MakeMyTrip - Earnings Call - Q1 2026
July 22, 2025
Transcript
Vipul Garg (Head of Investor Relations)
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 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 the 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 is contained in the Risk Factors Forward-Looking Statements section of the company's annual report on Form 20-F filed with the SEC on June 16, 2025. 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 to Rajesh. Over to you, Rajesh.
Rajesh Magow (Group CEO)
Thank you, Vipul. Welcome, everyone, to our first quarter call of fiscal 2026. The first quarter of the fiscal year is typically a high season for leisure travel, and this quarter also started on a similar note with strong demand momentum and booking growth in the mid-20s in the month of April. However, domestic demand was impacted due to the unfortunate incident in Pahlgau, leading to geographical escalations in the month of May and the tragic crash of a passenger airplane in June. While domestic demand for leisure travel was particularly weak for domestic leisure destinations for air travel and holiday packages, being a one-stop shop on travel allowed us to drive growth from other travel services, other modes of transport, as well as ancillary travel services catering to non-leisure travel use cases.
We also continued to drive growth in international travel, where online booking behavior is growing, and the overall demand was relatively less impacted. Last but not the least, we managed to continue the growth momentum in our corporate offerings. As a result, despite the exceptional macro headwinds during the reported quarter, I'm pleased to report that we delivered very good top-line growth on our hotels and packages, bus, and ancillary business segments, and also managed to grow market share in the domestic air segment marginally from 30.6% to 30.8%. Our registered operating profit for the quarter was also at $47.3 million, witnessing growth of 21% year-on-year. We believe this impact is short-term in nature and doesn't materially alter our view of the travel sector's long-term growth prospects of the Indian travel and tourism market.
India's travel sector is poised for strong long-term growth driven by rising disposable income, infrastructure upgrades, and a fundamental shift in consumer behavior to spend more on travel. Indian consumers are increasingly prioritizing experiential travel activities and experiences. There's a clear shift toward taking multiple holidays and short breaks throughout the year, signaling a structural change in travel consumption patterns, which bode well for us. International outbound travel from India presents a significant growth opportunity as well, with more Indians eager to explore global destinations. Short-haul markets are gaining traction driven by better air connectivity, simplified visa processes, and rising preferences for quick getaways. For Q1 fiscal year 2026, our international air ticketing revenue grew by over 27% year-on-year, far outpacing industry growth. Similarly, our international hotels revenue grew by over 45% year-on-year.
Our international business now contributes about 27% to the overall revenue, up from 24% during the same period last year. Let me now turn to the business segments, starting with the air ticketing business. As mentioned before, this quarter was impacted by operational disruptions, particularly for the domestic market, due to uncontrollable factors. However, we delivered above-market growth and gained share in our air business. As part of our ongoing efforts to enhance customer experience, we have launched a new version of our zero-cancellation product for domestic flights, designed to boost user confidence and repeat usage for frequent domestic flyers. We've also further streamlined the airport transfer booking process for domestic flights. Travelers can now conveniently reserve a cab of their choice from a wide range of options while booking their flight. For our international travelers, we also expanded our lounge offerings to include departures from 131 international airports.
Customers can now conveniently purchase airport lounge access while booking their international flights, enhancing their pre-flight experience. Our accommodation business, which includes hotels, homestays, and packages, delivered healthy growth despite a lower share of leisure bookings this quarter due to macro disruptions, particularly for our 100% leisure-focused packages business. Jammu and Kashmir, a key summer travel destination, saw a dip in tourist enclosure this quarter due to the unfortunate incident in Pahalgam that's affecting our growth. Gross booking value of hotel and packages business grew by 15.3% year-on-year in constant currency for Q1 fiscal year 2026. Gross bookings for standalone hotels business, however, grew by 19.4% year-on-year on a constant currency basis. While domestic leisure travel faced headwinds this quarter, other segments, including corporate travel and international outbound, delivered strong growth.
