe to assume that we would still be the single largest player for international air, but for -- and Expedia, obviously, does have some market there, but it's still essentially where we would be in a comfortable position when we get our feedback from the airlines or the GDS companies. When it comes to hotel bookings, I think, definitely, booking.com is doing quite well. But again, don't have a good sense on numbers as of now. So hard to say.

Okay, great. And then, just 1 or 2 questions on your recent IPO announcement. So it's been a few days since you've made that announcement. Just wondering if you could share any feedback that you would receive from your hotel suppliers or other players in the industry, since you've made that announcement last week?

Yes, I know. It's a good question. I think we have -- as of now, at least to the 3 of us, we've only -- or senior folks have only got very strong, positive congratulatory messages, and we have had some one-on-one conversations at our hotel meeting just today. I think, when you talk about our Market Managers and the feedback we're getting out there, people have got questions definitely that, how is this going to play out? And I think we are -- the message is clear that we are reassuring our partners that this doesn't result in us going out and trying to get higher margin, because very clearly, our strategy anyway had changed over the last few quarters, where we were looking much more at penetration and availability rather than getting a couple of percentage points more. So that assurances have gone out. And I think people are...

Positive...

Yes, quite positive, and continue to work closely. And again, as you know, till we get our CCI approval, we really cannot be -- we are functioning as 2 separate companies, and we'll continue to do so. And I think we are here to continue to give that same positive message to all.

Awesome. And then just 1 last thing before I hop off. Just wondering if you could share anything in terms of take rates on the bus segment for ibibo?

Very hard right now. We are actually not in a position, right now, to share that information. So it'll be hard to say. What we know of the bus business, we can definitely share. We've had a bus offering for a while, albeit smaller. So take rates tend to hover close to the 10% mark in this business. It is a low ASP business, but about 10%. I'm sure RedBus, with a larger traction and much larger market share, would probably be enjoying something better. But we really will not be able to comment on that.

[Operator Instructions] And we have a question from Arya Sen from Jefferies.

Just a few bookkeeping questions. First, if you could give the number of transactions in ETB in the quarter? And standalone India hotel, what was the net revenue contribution?

Arya, Mohit here. As you would recollect, we were giving ETB transaction separately as a part of the call out that we are taking that business segment down last year. We are no longer reporting ETB as a separate segment since the beginning of this year.

Okay. And it will not be possible to share the transaction number for that?

Not material.

Okay. But I think last quarter, you did mention a number of $29 million or so. No?

Not specific.

Possibly, Arya. But as I said, the transaction number is kind of coming down, and considering the total standalone hotel transactions that we report, the number is pretty immaterial.

Okay, okay, understood. And if you could give the standalone hotel net revenue contribution out of the total net revenue of $28 million in this quarter in H&P?

Again, Arya, we kind of report this segment as a whole. And as we've been calling out, depending upon seasonality, the mix between packages and hotels tends to kind of move. Albeit, the only color that I could perhaps share is that, the mix has significantly moved in favor of hotels compared to packages over the last year or so.

Right, right. I mean, because where I'm coming from is, the average booking value in H&P seems to have fallen further. Even from, say, in the last 2 quarters, when it was around $120, $125...

Correct.

It has fallen further to almost $100 -- $104. Now the understanding was that, standalone hotel average transaction size was somewhere close to that. But this appears to suggest that, that has also fallen. I mean, any comments on the transaction size of standalone hotels? Also, has that fallen further? How is the mix?

Arya, where did you get the $100 number?

No, I mean, in the past, I think -- No, overall was -- it used to be much higher. I think you've been talking about somewhere in the range of $80, $90, $100 kind of a number for standalone hotel transaction size, right? Including 2 room nights per transaction -- 1.5 to 2 room nights per transaction. This time, it has fallen even further, right? It's almost $100 for the overall segment. So is there -- is the underlying for...

