Hello, everyone. I'm Vipul Garg, Vice President, Investor Relations at MakeMyTrip Limited. And welcome to our Fiscal Year 2023 Second Quarter Earnings webinar. Today's event will be hosted by Deep Kalra, our company's Founder and Chairman. Joining him is Rajesh Magow, 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&A session. Furthermore, certain statements made during today's event may be considered forward-looking statements within the meaning of Safe Harbor provision of the U.S. Private Securities Litigation Reform Act of 1995. These statements are not guarantees 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 no obligation to update the information to reflect changed circumstances. Additional information concerning these statements are contained in the Risk Factors in Forward-Looking Statement section of the company's annual report on Form 20-F filed with the SEC on July 12, 2022. Copies of these filings are available from the SEC or from the company's investor relations department. I would like to now turn over the call over to Rajesh for his comments. Over to you, Rajesh.

Thank you, Vipul. Welcome everyone to our second quarter earnings call of fiscal 2023. To start with, just a couple of key performance highlights of the quarter. While the reported quarter was a seasonally weak period for leisure travel, we delivered strong results with gross bookings growing by 126.3% year-on-year on constant currency basis. EBITDA for the quarter was at $10.7 million as compared to an EBITDA loss of $0.6 million in Q2 fiscal year 2022. And adjusted EBITDA or adjusted cash operating profits stood at $18.7 million as compared to $10.5 million in the same quarter last year. COVID-19 infections in India have steadily come down and continue to be mild; hence the impact of pandemic on travel decisions was negligible during the quarter. However, the inflationary pressure and visa issues are holding recovery momentum, especially in outbound international travel. As shared earlier, high fuel cost and inflationary pressures lead to high air fares during Q1. While we witnessed some moderation in crude oil and ETF prices towards the end of Q2, for large part of the quarter, fares remained high. Domestic leisure traffic has recovered more than 100% of pre-pandemic levels and continues to be strong. As per DGCA data, overall domestic daily flown passenger market has recovered to 85%. We are recovering faster than the market at 98% as compared to same quarter pre-pandemic. As a result, despite had headwinds on outbound travel, we delivered more than 126% recovery on air gross bookings and 117% recovery in overall gross bookings on constant currency basis compared to the pre-pandemic Q2 fiscal year ’20 quarter. As stated earlier, consumer sentiment continues to stay positive in terms of willingness to travel, and therefore fares getting rationalized with full restoration of passenger carrying capacity can aid to full recovery in outbound…

Thanks, Rajesh. Hello, everyone. And I hope you’re all staying safe and healthy. To start with, I’d like to call out that while our operating business is largely in Indian currency, our financial reporting is in US dollars. Significant weakening of the INR versus the US dollar by about 3.4% during the quarter has had a translation and restatement impact. This notionally affects our growth numbers and our cash balance as restated in US dollars and as a result the finance cost from ForEx impact is higher during the quarter. Hence I will focus on growth in constant currency to reflect the stronger underneath growth in the operating currency. As highlighted, in the last couple years during the pandemic, we are focused on tight cost control and operational profitability in view of the business uncertainties from disruption in travel services. And as we are returning to business normalcy, our focus during this fiscal year is on business recovery and growth with operating leverage in the business continuing to drive profitability. During the first half of the fiscal, we have seen gross bookings grow 227.7% year-on-year in constant currency terms and the adjusted profit has come in at about $31.6 million versus a loss of $2 million in the first half during last fiscal year. We are glad to report that for the first half, our adjusted operating profit came in at about one percentage points of gross booking in line with our targets and estimates. The other broad highlight for the quarter is that despite Q2 being a seasonally weak quarter and the macro headwinds, we continue to see rebound in travel demand and that has helped us achieve gross bookings of $1.54 billion, which is about 1%, just about 1% lower compared to the seasonally strong previous quarter in…

Thank you, Mohit. Thank you, Rajesh. [Operator instructions] Thank you. First question is from the line of [Brian Wang]. Brian, you may unmute yourself and ask your question.

