MakeMyTrip Limited

Hello, everyone. I'm Vipul Garg, Vice President, Investor Relations at MakeMyTrip Limited, and welcome to our fiscal year 22 fourth quarter and full year earnings webinar. Today's event will be hosted by Deep Kalra, our company's group chairman and chief mentor. Joining him is Rajesh Mago, 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 marks, 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 US 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 and forward-looking statement section of the company's annual report on Form 20-F filed with the SEC on July 13, 2021. 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 remarks. Over to you, Rajesh.

Thank you, Vipul. Welcome everyone to our fourth quarter and full year earnings call of fiscal 2022. I hope everyone joining us today is keeping safe and healthy. India went through third COVID wave with Omicron variant that started in December 2021 and continued during January and February. While the reported cases were high, severity of infection was low as compared to the Delta variant were possibly aided by significant vaccine coverage, which has now crossed about 1.9 billion doses. Travel slowed down with onset of Omicron, but picked up again later part of the quarter when Omicron started to recede. Demand started to come back, especially for leisure segments, Albeit momentum remained under pressure due to inflationary pressure, due to price increase of fuel leading to high airfares. This full fiscal year overall was the second pandemic impacted year for travel sector with the robust recovery phases in between waves. However, what is encouraging now is that pandemic-related movement restrictions have been lifted across India and pretty much in the rest of the world, except China, leading to travel coming back to near normal. Consumer sentiment for travel, especially for leisure, is quite positive right now, and more and more people are looking to travel for vacations in 2022. Government of India also opened commercial international flights from 27th March, and this is helping revive the international travel demand as well. In fact, as we enter summer holiday season, we are witnessing pent-up demand for both domestic and international leisure travel. While the interest and demand momentum has been strong, we are watchful of geopolitical crisis, inflationary pressures and its ripple effects on the overall economic environment and travel demand in future. As highlighted earlier, there has also been a significant improvement in online buying behavior during the pandemic, leading to growth in Internet users across all demographics. As a result, while other e-commerce categories have seen accelerated growth in number of transactions, We expect online travel sector to benefit from this shift in future as things normalize and more and more people start to travel. Currently, there are 622 million active mobile internet users in India, which are expected to grow to about 900 million by 2025, driven by smartphone penetration. Similarly, online shopper base is expected to reach 220 million by 2025 from the current base of about 160 million. We are also aiming to increase our online penetration to bring new users to transact on our platform by not only continue to focus and grow our leading travel use cases of air hotels and packages, including alternative accommodations, And bus, but also investing behind, adding and growing other travel and adjacent use cases in line with our already called out vision to be the travel super app. We recently expanded our rail and intercity cab booking services with Red Rail on Red Bus platform, as well as an independent Red Rail app. and ride our intercity cabs to make our RedBus platform a comprehensive ground transport services platform now. This would help booking any of the services super convenient for ground transport travelers. We also believe both rail and cabs offering will be significant source of new customer acquisition in the coming years. With our promise to add ancillary use cases in this reported quarter, we launched Global Cash Card by TripMoney our travel-focused FinTech initiative to cater to Forex needs of our international outbound travelers. In terms of targeting new travel growth segments, apart from going deeper in penetration to Tier 3 and Tier 4 cities on the B2C side, we are now aggressively growing B2B corporate travel segment with our SMEs and large enterprise product solutions via MyBiz and Quest to travel brands that are becoming increasingly popular with the clients. In addition, we are also driving B2B2C demand through our My Partner and My Affiliate solutions. Coming to the highlights of Q4 quarter now. During the reported quarter, despite the headwinds and slowdown in business compared to the previous quarter, we were able to ensure sustained profitability in operations with gross bookings touching a billion dollars. In our air business, we continue to maintain our leadership position. We continue to gain market share and our share in Q4 22 was 30.1% as compared to 29.7% in Q3 fiscal year 22. For domestic traffic, Leisure destinations like Srinagar, Dehradun, Leh have shown more than 100% recovery. High airfares due to increase in fuel prices affected the demand momentum to some