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MakeMyTrip Q2 PAT Beat Estimates; To Buy My Guest House Accommodations

08 November, 2011

MakeMyTrip’s net profit has dropped nearly 90 per cent sequentially to $0.074 million for the quarter ended September 30, 2011 even as its bottomline improved substantially compared to loss of $1.8 million in the second quarter last year. The NASDAQ-listed online travel services firm also saw drop in sequential revenues to $43.7 million compared to $52 million in Q1 even as it grew 84 per cent over the year ago period.

Adjusted net income (profit for the period excluding employee share-based compensation costs, cost related to follow-on public offering, interest expense on the liability portion of preference shares, interest accretion on financial liability related to business combination, changes in the fair market value of embedded derivatives in the preference shares and income tax benefit (expense)) more than doubled to $1.52 million compared to $0.579 million in the corresponding quarter last fiscal.

“MakeMyTrip has performed quite well in the seasonally slow second quarter” said Deep Kalra, chairman and CEO of MakeMyTrip Ltd.

MakeMyTrip, that competes with companies like Yatra.com and Cleartrip.com in India, has also disclosed that Sanjeev Aggarwal(managing director of Helion Venture Partners) has tendered his resignation as a director of the company on November 1, 2011 which leaves the company with an eight member board.

Investment in My Guest House Accommodations Private Limited

The company has disclosed that today it has entered into a shareholders’ agreement and share subscription and purchase agreement with My Guest House Accommodations Private Limited (MGH) and its existing shareholders. Pursuant to these agreements, MakeMyTrip can acquire 100 per cent of MGH’s ordinary shares through an earn-out structure based upon the achievement of various business parameters spread over eight years. The firm expects the first closing to take place this month, pursuant to which it will acquire an approximately 29 per cent stake in MGH against a cash investment of approximately $1.0 million.

MGH is based in New Delhi, India and is engaged in the business of aggregation, sales and distribution of hotel room inventory with a special focus on budget lodging accommodations and serviced apartments. MakeMyTrip believes the investment strengthens its presence in the distribution of low budget accommodation inventory besides strengthening its connectivity with hotels in India.

In August, MakeMyTrip teamed up with its largest shareholder private equity firm SAIF Partners, to acquire a majority stake in Gurgaon-based Le Travenues Technology Pvt Ltd, which owns and operates travel search engine iXiGO. While MakeMyTrip is picking 19.9 per cent for a cash consideration of $4.8 million, SAIF is acquiring 56.7 per cent for $13.7 million.

Operational Growth

The combined gross bookings for air ticketing and hotels and packages rose 57 per cent to $245.0 million on a yearly basis. The number of transactions for air ticketing and hotels and packages also experienced a 64 per cent year on year growth. Combined net revenue margin has increased by 0.4 per cent to 8.3 per cent on a year on year basis.

Air Ticketing: Revenue from MMT’s air ticketing business increased 85.1 per cent to $19 million in the quarter ended September 30, 2011 on a year on year basis.  Gross bookings increased 54.2 per cent and net revenue margin for the business were also up 7.8 per cent in the quarter. Hence its revenue, exclusive of service costs, rose 61.8 per cent to $16.6 million, compared to $10.3 million in the corresponding quarter last year.

Hotels and Packages: Revenue from its hotels and packages business was up 83.2 per cent to $23.8 million. Gross bookings in this division also saw a jump of 79.8 per cent, resulting in revenue less service costs rising 83.7 per cent to $3.8 million in the quarter ended September 30, 2011 from $2.1 million in the quarter ended September 30, 2010.

Rail & Bus Tickets: An increase in sale of rail tickets and bus tickets as well as miscellaneous income has resulted in MMT’s other revenue growing to $0.9 million from $0.5 million in the corresponding quarter last fiscal. 

Personnel Expenses: MakeMyTrip’s personnel expenses spiralled to $6.7 million as a result of employee share-based compensation costs of $1.4 million on RSU’s granted to employees in the current quarter as well as due to increases in annual wages and average employee headcount year over year in the quarter ended September 30, 2011. Excluding these compensation costs, the personnel expenses as a percentage of net revenue has stayed steady at 24.9 per cent on a year on year basis, and has risen by 4 per cent from 20.9 per cent recorded in the previous quarter.


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MakeMyTrip Q2 PAT Beat Estimates; To Buy My Guest House Accommodations

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