Good day, ladies and gentlemen, and welcome to the MakeMyTrip Limited Fiscal 2019 Q3 Earnings Call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference, Vice President of Investor Relations, Jonathan Huang. You may begin.

Thank you. Happy New Year and welcome to MakeMyTrip Limited’s Fiscal 2019 third quarter earnings call. I would like to remind everyone that certain statements made on today’s 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 performance, and by their nature, are subject to inherent uncertainties and actual results may differ materially. Any forward-looking information related on this call speaks only as of the state, and the company undertakes no obligation to update information to reflect changed circumstances. Additional information concerning these statements are contained in the risk factors and forward-looking statements section of the company’s annual report on Form 20-F filed with the SEC on June 20, 2018. Copies of these filings are available from the SEC or from the company’s Investor Relations department. I’m joined today by Deep Kalra, MakeMyTrip’s Founder, Chairman and Group CEO; Rajesh Magow, Co-Founder and CEO India; as well as Mohit Kabra, MakeMyTrip Group’s CFO. And now, I would like to turn the call over to Deep to start today’s discussion of our quarterly results.

Thanks, Jon, and welcome, everyone, to our third quarter earnings call for fiscal 2019. I’d like to begin by wishing all our listeners a happy and prosperous 2019. During the last reported quarter, we continued to deliver on our twin objectives for the current fiscal year, which is to improve top line growth while reducing bottom line losses. We continue our relentless focus on delivering superior end-to-end experience for our customers. It’s this unwavering focus on customers that has allowed The MakeMyTrip Group to strengthen its market share across all key travel segments quarter-after-quarter. I would now like to share some long-term macro growth drivers, which the group is well placed to leverage for driving growth opportunities in 2019 and beyond. A recent fiscal report has forecasted that the number of smartphone users in India will reach 829 million by 2022 up from today’s estimated 450 million users. Considering that mobile bookings account for almost two thirds of our transactions, we believe we have significant new customer acquisition opportunities ahead of us. The Indian economy also continues to benefit with the stabilization of long-term reforms like demonetization, GST implementation, that is the goods and service tax, and focus on driving digital transactions. As a result, GDP growth is expected to be approximately 7.5% in calendar 2019, making India one of the fastest-growing large economies globally. The overall demand for travel is also expected to remain robust as India is on track to become the third largest aviation market by 2022. Even with forecasted high growth rates, industry experts believe that the Indian aviation sector still remains relatively untapped. India now has over 100 operational airports with scheduled flights, and this is projected to grow to over 200 airports over the next 20 years. While India’s domestic air market continues to…

Thanks, Deep, and happy New Year, everyone. I would like to begin by sharing a summary of business performance highlights in the third quarter of fiscal 2019, which we believe were in line with our twin objectives, as mentioned by Deep. I’m pleased to report that The MakeMyTrip Group recorded gross bookings of over $1.4 billion, representing year-on-year constant currency growth of nearly 32%. Adjusted revenue grew over 31% year-on-year on constant currency basis and was largely in line with the gross bookings growth. During the past quarter, with the unstinted support of over 50,000 hotel partners, we also logged our highest-ever quarterly room nights with over 6.8 million stayed room nights in our standalone hotels business. This is a growth of 27% on a year-on-year basis. We are pleased with the continued acceleration in hotel room nights growth over the last few quarters, in line with our call-out during the beginning of the fiscal year. In our air ticketing business, over 10.1 million flight segments were flown by our customers during the past quarter. The number of air ticketing segments grew by over 19% year-on-year. At the same time, outbound flight segments growth was very robust as we continued to provide seamless booking experience to make it convenient to influence customers to book online on our platforms. Our bus ticketing business also witnessed very strong growth momentum with over 16 million tickets traveled for the fiscal third quarter, representing more than 58% year-on-year increase. Lastly, our packages business continue to make valuable contribution to help record hotels and packages in excess of 53% for the quarter. Now I would like to share some highlights from our strategically important online standalone hotels business. In Q3, we continue to expand the selection for our customers to beyond 60,000 properties bookable within…