extent, but we continue to see steady recovery on the back of pent-up demand in leisure travel during summer holidays. International flight daily departure supply has also now started to scale in April 2022. Nearly 65% of the capacity has come back overall as compared to January 2020, which is pre-pandemic. U.S., Maldives, and Nepal are key destinations wherein capacity recovery has touched 100%, while UAE is at about 85% of pre-COVID supply levels. As things open further, demand recovery will be led by popular destinations for Indians like Thailand, Malaysia, Singapore, Indonesia, Dubai, Maldives, all of Europe, etc. Coming to our hotels, packages and alternative accommodations business, where demand pattern was not any different from January and February months, where January and February months were somewhat impacted by Omicron, but steady recovery starting March on account of leisure travel, weddings, social and corporate events. Supply of rooms has now started to stabilize, and we have seen steady demand recovery across all price segments. Most of leisure destinations are already clocking volumes above pre-pandemic levels, and the outlook for Q1 remains strong. We continue to improve our product offering and bring more and more hotels online. As mentioned earlier, we are going deeper into the country, and we have now hotels listed from 1,600 cities as compared to 1,300 cities in fiscal year 20. This extensive inventory is helping us bring new users from tier three and tier four towns on our platform. We have further improved the experience for our Luxe collection of super premium properties. We've started offering Luxe packages which deliver more value to the customer and bring additional revenues for the hotels. These value added services have been well received by our customers. One of the trends that will continue to remain strong is preference for alternative accommodations and short breaks. People are opting for staycations in homestays, such as villas and holiday homes. We continue to invest and grow this business. Total active properties on our platform have now increased to more than about 34,000. We have witnessed a 70% increase in homestay listings from tier two cities and unexplored destinations over pre-pandemic levels. Homestays is a key segment for us from strategic point of view and is one of the fastest growing segments. Our holiday package business was slow at the start of the quarter like other businesses, but we were able to grow month on month and currently this business is already above pre-pandemic levels. Majority of travel during the first half of Q4 was dominated by domestic destinations where international travels started to pick up towards end of quarter. During the quarter, Kashmir, Himachal, Andaman, Goa and Northeast were the destinations which attributed to about 85% of the domestic demand. This trend seems to continue for the Q1 as well, with an addition of destinations like Ladakh, For international destination, the demand was majorly dominated by Maldives and Dubai. However, with easing of restrictions, Europe also started picking up towards the end. Going ahead into Q1, the demand trends are similar with the addition of new destinations such as Mauritius and Bali. Coming to our bus ticketing business, Q4 saw a steady recovery post the third wave. It is expected that the demand picking up further in April April-June quarter on account of school vacations, reopening of offices, especially in IT sector, inventory will bounce back further, particularly in the southern region. Towards the end of Q4, we also saw green shoots on new fleet addition from operators in a few states. This is a silver lining as operators have shown interest in new fleet addition for the first time since March 2020. And August, well, for both inventory expansion as well as improvement in Net Promoter Score. On the product side, we enabled bus operators to cross-sell add-ons in booking and post-booking touchpoints. In the first phase, operators can enable food-related add-ons. Same will be extended to other categories such as luggage, travel essentials, et cetera, in the current quarter. PRIMO, our program for top rated sellers, which aggregates the best rated services is shaping up well. We have close to 2,450 physically branded buses on the road across the length and breadth of the country. And this is helping us create a robust top of mind awareness. There have been several new initiatives to differentiate the PRIMO experience, including three red bus lounges, which are live across the top boarding points pan India. Other ground transport use cases, which include rail and intercity cabs, continue to scale and bring new users on our platform. We witnessed strong growth in both seats and gross bookings value despite Omicron impact. Ground transport contributed to 27% of the overall new users acquired on MakeMyTrip and GoIbibo platform in Q4. Significant part of this new traffic comes from the non-English speaking Tier 3 and Tier 4 cities, thereby expanding the reach of our offering to new geographies and user segments. We are already witnessing strong growth in our rail bookings business. We witnessed 66% growth in seats in Q4 fiscal year 2022 over Q4 fiscal year 2021, surpassing pre-COVID levels. During the quarter, we launched the standalone Red Rail app with an app size of 7.2 MB. This is the lightest app in the industry to target the Bharat user base. The app has already seen 160,000 downloads in first 30 days of launch with 75,000 active user base. Ride by Red Bus are curated and certified into city cab. offering with quality vehicles and trained drivers is also piloting in two big cities, Bangalore and Delhi. 