As we deepen our reach across the country, we see good traction from tier-three cities, reflecting rising travel adoption in smaller cities. In line with this trend, we continue to expand our supply base in the domestic market. We now have 91,000-plus accommodation options available on the platform, covering 2,000-plus cities in the country. For the international market, on the other hand, we have been expanding our international hotel supply through a direct contracting strategy focused on high-demand outbound destinations. In the past year, we have added over 2,000 directly contracted hotels across 50 cities in 20 countries. These 50 cities collectively account for more than half of India's outbound travel. During the quarter, we partnered with Premier Inn, the UK's largest hotel chain.
This addition further strengthens our international hotel portfolio, with a brand known for its scale, reliability, and value, offering Indian travelers more relevant choices across key cities in the United Kingdom. Our product strategy is built on deep consumer insights and leveraging GenAI. This is helping us transform hotel booking experience on our brands through a robust and comprehensive knowledge graph that integrates hotel data, reviews, images, location insights, and user intent. This enables natural language search and context-aware recommendations as well. As the graph evolves, it will unlock more personalized and relevant results for our customers. Recognizing the influence of food and hotel selection by Indian travelers, we have made dining-related content a key product priority on MakeMyTrip, from showcasing on-property dining options like rooftop lounges and specialty cuisines for premium travelers to highlighting the availability of vegetarian and Jain meals in religious destinations.
We've scaled food-related data coverage to over 21,000 properties across India. This allows us to deliver more context-aware hotel recommendations based on travelers' culinary preferences. Another emerging trend among Indian travelers is wildlife tourism. We have prioritized this insight by enriching our content and discovery signals. With increasing interest in nature-based experiences among families and small groups, the proximity of a hotel to a national park, safari gate, or forest buffer zone has become a key factor in trip planning. For over 2,000 properties, especially near wildlife hotspots, we now surface these details, prominently driving higher engagement and conversion. In our holiday packages business, international outbound packages continue to scale well, with Japan leading the growth, followed by Africa. For international, we continue to add destinations and options for travelers. We launched packages for Jordan with the start of direct flights from Mumbai on Royal Jordanian Airlines.
We also launched packages for Tashkent and New Delhi for the East. Our homestay business continues to scale. We continue to build the category and expand our homestay supply. We added more supply in our top 18 pilgrimage cities, led by Varanasi, Ayodhya, and Tirupati, which witnessed a 103% increase in new rooms on the platform versus the same quarter last year. The supply in business cities grew 46% year-on-year, with notable growth in new rooms in Mumbai, Delhi, Bangalore, Hyderabad, and Gurgaon. Among international travelers, particularly solo travelers, families, and groups, we have observed a rising preference for alternative accommodation, such as hostels and apartments. To cater to this shift, we implemented targeted interventions to surface these property types to relevant customer cohorts in Europe and other key destinations. As a result, we saw an improvement in the share of alternative accommodation with our international business.
In our bus business, growth further improved in Q1 fiscal year 2026, with all regions growing in double digits. Our growth continues to be broad-based, with all regions growing in double digits, with North and East outpacing traditional bus markets like South and West during the quarter. We are also noticing significantly higher growth from pilgrimage and tier-three destinations. Inventory addition remained buoyant throughout Q1 fiscal year 2026, with private inventory crossing 44,000 daily schedules by the end of the quarter. This was driven by new bus addition by existing operators, which are predominantly sleeper buses in long routes, including the addition of 90-plus premium Volvo buses in the quarter. This trend of investment in new buses is likely to continue in the coming quarters.
For RTCs, government buses, too, we saw a significant increase in inventory with the acquisition of GSRTC, Gujarat State Roadways Transport Corporation, and an almost 4x increase in digitized inventory from UPSRTC. This has resulted in RTC inventory crossing 40,000 daily schedules as of June. Our international bus business continues to be promising. In Malaysia, which is a big market and where we are the market leader, with a healthy market share in online bus booking, we are adding more adjacent products, such as ferries and activities. In other countries, we are in the market-making mode and seeing steady progress. We continue to strengthen the customer proposition within our trains business. This quarter, we launched an industry-first seat availability prediction feature powered by a machine learning-based forecasting model.