Hi, evening and Happy Diwali to the management team. Congrats on your third straight quarter of IFRS profitability. On this front, could you let us know your views behind how you intend to manage S&M and operating expenses in the long term? And how this might translate to higher levels of profitability? And a second one, if I may? How do you manage customer inducement costs on the air ticketing side and how should we think about this in the long term? Thank you very much.

Hi Brian, maybe I can take that. And like I had called out, we continue to be very prudent on the customer efficient cost overall. And therefore, we do believe we will continue to see marketing and promotional expenses remain much lower than what they used to be during the pre-pandemic times. If you would recollect pre-pandemic the marketing and sales promotion expenses used to be about 9 percentage points to 10 percentage points of gross booking. Although we have seen much higher number at about close to about 14% way back in 2017. Now these were largely coming out of the significant investments that we were doing in terms of building online penetration in the hotels business or the accommodation business and also driving significant amount of customer acquisition on the mobile platforms, particularly the mobile apps, which were launched between 2015 to ’17. So this was largely in keeping with our investments in customer acquisition on mobile platforms as well as in the hotel category. We have continued to see good growth in both these areas. As a result of which you’ll see the efficiencies coming through. And now the customer acquisition cost is close to about 5.4 percentage points of gross bookings. We do expect a little bit of an increase coming in, in the customer acquisition costs and this could scale-up to about 6% or so. But this would largely be in line with our revenue mix, kind of, once again improving in favor of hotels. Pre-pandemic, I would like to kind of bring to attention that the mix of hotels in the revenue mix used to be close to about 50% plus. We are currently a little short of that because the recovery in the accommodation segment is slightly lagging the recovery in the air ticketing segment. But as that kind of catches up, we do believe the overall blended margins will also improve a little bit and there might be a slight increase in the overall customer acquisition costs as well. Coming to slightly longer-term operating margins, we should continue to see operating leverage coming in from scaling up, because we don’t really see any significant increases in the customer acquisition costs in the near-term future. So that should really help us improve operating profitability year upon year. And this is what you’re kind of seeing in the current first half also compared to what we had seen maybe in the first half or second half of last fiscal year.

Thank you very much. That was excellent.

Thank you, Brian. Next question is from the line of Lester [indiscernible]. Lester, you have been unmated -- you may unmute yourself and ask your question please.

Hi, I noticed that, it’s also about the customer acquisition cost. In the last earnings call, you expected the cost to increase in this quarter but actually it was about the same or actually slightly lower. Is that due to any factors like branding, you spend less on branding or other variable factors? Thank you.

Hi, Lester. I think we’ve been able to kind of keep this at much lower levels than we had expected. And yes, to some extent, it has also been because one of the brand campaigns that we had planned kind of got pushed out because we weren’t really seeing as significant kind of strength in the recovery on the accommodation side as we had expected. This kind of campaign is kind of now planned in the next quarter. And therefore we would kind of possibly see a slight kind of increase coming through in these expenses in the next quarter. But it should also be kind of getting pretty much offset by the improvement in the volumes in the seasonally better quarter of Q3.

Okay, thank you.

Thank you, Lester. [Operator Instructions]. At this point of time, we have no questions. So we’ll wait for a couple of minutes. Next question is from the line of Tarbir Shahpuri. Tarbir, you can unmute yourself and ask the question now. Thank you.

Hi Rajesh, this is specifically towards competitive intensity, do you mind spending a few minutes on that. And what’s your sense today and maybe a [year out], what you are seeing on the ground? Thanks.