21% of our overall bookings originating out of Delhi and Bangalore are now ride certified. Driver application, which is the key component in the post booking experience, was enhanced to allow for detailed tracking and auditing ride promises like driver wearing uniform and mask and clean caps. All three of our brands, Nekma Trip, Goi Bebo and Redbus, continue to enjoy highest top of mind recall and consideration. We have industry leading repeat rates. For Q4, over 70% of transactions were done by existing customers, clearly showcasing the strength of our product experience and brands. Coming to our expansion in GCC, Q4 has been a strong quarter for GCC with our continued focus on efficient customer acquisition by enhancing customer proposition and competitive advantage. While COVID did affect the growth, the region is bouncing back and is expected to recover to pre-pandemic levels in 2022. For the quarter, GCC business grew by 52% quarter on quarter. Our travel-focused fintech platform trip money is shaping up well as well. We continue to invest and expand our offerings, we have introduced book now, pay later payment option while booking travel, flight or hotels on MakeMyTrip as well as the Goibibo app. TripMoney has established a marketplace attracting 15 leading fintech players, NBFCs and banks to offer easy travel credit to the travelers. Initial response to BNPL on the MakeMyTrip platforms has been very encouraging. with a 60% growth in BNPL transactions quarter on quarter over the past one year. TripMoney has also strengthened its position in the Forex space by acquiring a majority stake in leading online currency exchange platform in India called BookMyForex. With this, TripMoney has a unique position in the industry by being the only player in travel fintech space to offer a suite of services like INR denominated global card, multi-currency forex card, foreign currency delivery plan India, and instant foreign remittances. Coming to our initiatives for non-direct B2C demand segments, my partner is our product to power offline travel agents. We have now onboarded more than 25,000 travel agents. Net additions of new travel agents in Q4 was about 3,089. By end of March, 2022, 52% of overall agents have transacted at least once on the platform, and the number continues to grow steadily. We are bringing more value to the agents through product enhancements. During the quarter, we launched new onboarding page to empower faster and smoother onboarding for agents, also launched a detailed council ledger section on the platform to facilitate faster reconciliation for the travel agents. Our MyAffiliate program is to power other online platforms for travel services. This initiative is aligned to our outlook for the future. During the quarter, our exclusive partnership with Amazon Pay went live and PhonePay went live in April 2022. These partnerships are aimed at providing greater value for customers with access to MakeMyTrips best-in-class flight and hotel offerings. There is an accelerated digital shift happening because of the pandemic. And through these partnerships, we will be able to extend our customer reach to Amazon pays and phone pays large consumer base, especially in smaller cities and towns. Our aim is to make travel bookings extremely convenient for new adopters, thereby increasing the online penetration of travel bookings. Our technology investment in catering to corporate travel demand have started paying off. as people have started returning to offices in greater numbers. Gross bookings for corporate business during fiscal year 22 grew by 266% year on year, driving non-B2C mix to high single digit. We acquired 262 key accounts and 502 SMEs on MyBiz during Q4. Some of the key accounts that went live were Lenskart, Indiamart, SC Johnson, ABP News, et cetera. On quest to travel, our active customers count has surpassed pre-COVID level. Active customers on Q2T reached 155 in March 22 versus 114 in January 20. Some of the notable customers acquired during the quarter were Nica, Tata Medical, Vira, Tata Motors Finance, Drawing Box, etc. We continue to work on both our products to enable seamless integration with the corporate systems and drive employee adoption. It is noteworthy that despite being a late entrant to the corporate travel segment, we have emerged as a significant player in the corporate segment in terms of gross booking value as well as revenue. To conclude, consumer sentiment remains strong, especially for leisure travel. While the demand momentum could have been even more stronger, but for high fares and inflationary pressures. We are hopeful of full recovery to pre-pandemic levels in domestic travel demand by first half and international travel demand by second half of the upcoming fiscal year 2023. With this, let me now hand over the call to Mohit for financial highlights of the quarter.