See the hotel standalone ETBs haven't changed. But comparably, between last quarter to this quarter, as we've been calling out, this was a seasonally low quarter for holidays. And since when the holidays mix goes down significantly, then it impacts the ETB for the segment as a whole in a significant manner, and that's the larger part of the change that you're seeing at the H&P level. Within the respective segments of packages as well as hotels, there is no significant change over the previous quarter.

Okay, Okay. And I mean, in terms of your mix of hotels, is it still -- I think you had guided for some -- close to 80% being 3-star or above. Is that still the case? Or...

Sorry. Arya, on the prior point, another contributing factor is the fact that it's a low holiday season quarter. So the trips and the vacations also are even shorter. So even vacation to vacation, we're looking at shorter length.

Sure, sure. Understood. In terms of the mix of hotels, how is that moved? Is it still -- 80% is tier 3 and above? Or is that changing? I mean, any comments on that?

So Arya, we've been calling out about 70% plus coming in from mid to premium, not really 80%, for the last few quarters, and the mix continues to remain on similar lines.

Yes. There is no change from the previous quarter, Arya, on that one. On this overall transaction value, the only difference is packages transactional value coming down, and that's only because of the low season quarter, nothing else.

Okay, okay. Understood. Lastly, on the finance cost. In the release, you've mentioned that the cost -- the interest payment for the Ctrip convertible was $4 million in this quarter. And I think last quarter, you had mentioned a number of $3.6 million. I'm just trying to reconcile that with the 4.25% interest coupon that you've mentioned this -- in the first half itself you seems to have...

Sorry, Arya. Carry on.

Yes. Yes. I'm just trying to reconcile because -- I mean, if I add these 2, then in the first half itself, you've paid almost $7.5 million in terms of that, which would be much higher than the 4.25% annual coupon on $180 million, right? I mean, how does that -- is there something else in that?

The quarterly coupon works out to about $3.9 million, Arya.

Okay, okay. But -- I mean, if I do 4.25% of $180 million, that should be -- the full year should be about [indiscernible] in that.

$7.65 million. Where are you picking this number from, Arya, sorry?

The coupon rate on the convertible is 4.25% per annum, right?

Right.

Yes.

So 4.25%...

Yes, Arya, the quarterly number is 3.99%. So Arya, let us reconcile that number. May be we'll take this offline. On a one-on-one call, we'll probably give you more details.

And our next question comes from Shaleen Kumar from UBS.

Just 1 or 2, couple of questions. Just wanted to ask you one thing. Let's assume that this -- our deal gets closed, let's say, assume, by December end. So how much time do -- we going to take to kind of have a synergistic number? Or what -- basically, when we could see you, MMYT, as a one company to start operating, instead of 2, post the closure?

So you're talking about reportings from financials point of view or operational point of view?

Both -- no, operational point of view rather.

Operational point of view, as soon as we get the approval, I think we should be able to start. Obviously, there are ideas and thoughts, et cetera, which are there, so we should be able to start seeing synergies et cetera, pretty quickly. I think, as shared earlier last week, there are no intentions to discontinue any of the brands. We think all 3 brands are very strong. We want to continue with the brands. And then we will seek out the synergies in various areas. So for that, I think, we would have to wait for the approval. That is not straightaway. Consolidation of financials, I think, we can only be able to do this in -- hopefully, by in the...

Q4 of -- and post the closure of the transaction in any case.

GFM quarter, I think, is when we should be able to share.

And that will be consolidated at the MMYT level only. So that -- so from a consolidation standpoint, there will be one parent company, which is listed, which is MMYT, will have all the -- will have the consolidated numbers.

Got it. Okay. And my next question is your -- on your marketing spend. I understand that we have a strategy, where we intend of increasing our market share, and also we are trying to -- in fact, we're trying to build our or sort of shift, offline consumer to online consumer, and that's, basically, to have a kind of mass. But when you think that -- you've believe that, at least from the offline to online, is sufficient and you need not to pump more capital on that side, and it can continue, as with the smartphone penetration, there's a sufficient awareness on that side. And even with the market share, now you guys will be like a substantial market share. So you may not need to go that aggressive. So what's your thought on that for near-term and long-term?