By integrating real-time seat availability signals within the booking funnel and deploying targeted notifications, we have enabled more confident and timely booking decisions. For our cabs business, we continue to scale both airport transfer and intercity cabs. During the quarter, we launched flight track cabs to ensure seamless airport-to-city rides for our customers. By using real-time flight data, we dynamically adjust cab pickup times, guaranteeing timely service whether a flight is delayed or arrives early. This initiative has improved our service reliability and has led to higher NPS. We plan to enhance accuracy using data science, increase supply participation, and scale this across all our platforms. Our corporate travel business via both our platforms, that is MyBiz and Quest2Travel, is witnessing strong growth. Our active corporate customer count on MyBiz is now over 66,500-plus, compared to 59,700 customers during the same quarter last year.
For Quest2Travel, the active customer count has reached 515 large corporates, compared to 458 customers in the same quarter last year. Looking ahead, we remain optimistic about the long-term growth prospects of the Indian travel sector and are firmly committed to delivering sustained value to our customers, partners, and stakeholders. Before I conclude, I want to extend my sincere thanks to all our existing and new shareholders and investors for their trust and support in our recent capital raise, which contributed to making it a very successful offering. With this, let me now hand over the call to Mohit for the financial highlights of the quarter.
Mohit Kabra (Group CFO)
Thanks, Rajesh, and hello, everyone. We started the quarter with strong gross booking growth of 25.3% during April, which tapered off during May and June due to multiple macro challenges that Rajesh has already spoken about. What stands out during the quarter is that within the Indian travel market, we were able to leverage our diversified mix to grow faster in other segments when domestic air ticketing and holiday packages demand was muted. Secondly, dial up our corporate platforms when leisure demand was impacted, also push international offerings when domestic demand was subdued, and lastly, drive operating leverage by impacting cost levers when growth seemed to have muted despite peak travel seasonality. This performance underscores the importance of our diversified business portfolio, disciplined financial management, and operational agility.
For the reported quarter, revenue as per IFRS grew by 7.8% year-on-year in constant currency to $268.8 million from $254.5 million in the same quarter last year. The growth was impacted due to a series of external events. Our profit for the quarter was $25.8 million compared to $21 million during the same quarter last year, registering 22.6% year-on-year growth. Adjusted operating profit registered a growth of 21% year-on-year and reached $47.3 million compared to $39.1 million in Q1 of last year. Moving on to our segment results, our air ticketing adjusted margin stood at $97 million, registering a growth of 11.5% year-on-year in constant currency. Take rates for the air ticketing business were in line at 6.8%. In the domestic air market, we maintained our market share despite the macro challenges at over 30%.
Our international air ticketing business continues to grow faster than the market, with increasing market share. Volumes in this segment grew by over 21% year-on-year, which was almost three times the market growth of 7% during the quarter. The mix of international air ticketing business revenue has now reached an all-time high of 42% compared to 37% during the same quarter last year. In the hotels and packages segment, adjusted margin growth was 16.3% year-on-year in constant currency, resulting in an adjusted margin of $121.9 million during the quarter. The growth was lower than expected, as the holiday packages business was largely flat year-on-year because of domestic leisure travel being impacted despite the increased totality. Take rates for the quarter were in line at 17.7% in this segment.
As Rajesh has already explained, we have also been increasing directly contracted international accommodation options, particularly in destinations where direct flight connectivity has been established and select long-haul destinations which are of great interest to Indians. As a result, the mix of international in hotels and packages revenue reached an all-time high of 25.2% during this quarter, up from 21% during the same quarter last year. In our bus ticketing business, the adjusted margin stood at $42.6 million, registering a strong year-on-year growth of over 34.1% in constant currency terms. Take rates for the business were in line at 10.3%. Our ground transport business, which includes rail and intercity cabs, is reported under the Others category, which has strong growth. Gross booking for the quarter stood at $71.8 million, witnessing a growth of 31.6% year-on-year in constant currency for the ground transport businesses.