Thanks, Rajesh. Hello, everyone. I hope you're all staying safe and healthy. Online travel booking in India is still an under-penetrated market. Our aim is to continue to grow our offerings and bring more and more users on our platform via the newly built travel use cases while ensuring that high repeat rates drive profitability in our leading business segments. As reported earlier, during the last couple of years through the pandemic, we have adopted a two-pronged strategy on cost rationalization to drive better operating leverage. Firstly, we have made concentrated efforts towards long-term fixed cost reduction, and secondly brought in more efficiencies in our variable expenses, and in particular, the customer allocation costs. As a result of this, despite a 12.4% sequential decline in gross bookings versus the previous quarter, we maintained strong profitability and posted an adjusted operating profit or adjusted EBIT of about $12 million. adding back non-cash amortization and depreciation, the adjusted cash operating profit or the adjusted EBITDA stood at about $15.5 million. For the full fiscal year FY22, adjusted operating profit is at about $23.2 million as compared to an assisted operating loss of $18 million in the previous fiscal year and the loss of about $70 million in full year 20, which was the pre-pandemic year. Moving on to our business segments. During the quarter, AA ticketing adjusted margin stood at about $44.8 million, representing a growth of 20.5% year on year in constant currency terms. This is the first quarter where we have seen growth over pre-pandemic comparable quarter of Q4-F520 in the domestic air ticketing market. Considering that regular international flights have been restarted since 27th of March 22, the recovery in the international ticketing segments, which is stood in the 40s during the reported quarter, is likely to improve in the coming quarters. with the strong recovery in air ticket business margins on expected lines have come back to pre-pandemic levels and stood at about 7.1% during the reported quarter. Our OTA brands, both Make My Trip and Goi Weibo continue to be the top two travel brands in the country with a combined market share of over 30% in the domestic air ticketing business. Existed margin for our hotels and packages business stood at $42.3 million, witnessing a growth of 22.2% in constant currency terms. Just as in the case of the air ticketing business, the recovery to pre-pandemic levels is much stronger in the domestic hotel bookings compared to international hotel bookings, which is likely to gather pace in the coming quarters with the reopening of regular commercial flights. The margins in this segment stood at 17.7% for the quarter and 17.9% for the full fiscal year. These are likely to remain stable in the 17 to 18% range. In our bus ticketing business, the adjusted margin stood at $12.4 million, registering a growth of 15.7% over the same quarter a year ago in constant currency terms. The RedBus brand continues to be a leader in the bus ticketing segment in the country. And in future, we are leveraging this to make a foray into adjacent ground transport services like intercity cabs, rail bookings, etc., as mentioned by Rajesh. Adjusted margin for other businesses during the reported quarter stood at $5.7 million, witnessing an increase of 13.6% over the same quarter last year in constant currency terms. Moving on to our operating costs, we continue to be prudent with our variable expense, especially the customer acquisition costs. Marketing and sales promotion expenses stood at about 4.5% of gross bookings compared to 5.6% in the previous quarter. Overall, with domestic business recovery under the belt, we are hopeful of international recovery gathering pace in the next fiscal year. To leverage the same, we have launched the Great India Travel Sale to nudge travelers to book early in the ongoing seasonally strong summer quarter. While we continue to pursue organic growth, we keep looking for strategic acquisition opportunities to enhance our product portfolio or add technical capabilities. We are well capitalized to be able to pursue such opportunities. Last month, we had announced the acquisition of a majority stake in India's leading currency exchange platform, BookMyForex, which will help us in offering Forex services to our MakeMyTrip as well as Goibibo customers. With international travel reopening, Forex services are showing early signs of traction and we expect growth momentum to increase as outbound travel recovers faster here onwards. We will continue to look for such investment opportunities in the new growth areas that Rajesh has already talked about. With that, I'd like to turn the call to Vipul for any Q&A.