Sure, Tarbir. Let me just give you a sort of short overview of the competitive dynamics in the market. And for us, given that we are an all-segment player, so the way we sort of see the competition is, is specific to a particular product and the offering. So let’s say for our domestic flights or an overall air market first, so the overall competitive dynamics remain the same. There is no real change from what we’ve been seeing for the last couple of quarters or more. It continues to be the same. There is some bit of sort of the consumer promotions push in the market. And part of that, by the way, is also from the airlines because the endeavor really is for everyone to sort of build the volumes given that the recovery is still sort of short-off on in volume terms, short of full 100% recovery in the domestic air market. So no real change from what we had been seeing in the past, it continues to be the same. And coming to hotels market, our competition there is the global players, whether it is Booking.com or Expedia or Airbnb for homestays market. And again there also we haven’t really seen any significant change in terms of any sort of aggressive competitive activity picking up or going ahead and making some investments in the marketplace from the competition. So again here the competition is largely focused on the back of the product strengths or the supply strength in general and not necessarily driven by aggressive sort of promotions, if you will. And coming to bus segment, given that we are the market leader by far there as well, there has been some competition for bus focused or ground transport focused OTAs at the local level, whether it is ixigo or Paytm to some extent on the horizontal side. Again from there also, if I may say so, we have actually seen the intensity coming down a bit relative to, I would say, couple of quarters ago. And overall, and as a result of that, we would have actually gained share on our bus segment in this quarter that we are reporting out.

Thank you so much. That’s really helpful. And if I could just get one short one more in. It’s something that all actually internally discussing and maybe, I want to ask it publicly. Is there a plan for a cross-listing at all?

Hi, Tarbir. You mean just cross-listing?

And listing in India, yeah.

Listening in India? Yeah, I mean I kind of called this out earlier also that two or three key considerations basis which we will consider listing in India. As far as the need for funds is concerned, we don’t really have a need for a fund raise right now because we’re kind of well capitalized. We have got over $450 million on the balance sheet in terms of cash and cash equivalents. So that’s not really a driver, the only driver being overall shareholder value creation and unlocking and also kind of leveraging the significant kind of brand strength that we have in the operating market, so something that we are kind of considering. Couple of considerations which will drive the part to it will be, one, seeing the impact of the pandemic over the last couple of years, I think we’re kind of very keen that we should see the business getting back to kind of growth over pre-pandemic levels. So that remains a key agenda and we are kind of, still to get there. And the other is kind of ensuring that the kind of operating model continues to be profitable and see the operating leverage coming through. This has got demonstrated over the last few quarters. And if we continue to remain on that path that will possibly kind of open the kind of the prospects for a listing in India as well.

Great. Thank you so much. That’s all from my end. Good luck for the future.

Thank you.

Thank you, Tarbir. The next question is from the line of Aditya Chandrasekar. Aditya, you can unmute yourself and ask your question now.

Yeah, hi, just a couple of quick questions from my side. Firstly, can you give us a sense of the market share in each of the segments? Just broadly what would be the share and how it has moved maybe in the last couple of quarters, if at all it has moved? And secondly on the adjusted margin percentage, we see some fluctuation on the air ticketing side over the last couple of quarters. So it came down in Q1, back up again in Q2, is that purely a function of airfares going up and down or is there any kind of structural change in the way we make the adjusted margin there in terms of commission or maybe airline promotional activity, etc.? Yeah, those are the two questions.

Yeah, so like I had called out the fluctuation in the adjusted margin percentage for the air ticketing business is largely in line with the kind of promotional kind of push that we see coming in from the airlines. So that’s one of the key reasons for the fluctuation over there. We’ve seen it fluctuating very significantly through the pandemic. So it’s kind of linked to the overall kind of load factor that the airlines are seeing and the amount of promotional activities that they would want to kind of do on the platform, so largely coming in from that. It is just kind of taking it back to your first question.

Maybe I can take that Mohit, it was about the market share.

Okay.

Maybe I can just quickly take that Aditya. So the only line of business where we have the third-party authentic data of market share is actually domestic air because we do get the data from DGCA pretty much on daily basis, which is Director General of Civil Aviation in the country. And there we clearly have gained share, pre-pandemic we used to be at about 27%. We today are about 30% of the total market. This is like offline online all put together. And we also believe in other segments, whether it is hotels or hotels and packages together or for that matter bus segment, we would have incrementally gained there as well given that we’ve been growing. When you pick-up surrogate data, we’ve been growing faster than the market recovery pretty much on every segment. So I guess directionally, just from a trend perspective, we believe that we’ve been gaining share.