Most of the ancillary services reported under the Others category, such as travel insurance, forex, etc., also grew very well during the quarter. As a result, the adjusted margin from Others category came in at $21.5 million, witnessing a strong growth of 47.4% year-on-year in constant currency. We remain focused on building operating cost efficiencies and driving operating leverage in our fixed costs, including personnel, selling, and general administrative expenses. Similarly, our customer acquisition costs, that is our marketing and sales promotion expenses, continue to remain efficient. Quarter one and quarter three are generally higher brand marketing expense quarters in line with the seasonality. In this quarter, we were able to partially roll this back through the tepid months of May and June. As a result, our customer acquisition costs came in at 5.1% of gross booking value.
All other expenses were in line and helped us expand the overall adjusted operating margin from 1.64% of gross booking value during Q1 of last year to 1.8% of gross booking value during the current reported quarter. We ended the quarter with cash and cash equivalents of $804 million and will continue to look for inorganic investment opportunities during the year. During the quarter, we were also able to significantly dial up on our share repurchase initiatives. We raised additional capital of approximately $3.1 million through the primary offering of ordinary shares and zero-coupon convertible senior notes. The entire net proceeds from the offerings were used for the repurchase of Class B shares. After the completion of the reported quarter, on July 2, 2025, we have completed the repurchase and cancellation of 34.3 million Class B shares.
As a result of the repurchase, we have a total of 95.4 million shares outstanding compared to 111.3 million shares outstanding as of March 31, 2025. Trip.com is now the largest minority shareholder with approximately 16.9% voting shares in the company. We would like to take this opportunity to thank our existing and new incoming investors who have participated in the aforesaid primary offerings. With that, I'd like to turn the call back to Vipul for Q&A.
Vipul Garg (Head of Investor Relations)
Thanks, Mohit. Anyone wishing to ask a question can click on the raise hand options on their computer screen, and we will take the questions one by one. The first question is from the line of Sachin Shrikant Salgaonkar of Bank of America. Sachin, you may please ask your question now.
Sachin Shrikant Salgaonkar (Managing Director)
Thanks, Vipul. Hi, management. Congrats on a good set of numbers and what was looking as, you know, a very difficult quarter. I have a few questions. First question, I know you as a company were targeting revenue and GMV growth of 20% odd every year. Given the fact that 1Q is at a 16% growth on revenue, how should we think about the upcoming quarters in the sense that for full year are we still aiming at a 20% growth or we might see growth, you know, lower than 20%? That's question number one, let me pause you.
Mohit Kabra (Group CFO)
Yeah, Sachin, maybe I can just take that. If you really look at it across lines of businesses, if I look at across all lines of businesses, the adjusted margin growth overall stands at close to about 18.8%. We're kind of pretty close to the 20% mark that we were kind of wanting to achieve. This is coming despite all the micro events that we have already talked about during the quarter. I think that pretty much gives us comfort that we are still on target to be in the high teens to 20s in terms of overall growth for the year as well.
Sachin Shrikant Salgaonkar (Managing Director)
Mohit, in a way, what you're saying is the next three quarters, the growth could be better than 1Q to achieve your full year target of 20%, right?
Mohit Kabra (Group CFO)
Yes, we do expect that we should be able to dial back growth because, like we said, April started off with much better growth, but it's the events of May and June which have kind of brought down the overall number for the quarter.
Sachin Shrikant Salgaonkar (Managing Director)
Got it. Second question.
Rajesh Magow (Group CEO)
Sorry, Sachin. If I may just add one important data point here, while what Mohit said about the rest of the segments in our commentary, we covered that only the domestic market was more impacted. I think we should look at constant currency growth number, and the gap on constant currency from a growth perspective is just 1.2%. 18.8% is actually growth for constant currency overall.
