India's largest travel portal MakeMyTrip disappointed the street by recording a loss in second quarter ended September 30, 2010 even though the revenues grew significantly.
In its first publicly announced financial results after the company went in for an IPO in Nasdaq, MakemyTrip recorded a loss of $1.8 million in 2Q2011 compared to a profit of $0.02 million in the same quarter the previous year. Following the results, shares fell 26.55% to $28.02 from $38.15 as revenues missed analysts' expectations. The company had gone public in Nasdaq in August this year at $14 a share. The shares had zoomed to above $40 commanding market cap of over $1 billion.
The street was also worried about a disclosed service tax demand by the authorities, which the company plans to argue against. Since the amount is not available to public and there is uncertainty, the market has reacted sharply. However, in India, it's common service tax authorities call companies for assessment and make demands for service taxes.
As for financials, the company's revenues grew 40.5% year over year to $23.8 million in 2Q2011 from $17 million in second quarter last year. The revenue less service cost increased by $3.8 million to $12.9 million, representing a growth of 41.5% year over year.
The gross bookings for air ticketing and hotels and packages combined increased by $51.2 million to $156 million, a growth of 48.8% year on year. The net revenue margin for air ticketing was 7.4% and hotels & packages net revenue margin was 11.9%.
Revenue from air ticketing business increased by 40.1% to $10.3 million in the quarter ended September 30, 2010 from $7.3 million in the same quarter in 2009. This was due to increase in gross bookings by 47.1% partially offset by reduction in net revenue margin from 7.8% in the quarter ended September 30, 2009 to 7.4% in the quarter ended September 30, 2010.
Hotels and Packages
Revenue from hotels and packages business increased by 38.8% to $13 million in the quarter of 2010-11 compared to $9.4 million in the same quarter last year.
On the costs side, personnel expenses increased to $3.4 million in the quarter ended September 30, 2010 from $2.4 million in the quarter ended September 30, 2009, mainly as a result of annual wage increases and increases in average employee headcount during the same period.
Other Operating Expenses
Other operating expenses increased by 42.8% to $8.7 million in the quarter this year compared to $6.1 million in the quarter last year, primarily as a result of increase in payment gateway charges, advertising and business promotion expenses and outsourcing fee.
Fiscal Year 2011 Outlook
The company is expecting fiscal year 2011's revenue less service cost to be between $58 million and $61 million.
Deep Kalra, CEO and Founder, said: "We believe MakeMyTrip is well positioned to capture the long term growth in travel services that comes with the growing Indian economy and its middle class. The expected roll out of broadband Internet services throughout the country will only continue to drive the popularity of e-commerce which will benefit online travel companies like MakeMyTrip."
Full results can be viewed .