Got it. And just a quick follow-up on the adjusted margin again, so going forward on a sustainable basis where do you think this number will lie between say 6% to 7% or how should we look at that number? Yeah.

I think it should largely remain around the six, seven percentage points. But it all kind of like I said is linked to what are the kind of prevailing air fares during that particular quarter, and the kind of load factors and overall promotional activity in that particular space. We have seen this going up even to 9% plus in some of the quarters during the pandemic. So I think that little bit of volatility will remain until the overall domestic civil aviation kind of market stabilizes and the pricing stabilizes.

Got it, thanks a lot.

Thank you, Aditya. The next question is from the line of Raghav Bihani. Raghav, you may please ask your question now.

Yeah. So, my question was around the market share, but I think you’ve already taken that up, so, no question. Thank you.

Thanks, Raghav. We’ll take the next question from the line of Prashant Kothari. Prashant, you may please unmute yourself and ask the question now.

Yeah, thank you for the opportunity. Just wanted to understand on the personnel cost, the increase that you say that’s in dollar terms I guess, if I have to convert it into rupee terms, will be more like 20% growth in personnel expenses year-over-year. Can you just explain how much of it is headcount addition and how much of it is salary increase?

Hi, Prashant. I’ll take that. Just give me a second. I think overall we did kind of expect certain amount of the inflationary impact to come through. And it’s largely coming in from that, but not necessarily in terms of significant headcount increase. So a larger part of it is coming from the inflationary increase, which I think [indiscernible] and not necessarily any significant headcount increases.

Okay. So it’s roughly 18%, 20% type of base increase across the board this year?

And we’ll need to see because it would also possibly have a combination of people on rolls and those on the call center. But that would be overall as part of the SGA part. Maybe I could kind of share more details separately.

All right. Okay. And the second question, I’m not sure if you already answered this because I joined the call a bit late. On the hotels and in the hotel segment, you said that the recovery is a bit slower. Is it just for us or is it kind of reflection of what’s happening to the overall industry?

Yeah, Prashant, maybe I can take that question. Prashant what we were trying to say as part of our commentary was actually the overall industry trend for the budget segment of hotels. And just the budget use case, say the price point per room night from INR500 to INR1,500 room night kind of a segment. And that too, if you go deeper, it will be more on business cities versus leisure cities. While the recovery has been fairly robust as we shared both for premium and mid-premium segment, in terms of just surpassing the pre-pandemic levels on gross booking basis very close to 100% sort of recovery even on volumes basis. Specifically on the budget segment and this is across industry phenomenon, not on us specifically as we see it from all the industry sources. And that’s the only segment. And I guess it’s just a function of all the sort of use cases just coming back in an absolute full-blown manner. And the reality also is that just the consumer price, I mean, there is a bit of an inflation there also in terms of the average selling price going up or relatively speaking to the pre-pandemic regime where there used to be a lot of the aggressive sort of acquisition of the customers in this particular segment was happening across the industry. And maybe some part of the impact is because of that. But our belief is that it’s just a matter of time. It’s just taking a little long to come back.

Yeah. And you do plan to increase your investment in that segment. So you think that would help kind of revive the demand? I mean what’s the kind of thinking there in increasing the marketing spends?

No, sure. Not necessarily marketing spend. In fact, we have been actually pushing and making investments in terms of just, you know, on having the right kind of supply with right kind of experience on our platform. As you might have noticed in the commentary we covered as well that we relaunched our goStays proposition, which is specifically in the budget segment. And we are obviously trying to work with the partners to also ensure and give them all the intelligence that we get on our platform in terms of what kind of conversion rate will happen on what kind of price points etc. and get them to sort of do the price adjustments on their fares differently for different periods, now weekdays versus weekends or long weekends versus just the regular days. And seasonality wherever there is high seasonality versus low season pricing or for that matter destination-based where there could be a different sort of pricing intelligence that goes back to them. Let’s say for, if there is any kind of a pilgrimage festival that seems to be happening on some of the pilgrimage destinations, so all kinds of variety of sort of intelligence gets passed on to the partners. And then they end up sort of making the price adjustments or doing promotions on our platform. So all kinds of interventions are happening both on the product side, supply side, product side coupled with supply side on the front end on our platform and also through our partners even on the pricing side.