Sachin Shrikant Salgaonkar (Managing Director)
Fair point, Rajesh. Thank you for that. Second question, I just wanted to gauge the consumer sentiment out here. I know because of the three one-off issues, be it India-Pakistan conflict, Iran-Israel, or to that matter, even an Air India plane going down, clearly the near-term consumer sentiment was negative. I just wanted to understand, as we head out of 1Q, are you seeing an improvement in the sentiment? I do understand, from a seasonality perspective, 1Q, 3Q are strong. Keeping aside seasonality, do we see the consumer sentiment improving? A related question perhaps is, obviously, for the last couple of years, we are seeing a bit of an air supply issue. If anything, that supply issue has again increased. We would love to get your thoughts in terms of how we should see at that also.
Rajesh Magow (Group CEO)
Yeah, maybe I can take that, Sachin. We've started seeing the sentiment improving, Sachin. In fact, if you look at the overall daily flown data, first in the domestic market and then look at the international flown data, you would see the trends. April, the daily flown numbers were actually pretty close to the average of the previous quarter, and the impact was May and June. If you really break that into literally day-on-day trend, you would see that the June numbers have started to come back. We do see the overall sort of sentiment improving. We obviously see data on our platform in terms of booking trends for even leisure destinations slowly and gradually coming back as well. I do think, like I was just saying it as part of the commentary as well, that this is not, this is like a temporary disruption.
I don't think it's going to change the structural shift that was happening on consumer behavior on spending more as part of their discretionary income on travel or on any other experience. I don't think so. We've seen that sort of recovery already happening slowly and gradually. Obviously, it'll pick up. This running quarter is non-season travel quarter as well. In that, keeping that in mind, keeping seasonality in mind, we do see the sentiment coming back. We also keep doing our own sort of consumer sentiment survey, and there also we've started to see the recovery trend week on week. On the supply side, yes, there was a temporary disruption, and this was completely this time around for a different reason, for a different reason, right?
This was just more for the safety check for various planes and all the partners just being absolutely making sure that they had to double down on safety checks, etc., and because of which some temporary announcements were made. There also we've started to see planes coming back, the overall sort of daily departures coming back to track. As far as international travel or daily flown traffic is concerned, that in any case relatively was less impacted, and we see that sort of coming back as well. I don't think on the supply side anything changes from what our narrative was, let's say, beginning of the fiscal when we had reported our last quarter, last year results, last quarter results of last fiscal and full year. It remains the same.
Seems like this impact was in the quarter, and we see the recovery happening, and it should go back to the same levels of April in terms of just the supply that was already there in the market. I don't really see any further situation deteriorating from what it was at the beginning of the fiscal.
Sachin Shrikant Salgaonkar (Managing Director)
Thank you, Rajesh. My last question is on a potential IPO in India. As you know, after Trip.com selling down stake and becoming below 20%, a few investors do have some expectations about a potential IPO in India. I know management in the past had reiterated listing in India as a medium-term aspiration. We'd love to get an incremental update from you guys. Anything we as analysts and investors need to watch out for to get a sense that if indeed there is a thought process and there is clarity about a potential IPO, and what are some of the events to watch out for from that perspective?
Mohit Kabra (Group CFO)
Thanks, Sachin. Maybe I can take that. You're right. I think I'll just reiterate that it continues to be a midterm opportunity for us to look at. Like we have been calling out in the past, the India capital markets is something that we'll definitely look at. We have the next opportunity to kind of raise funds. The current exercise that we did was largely more a repurchase program. Like we have always said, the current shareholding pattern that we had, even pre the repurchases, wasn't really a deterrent to any kind of capital market activity globally or within India. I think the eventual listing in India is going to be more linked to fundraise plans as and when they materialize.
Right now, like I've called out, we have only added further to the balance sheet through the quarter, and we're currently sitting at about $800 million of cash and cash equivalents. Unless we find a significant reason to deploy a large amount of funds, I think the India plans will tend to be more of a midterm opportunity than a short-term opportunity.
Sachin Shrikant Salgaonkar (Managing Director)
Got it. Thanks, guys, and all the best.
Mohit Kabra (Group CFO)
Thank you, Sachin.
Vipul Garg (Head of Investor Relations)
Thanks, Sachin. The next question is from the line of Manish Adukia from Goldman Sachs. Manish, maybe please ask your question now.