Sure. So let me take this one. So the approach that we are taking is the segment-wise approach. So let's talk about domestic hotels first. Clearly, as we've been talking about in the past, and I'm sure you would aware that the penetration -- online penetration of domestic hotel is 12%, 13% -- maybe 15%, depending upon which source that you look at. So we believe that, one, that momentum is continuing right now in terms of shift from offline to online. We also believe that there is a huge amount of headroom that is available. So this 15% number could potentially go to about 35%, 40% in the next 2 to 3 years. And the key driver for that is going to be the increasing number of Internet users through the mobile smartphones, right? Because both the numbers are penetrating and they're projected to grow, and they've just -- you know the -- one, the device is becoming very cheaper; two, the data plans are becoming very cheaper, including the launch of Reliance Jio et cetera. So that's going to be the key driver. So as far as this particular segment is concerned, we believe that we would continue to invest in -- invest and focus on growth as much as we could potentially do. So that's as far as domestic hotel segment is concerned. We also do see a growth potential in our international hotel segment as the consumer behavior is changing more and more from an offline booking to online booking. So we would like to continue to invest in that segment as well. As far as domestic air segment is concerned, relatively, more mature segment in terms of online penetration, about 50% online penetration versus about 12%, 13% online penetration for hotels, and that's relatively more…

Right. I completely agree with you, Rajesh, that there's definitely a lot of opportunity available. But from 15% to 35%, I agree with you. But what would be the like -- the percentage, where we feel that we may not be responsible to bring them online, it's good enough, it's -- or rather it has achieved sufficient momentum that [Audio Gap] you think we can considerably reduce our ad spend or maybe at 35% also?

Yes. I mean probably at 35% to 40% and beyond that, then it slows down a bit. But we being the market leader in all fairness, in order to get the disproportionate share, we will have to continue to kind of take this initiative and lead this initiative. And as the momentum picks up, overall penetration improves, it automatically slows down. We've seen this playing out in the air market also a few years ago or a decade ago, and it automatically, then, kind of keeps coming down as the penetration improves. But very hard to predict at what level this will come down. I guess you will have to just keep watching the space, keep looking at the numbers quarter-on-quarter, year-on-year. We would see some lapping effect coming in the subsequent quarter as well, given that third quarter of last year we had pushed the pedal on growth. So there will be a year-on-year impact coming in there. And in terms of spends also, when you see and analyze as a percentage of gross booking or revenue, you would see there will be small marginal improvements happening in pretty much every quarter. So keep watching the numbers. It's very hard to predict, precisely linking it with the penetration number, whether it'll happen at 25% or 20% or 30% or beyond. Very hard to predict that. But clearly, as the penetration improves, it's -- it should keep coming down.

And our next question comes from Ashwin Mehta from Nomura.

Deep, Rajesh, I had 1 question. Now, it appears that you would be more in control of when you can achieve profitability, especially given that the market share of the combined entity will be large. And secondly, competition is not necessarily as well-funded. So in terms of our longer-term targets of achieving the 15% to 20% margins, how many years -- it's difficult to answer, but the road -- how many years do you think will it take to kind of reach there?

I know. Ashwin, it's a great question, and I think you also answered it by saying it's really hard to answer. The reality is that we are definitely in better control, and we will be in better control, rather. And I also think that if anything, this will definitely accelerate that point. But, like I'd said even earlier on last week's call, I don't think we are in this kind of space that where we are going to give a premium right now to turning profitable overgrowth. Growth continues to be the topmost priority for us in the hotel segment, and I think if we can keep seeing high growth coming in, like Rajesh was just answering previously, then we are not, definitely, in a position where -- in a mindset where we want to stop that. So some of this, we're going to play as it goes along, but definitely it becomes more closer now than it was earlier. So I think that is a fair point and a fair comment to make. But we will have to give you more and more color on that as we go along.

