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MakeMyTrip’s Q3 net revenue climbs 27.7% as air ticketing growth accelerates; hotel booking continues to outpace

30 January, 2014

NASDAQ-listed online travel services firm MakeMyTrip (MMT) reported a 27.7 per cent rise in revenues less service costs which stood at $28.5 million for the third quarter ended December 31, 2013 over the year-ago period. Overall revenues rose 9.6 per cent to $69.9 million in the quarter even as gross bookings, which represent the total amount paid by a customer while booking on its platform, declined 4 per cent to $311.3 million.

The third quarter is crucial for OTAs like MMT as it captures the holiday season.

This is the second straight quarter that its revenues less service costs (a crucial metric for OTAs) rose. Previously this has been sliding due to lower revenues from air tickets, which is the largest business driver for the company. The air ticketing revenues started moving back up from Q2.

Net air ticketing revenues rose 21.6 per cent last quarter to $16.4 million as margins increased even as the number of air ticketing transactions declined 12.3 per cent to 8.9 lakh.

Hotel & packages booking, which has been growing faster in the recent past, was up 40.1 per cent. This could be worrisome for MMT as hotels & packages, which commands higher margins, grew 43.4 per cent in Q2 and 52.7 per cent growth in the first quarter. This growth has slid sequentially. Hotels & packages contributed 35.7 per cent of its overall revenues less service costs.

Revenue from other businesses, which include trains, bus and cab booking, grew 12.9 per cent to $1 million.

The OTA reported a net loss of $1.6 million against loss of $5.2 million in the year-ago period. Even sequentially its bottom-line has been improving.

The firm also reported a turnaround after adjusting for employee share-based compensation costs, M&A-related expenses, amortisation of acquisition-related intangibles, net change in fair value of financial liability in business combination, net loss on change in fair value of derivative financial instrument and income tax (benefit) expenses.

Its adjusted net profit was of $1.2 million as against adjusted net loss of $2.5 million in Q3 FY13. Adjusted operating profit was $1.39 million as against adjusted operating loss of $2.2 million in Q3 FY13.

Deep Kalra, chairman and group CEO of MakeMyTrip, said: “MakeMyTrip further consolidated its position in the market place with strong revenue growth and adjusted operating profit in a difficult business environment of high fares and rupee depreciation.”

The firm indicated better revenue for the current year but cautioned that it remains watchful of the persistent volatility in the rupee to dollar exchange rate and an unpredictable domestic airfare environment in the coming quarters.

“However, the achieved results in the third quarter of fiscal year 2014 give us confidence to improve our annual constant currency growth guidance to 24-25 per cent for revenue less service costs, which is $99 million to $100 million for the full fiscal year, at an estimated exchange rate of 60.39 INR per dollar,” it said.

At the end of the second quarter it had given full-year revenue less service costs growth guidance of 15-20 per cent on a constant currency basis, but adjusted the range to approximately $93 million to $97 million, against the previous estimate of $95 million to $100 million, to account for the forex swing. It had originally given a guidance of $101 million to $106 million for FY14.

Air ticketing

Revenue from air ticketing business increased 31.2 per cent (49.2 per cent in constant currency) to $18.8 million in the quarter ended December 31, 2013 from $14.3 million in the quarter ended December 31, 2012. The revenue less service costs increased by 21.6 per cent (38.3 per cent in constant currency) to $16.5 million last quarter. This was largely due to an increase in net revenue margin (defined as revenue less service cost as a percentage of gross bookings) from 5.3 per cent in the quarter ended December 31, 2012 to 7.3 per cent in the quarter ended December 31, 2013.

Hotels and packages

Revenue from hotels and packages business increased 3.2 per cent (14.9 per cent in constant currency) to $50.1 million in the quarter ended December 31, 2013, up from $48.6 million in the quarter ended December 31, 2012. The revenue less service costs increased by 40.1 per cent (50.6 per cent in constant currency) to $11.0 million in the quarter ended December 31, 2013 from $7.8 million in the quarter ended December 31, 2012. This was attributed to an increase in gross bookings by 22.8 per cent (34 per cent in constant currency) primarily due to a 25 per cent increase in the number of transactions year over year and net revenue margin expansion from 11.1 per cent in the quarter ended December 31, 2012 to 12.6 per cent in the quarter ended December 31, 2013. However this net margin was lower than the net revenue margin of 12.9 per cent reported in the previous quarter of current fiscal year.

Other revenue

Other revenue increased to $1.1 million in the quarter ended December 31, 2013 from $1 million in the quarter ended December 31, 2012, primarily due to an increase in facilitation fees from travel insurance sales.


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MakeMyTrip’s Q3 net revenue climbs 27.7% as air ticketing growth accelerates; hotel booking continues to outpace

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