Thanks, Rajesh. Hello, everyone, and wish you a very happy 2019. As mentioned by Deep and Rajesh, we are glad to report the explanation in adjusted revenue growth in the 30s, aided by acceleration in standalone hotel room night growth to the high 20s in the current quarter. This comes around with reduction in adjusted operating losses to $22.2 million in the third quarter of this fiscal year. This is in line with our plans and strategic direction called out at the beginning of the year. I am pleased to report that total adjusted revenue growth in constant currency terms, which stood at 25% for Q1 and 25.3% for Q2, has accelerated to 31.4% in Q3, which is the first quarter of the second half of this fiscal year. This was the result of an acceleration in adjusted revenue growth across all our lines of businesses. Adjusted revenue growth in constant currency for the air ticketing business stood at 32.2% while it was 43.4% in the bus ticketing business. The hotels and packages business also saw adjusted revenue growth in constant currency accelerating to 26% compared to 19.8% in Q1 and 17.7% in Q2. The total adjusted revenue growth of 31.4% also came along with robust 37.2% growth in unit volumes and 31.9% constant currency growth in gross bookings across our businesses. Now let me share highlights of our key business segments. In the H&P segment, adjusted revenue in constant currency growth accelerated to 26% year-over-year, aided by acceleration in room nights growth, which stood at 25.5%. The room nights growth was driven by improvement in standalone room nights growth, which stood at 27.1% year-over-year. As a result of the increasing mix of standalone hotels, which have lower average selling price compared to packages, the growth in hotels and packages…

Thank you. [Operator Instructions] And our first question comes from Shyam Patil with SIG. You may proceed.

Hi, this is Brendan on for Shyam. We just had two quick ones. Just on the competitive landscape, I know marketing and commercial expense coming down as a percentage of gross bookings. But can you just talk about sort of what you’re seeing in terms of the competitive landscape? Any changes? And then just on the outbound flights business, can you just talk a little bit more about your strategy there and sort of how you see that business shaping up over the next couple of years?

Yes. Hi, Brendan. I’ll take the first one. This is Deep. So the first part, I think by line of business is the right way to look at competition. So on the air space, both domestic air and international air, we continue to see competition from erstwhile competitors, Yatra and Cleartrip. In addition to that, Paytm, which is our super app or multiservice app, is also now quite an active player on the domestic air space, not so much on the international. We also see some new players. Expedia, of course, as an international player. And we see some new players also were emerged in that area. When it comes to the hotel space, there is, I would say, lesser competition from erstwhile players. Definitely not Cleartrip. We see Yatra in the market for domestic bookings. We also see increasing competition from Booking.com and Expedia both in the local market and, of course, in the inbound market. As you would know and you would have seen in the last few quarters, we’ve been talking about so we are now selling OYO. OYO Rooms is now more of a hotel chain. And by virtue of them being a budget hotel chain, we’ve been partnering them and selling them, but they also have a strong direct business. So that is largely the competitive landscape. Now of late, we have seen Paytm just enter on the hotel space as well, the business. But if you – if I take you back to the market shares, you would see that the market share, both for air and for hotel, has been growing. So we believe we continue to grow significantly faster than the market and indeed faster than even the online market. So in air, the overall air market grew at about 12.7%. This last quarter, we grew at about 18.5%. If you look at the hotel segment, data is a little harder to get, but we believe that the total penetration now on the hotel market is in the low teens, high double digits. Kind of 12% to 13% of all hotel bookings are made online, and we account for about half of that.