Okay. And just one last question, the service cost for the hotels and packages segment has increased a lot this year. Can you just explain what is it?

Yeah, I think we’ve seen sharper growth kind of coming in the packages division, which gets reported on a gross basis. So therefore you see the cost of service kind of increasing on a year-on-year basis.

Yeah, if I may just add, Prashant. I had called this out, the domestic packages for us grew 166% year-on-year. And like Mohit pointed out that only the packages business gets reported on a gross basis and the cost of servicing is nothing but the cost of sales for the packages. And so that would have grown in line with the growth in revenue.

So if we are looking at the adjusted margins of the segment, roughly what part would be contributed by packages and what part is the standalone nights?

So while we do share kind of operating metrics on standalone hotels as well, but if kind of you know look at broadly the mix between say hotels and packages at a margin level, it’s predominantly hotels. So it’s kind of in the high 90s coming from the hotel side. But yeah, as a gross booking kind of breakdown there is the mix of hotels -- of packages is much higher.

All right. Okay.

Thank you, Prashant. The next question is from the line of Santhosh Sinha. Santhosh, you may unmute yourself and ask your question now.

Hi, my question is regarding the ForEx product that was launched recently. So how has been the traction in this segment, ForEx segment? And what kind of actually revenue or margins you are expecting from this segment?

Yeah. Santhosh, if I may just take that, good question. And I would say at the outset, early days. I mean we just launched, in fact this last quarter we just finished the integration with the BookMyForex, the company that we had -- that’s focusing on ForEx sale on B2C platform and we were supposed to be integrating with them. So we just finished the integration in this quarter, in fact just more recently spilling over to current running quarter as well. And we have started to see some traction, more traffic sort of going from our platform to also opting for ForEx product. So really early days, but BookMyForex, again that also we’ve just sort of consolidated only part of the quarter. So I think in the coming quarters, we should be able to give you a better sense of how much is the contribution coming from this ancillary product called ForEx, and how it’s sort of growing and what kind of margin etc. But right now for the reported quarter it’s insignificant.

Okay. That was helpful. Next question is regarding the hotels business again. So as the share of homestays or goStays increase in the revenue, will it impact margin for the company? And also as the lower segments of the hotels actually revive, budget segment actually revives, so will its share increase, will it impact margins for the company?

There could be slight overall improvement in the margins with the budget segment kind of mix improving. But like we had called out, we do kind of expect overall hotel margins to remain within the 17% to 19% kind of a range overall. So I would kind of leave that as a larger kind of range to kind of keep in mind, even as the mix changes.

Thank you. Thanks for taking my question. Thank you. Thanks a lot.

Most welcome.

Thank you, Santhosh. The next question is from the line of Vijit Jain. Vijit, you may unmute yourself and ask the question now.

Yes. Thanks Vipul. Hi, sorry I joined a little bit late. Apologies if this question was already answered. But two questions from my side. One, can you comment on the supply recovery currently as it stands from the pandemic overall across the segment? And my second question is the BookMyForex that you mentioned that you’ve consolidated only in part of this quarter in terms of revenues. Can you talk about what was the impact of it in terms of costs, employee costs and other costs in this quarter? And how should we look at that cost increase QoQ next quarter when it is fully in the numbers?

Yeah, Vijit. What was the first one you asked? Sorry.

Supply recovery from the pandemic at the moment.