Okay, fair enough. Secondly, like, while you restricted your comments in terms of any indications on how Goibibo looks in comparison to MakeMyTrip across financials or across parameters, is there anything incremental that you can provide in terms of their scale versus yours, or their losses versus yours, or something to the effect in terms of their share on hotels versus yours?

Nothing much as yet, Ashwin. Hopefully, once we are -- once the transaction closes, we might be able to get back with more details.

Okay. And just 1 last bookkeeping one. In terms of packages segment, approximately how much would have been the decline in terms of transaction here from a y-o-y perspective?

On packages, is it?

Yes.

Packages, -- if you, and we've been calling this out. In the packages, we are largely looking it in the buckets of domestic and outbound. While domestic has kind of remained flattish, outbound, actually, has seen growth during the quarter. So that's encouraging, and that's what we were trying to call out in the script as well, that in outbound we have seen some amount of growth returning.

And Ashwin, if I could just add. The decline on domestic -- sorry, just one additional comment. Decline on domestic is actually understandable to an extent, given that -- as we spoke about it last time also, that a lot of the now bookings are happening standalone a-la-carte. And the key destinations, which are really package destinations, that are being picked up as far as just packages bookings are concerned. And we also need to keep in mind that this quarter, for packages specifically, is a low season quarter. So we do think that the growth, even on domestic packages, could come back in the high season quarter for the key destinations. I mean, just like-to-like comparison from a destination standpoint. On an overall basis, we would see decline because a lot of the hotel bookings that were happening offline have moved online.

And approximately, what's the mix of outbound versus domestic in packages?

So outbound versus domestic on packages, at least in transaction terms, is now kind of almost getting to similar levels. At least in the off-season quarters, it's kind of on similar levels. Come peak quarters or high travel season quarters, it's more like -- domestic is, maybe, about 3/5 of the total and outbound is perhaps 2/5 of the total.

[Operator Instructions] And we have a follow-up question from Lloyd Walmsley from Deutsche Bank.

Again this Aki, on behalf of Lloyd. Just 1 or 2 quick questions. Sort of on similar lines as one of the previous questions, in terms of sales and marketing as a percentage of bookings, just wondering -- you've said, obviously, that one is continue to survive till you get enough online penetration. Just wondering if you could talk about what you see -- where you see this settling longer-term, once you sort of reach an equilibrium state, where do you see this settling? So that will be number 1. And then number 2 was, any initial reactions or initial traction numbers or anything you can share in terms of Rightstay.

Sure. We've -- I'll take that. If you really look at the sales and marketing expenses or sales, promotion and marketing expenses as a percentage of gross bookings -- was close to about 11.1% in Q4 of last fiscal. And for the last 2 quarters, it's now kind of averages out to about 9.5%. So we do have seen some amount of efficiency coming on the marketing and sales promotion expenses. Clearly, if you would recollect, before we got on to the high growth strategy about 3 quarters, 4 quarters back, this used to be in the range of about 3% or so. And by -- and we believe once we kind of are in a steady state, we would expect this to come down in the 3% to 4% range in the longer term.

Just anything in terms of Rightstay?

Yes. So on Rightstay -- I mean, obviously early days, since we have just kind of launched in the last few weeks. But we've seen some early traction. So on a good day, we probably would end up doing 100 bookings a day. It started with obviously 5, 10 bookings a day and all that. So it's kind of improving by the week, but, obviously, early days right now.

And at this time, I'm showing no further questions. I will like to turn the call to Jonathan Huang for closing remarks.

Thank you, everybody, for joining our fiscal Q2 2017 earnings call, and we look forward to speaking with each and every one of you pretty soon. And that concludes our call for today.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect. Everyone, have a great day.