And maybe the second question, this is Rajesh here, on your outbound flights question, if I may just share my thoughts on that. So the first important point there is that the online penetration as compared to the domestic flight segment is quite low. So therefore, we believe that the shift from offline to online will continue to happen and will gain momentum, more so when more and more people are coming online, more and more digital payment options are emerging, including the credit option, as I kind of mentioned in my script as well, and the fact that the disposable income is growing. A lot of the people are looking to actually fly out for their holiday. And by virtue of all of these factors, actually all the projections, the industry expert projections are also projecting the current outbound traveler number of, say, around 25 million to grow to about 50 million in the next few years. So the macros look good, and we believe that we, on our growth platforms, are very well-poised to tap into this opportunity and grow our share. We already have a higher growth rate albeit at a lower base on outbound flight segment, but we believe that we will continue to keep kind of making all the interesting product-level changes, the supply side innovations, and be able to just keep the momentum of the growth going on in our platforms as well.

Great. Thank you, both.

And our next question comes from Sachin Salgaonkar with Bank of America. You may proceed.

Hi, thank you for the opportunity. I have a few questions. Number one, just wanted to understand in terms of any breakeven target which you guys have talked in the past. I think you guys talked about eight quarters after the ibibo acquisition where you guys should be close to a breakeven. Any updates on that? Are we still comfortable in terms of achieving that? That’s the first question. Second question is again a related one. Last few quarters, the focus was more on a rationalization wherein you guys were curtailing discounts. Is that more or less period behind us? And going forward, could we see the growth accelerating? And thirdly, as you know, obviously, there are a lot of chatter in the market about Jet Airways and how it is struggling. It would be great to understand how you guys look at that from a potential impact to, a, well, the industry and, b, to you guys.

Hey, Sachin. Mohit here. And I’ll take the first two and Deep and Rajesh will help. And so when it comes to – and pretty much, the first two are kind linked. If you look at it, the whole rational post the merger was to kind of start rationalizing promotions and expense, particularly in the hotels category and more so in the budget segment, which is what pretty much kind of played out pretty well over the last, I would say, eight quarters, seven to eight quarters. And we believe we’ll continue on that path till the time we’d like to break even and whether it takes another three quarters or four. But probably, directionally, this is the area we’re kind of penetrating. And if you’d look at it over the last few quarters, even in the beginning of the fiscal year, we had mentioned that we should see growth accelerating in the second half of the year, and that’s what I was calling out that we have seen an acceleration come through in the first quarter of the second half with revenue growth overall kind of, again, getting back into the 30s. If you look at the standalone hotel room night growth, that has also accelerated from the 17%, 18% and 21%, 22% in the last two quarters to about 27%-odd in the third quarter. And we therefore believe that a large part of the acceleration should kind of continue with the rationalization largely behind us. But are we completely done with that? Probably not. And as we kind of keep going on that path for the next few quarters, we should probably be getting into EBITDA breakeven. If you look at it in terms of cash operating losses currently, even this quarter it’s kind of less than $20 million. So we have covered a lot of ground over the last, I would say, six to seven quarters.

Okay, coming to, Sachin, for the Jet Airways, and if you have a follow-up, we’ll be happy to take that, so the first point on Jet Airways is that news – I mean, a lot of the news is already out with you. Always, you kind of see every day pretty much, I mean, the development that happens on the Jet Airways. So that’s, I guess, known to everyone. So the Jet Airways is trying to raise funds, and they’re trying to look at many options. And the last update was that the Etihad might be able to come to the rescue, et cetera. But just from our point of view, we’ve been able to continue to just monitor the situation very, very closely, work also very, very closely, and been able to limit our exposure per se in terms of any outstanding from them and so on. So that part is – we are kind of comfortably placed. In terms of the thought-back they would be able to come out of the situation. Obviously, I think it is better for the whole ecosystem that they come out of the situation. And it seems like, I mean, at least from the last update that we had it from them and every now and then that we keep getting the update from them, that they seem to believe that they are confident to be able to find a solution in the next few weeks. So we are obviously working the space very carefully and – but on the ground kind of continue to keep working because on the ground, there are no operations kind of disrupted and the flights are flying. They might be changing the schedules here and there, but a large part of their operations are still running and running well.