Yeah. Hi Vijit, I will now answer the question. So let me just give you an overview on the supply recovery first and then Mohit can take on the second question. As far as domestic flights is concerned, overall supply recovery is about 85% in terms of number of flights that if you compare them apples-to-apples with pre-pandemic. And as far as hotels is concerned, the supply recovery is pretty much there like there may be a churn of the hotels that might have happened, which might be 5% to 10% is our sort of best estimate, but otherwise sort of 100% of the supply is back in business. And similarly for bus, I don’t think there is any constraint on bus supply recovery per se. It’s just that on volumes terms some use cases would still be like I was mentioning for the hotel case, some budget segment use case is still to come back. And in case of bus, there may be small sort of a use case, that is first time office goers or people working in the big IT companies back and forth travel that happens through bus especially in the south region, that has to come back 100% more and more, IT companies are sort of mandating people to come back to office and all. But on supply side, the recovery is almost 100% there as well.

Got it. Rajesh, just a quick follow-up to that question. On the hotel side, right, one of the things we see in some other parts of the economy is you know the premium segment, in general, not just for the hotels, but on other segments as well has done well so far from the pandemic and the budget. The demand side has also been kind of on the weak side. So if you just -- I don’t know if you can strip-out the supply-related impact on the budget segment from the demand related impact. But do you see the same or if I put it in other words, do you see the Goibibo app kind of relatively lagging behind MakeMyTrip when it comes to hotels?

Given that Goibibo, yes, was leading the budget segment or the sweet spot for Goibibo platform was budget and mid segments. So while mid segment, by the way, is doing there also very well, so it -- which is comparable with MakeMyTrip as well. But specific to budget segment, yes, it’s sort of lagging behind, but it’s sort of lagging behind both on MakeMyTrip and Goibibo. So like I was just sharing earlier, you may not be on the call at that point in time, that it is more like an industry phenomenon. And I would say less on the supply side, relatively speaking, more on the demand side because of the fact that the prices have also firmed up in the budget segment across the hotel partners or the hoteliers, relative to what it used to be, because there used to be aggressive promotions pre-pandemic focusing more on aggressive acquisition of the customers in this particular segment, which definitely drives more demand. And sometimes some part of the demand can be superficial. And as the rates have firmed up, that demand might be taking more time to come up because as people get used to the new levels of the pricing. So to my mind it’s more the demand side than the supply side.

Got it. Thanks, super helpful. Thanks, Rajesh. Mohit, if you can take my second question, which is on costs. In terms of employee costs, other costs, etc., the full impact what it would be like of BookMyForex?

It could be large. Actually we’ve kind of you know started consolidating BookMyForex and the same will happen with Simplotel. But between the two put together there won’t be any significant kind of impact coming on the people cost side.

Okay.

All of these are going to be marginal increases, nothing meaningful. Large part of the increase actually continues to be the inflationary increase that we had called out will happen when everyone look at it on a comparative basis versus the previous fiscal.

Got it. Great, thanks Mohit. Those were my questions. Thank you so much.

Thank you.

Thank you, Vijit. The next question is from the line of Manik Taneja. Manik, you may please unmute yourself and ask your question.

Thank you for the opportunity. And my apologies that I joined the call late and probably you might have answered the question earlier. But if you could help us understand what drove the sequential improvement in the take rates on the airlines business this quarter. Are there any one-offs there and how should one be thinking about the take rates on the airlines business going forward? Thank you.

Yeah. Manik, I had picked that earlier. So we’ll kind of possibly call it out briefly that it’s largely in line with the increased promotional spending, which is kind of coming in from the airlines because the overall load factors have been under stress during the quarter. So it’s largely coming in on account of fluctuation on promotional spends, which are kind of funded by the airlines.

Thank you. And if you could want to comment on the relative market share between players over here, that would be really helpful.

Our market share has largely remained around the 30% levels, in line with the previous quarters, no significant changes over there.

And any changes in competitive intensity from some of the other players in the space?

Not really. Not really to the quarter.

Thank you.

Thank you, Manik. If anyone has any other question? Last question, in the interest of time, we’ll take that, otherwise we can end the call now. I guess that was the last question. Rajesh, closing comments from you and then we can end the call.

All right, thank you. Thank you, Vipul and thank you, everyone for sparing time. Thanks for all the curious questions as well. And we’ll keep you all updated as we go along. Thank you. Thanks a lot.

Thank you everyone for joining. You may now disconnect the call. Thank you.