Rajesh, this is helpful. So couple of small follow-ups generally from me. One is Mohit here talked about standalone hotels growth accelerating at 27%. If you look at the revenue growth more or less, we’re talking about a 14% growth. Do we see that accelerating going forward also? And second question is, clearly the sense I got is maybe up to four to five quarters, around that, you guys will be close to EBITDA breakeven. But is it fair to assume that after that EBITDA breakeven the EBITDA margin start accelerating further up? Or more or less we could be stagnant at the EBITDA level for some time?

Sachin, if you – first thing on the hotels and packages revenue growth, while probably the dollar revenue growth is about 14% but it’s better to kind of look at it in constant currency because it’s all INR and, therefore currency fluctuation. And if you look at constant currency growth, that’s close to about 26%. And we’ve been calling out that we have largely been kind of – the mix as I’ve called out, has been accelerating in favor of hotels. And therefore, it is likely that the hotels growth is going to be leading that number as well. So therefore, I think the growth overall is kind of coming in line, whether in terms of room night growth or revenue growth, and that isn’t an issue per se and this is more a presentation issue in terms of dollars versus the local currency. In terms of the acceleration in EBITDA as and when we get to the breakeven level, as I said, this is probably something we are talking about at least about a year down the line, and I’m sure we’ll kind of continue giving more and more color as we keep getting there. So hopefully, in the next few quarters, we should be able to share more color on how do we kind of take it over from there.

Okay, alright. Thanks.

And our next question comes from Kevin Campbell Kopelman with Cowen and Company. You may proceed.

Hi, thanks a lot. I am just going to ask you an update on revenue take rates or commission rates. It looks like they were stable – relatively stable on air and up a little bit in the hotel and down in bus, could you talk about the key drivers in each category and how you see those playing out over the next couple of quarters? Thanks.

Yes, sure. If you look air take rates have been reasonably stable compared to the last couple of quarters and we don’t really kind of see a significant change directionally over the next few quarters and few years. We do believe that air take rates will come down gradually, and this is going to happen on multiple counts. But we also believe that in terms of a corresponding change, we will have payment gateway costs also kind of coming down. And therefore, at a net level probably it should not hurt us in a big way even in the next few years. When it comes to hotels and packages, while there is a year-on-year kind of a slight increase, but probably more driven by the changing mix in favor of hotels in the overall segment rather than anything else. So it’s not really they’re from a supply side point of view. We have increased margins. We have only been actually taking the overall margins in the hotel segment down by about 0.5 percentage point to 1 percentage point over the last quarter or pretty much on a quarter-on-quarter basis. We are trying to kind of see that we gradually over the next few years get back probably more in the range of about 18% to 20% rather than the 20%-plus range. But I guess this will happen more gradually in over the next few years. So otherwise, the overall take rates have been reasonably stable. And the relief that we kind of are talking about of are taking down margins over the next few years, again it’s predominantly kind of linked to our overall rationalization of the marketing and promotional expense because, as you called out, it is largely the suppliers who kind of participate with incremental performance-linked incentives so as to drive higher occupancy rates for them. So this is more a volume driver for them and we believe that over a period of time, as our promotional expense keep going down, we should be able to kind of pass on that benefit to the suppliers. On the bus side, pretty much the retail margins kind of continue to remain stable. It’s just a little bit of incremental mix coming in from the B2B side, considering the investments that we have done in the recent past in that area that the overall weighted margins kind of have come down slightly over the last quarter. But otherwise, the margins remained stable even in the bus segment.

Great, thanks very much.

Thank you. Ladies and gentlemen, this concludes our Q&A portion of today’s call. I would to turn the call back over to your host, Jonathan Huang, you may be begin.

Thank you. I want to thank everybody for joining our call this morning, and we certainly look forward to speaking with you throughout the rest of this quarter. And once again, thank you for joining our call.

Ladies and gentlemen, thank you for attending today’s conference, this does conclude the program, and you may all disconnect. Everyone have a great day.