Manish Adukia (Equity Research Analyst)
Thank you, Vipul. Hi, good evening, team. Thank you for taking my questions. My first question is on, again, demand. When I think about your international segment, which again has done like a really good quarter, air, you mentioned 27% and hotels 45%, and now the overall international segment is more than a quarter of your revenue. I just want to get a sense of, do you think this runway of 30%+ growth on a blended basis is still like a long way to go and you can continue to deliver on this number for some more time? Is it largely a function of you adding more supply or is it also a function of continued shift to online on the international side? A related question there is, do you give the monthly booking data for April, May, and June for your overall segments, air, hotel, and bus?
Was the trend similar for international as well, where April was very strong and then May and June worsened, or was the trend in international different? That was my first set of questions.
Mohit Kabra (Group CFO)
Maybe I can just, sorry, go ahead.
Rajesh Magow (Group CEO)
Okay, maybe I can just start with that and then Mohit, you please add. So Manish, you're absolutely right. Two reasons you've already actually called out, and it's a combination of the two. I'll give you one more reason. You know, on the international trend, one, two that you called out is underpenetrated online market, which is absolutely true. Behavior is going more and more towards online booking. The second is we are doing a lot of effort on adding supply on all the sectors, on both the segments directly contracted. Of course, you know, just working really hard to also picking up consumer insights to improve the product experience as well.
I'll tell you one more macro reason for this, and that is about the overall sort of country growth, you know, consistently GDP growing, rising income, disposable income growing, also is sort of leading to, you know, sort of international travel, the overall international travel growth as well. That is the third macro reason, and it's likely to be, you know, there for the foreseeable future. These are all these macro drivers because there is headroom everywhere. If the country continues to keep growing and the incomes continue to keep rising, you will see more and more urban population, tier one, tier two cities especially, and look to, you know, sort of leverage and cash on the air connectivity improving, the direct flights and air connectivity improving, and also the ease of travel thanks to the, you know, short-haul destinations.
The visa is becoming very, very sort of easy, you know, easily available for people and smooth experience for getting those visas without any hassles. All of these trends, if you really bring them together, would help the international, you know, travel segment to definitely grow. You know, from our strategic sort of direction standpoint, we're clearly doubling down on that.
Mohit Kabra (Group CFO)
Yeah, maybe I can just add, Manish, I can go to two questions that you had. Yes, while Rajesh has already covered the depth of supply, both for domestic and international, I would also say the overall width of supply because we keep on adding new ancillary services on the platform as well. That is going to be another kind of source of incremental growth that we want to keep dialing upon. Of course, the continued shift from offline to online will be a driver as well. Just on the first question that you had, this would be the kind of drivers for growth. On the second one, on international, while domestic was very, very tepid growth in May and June, international was not as impacted even through May and June. Therefore, we were able to drive much better growth through the international offerings that we have on the platform.
Manish Adukia (Equity Research Analyst)
Thank you. My second set of questions was on competition. If you can just maybe highlight the general competition landscape, particularly from Airline Direct, has there been any change? From one of the other listed OTAs, EaseMyTrip, which reported results, I think last week, their growth, at least on headline, looked stronger than your reported growth. Anything that you can talk about in terms of competition dynamics that may have changed in the market where any of the OTAs may have become slightly more aggressive than they were in the past? Would love to get your thoughts.
Mohit Kabra (Group CFO)
I can take the second one, probably. In terms of, if you really look at it in the overall competitive dynamics and shares of various OTAs or intermediaries in the segment, we've generally seen the number three, four, five kind of changing places often. This could be for multiple reasons. What we are seeing largely across what we're actually more targeting across various segments is if you really look at it on domestic air, we've got a very strong leading market share of close to about 30%. Therefore, at that kind of a sizable share of the market, we are pretty realistic that we would tend to grow in line with the market. It's not going to be disproportionate to the market any longer.
Whereas for some of the OTAs with marginal shares in the segment, you could see a little bit of a trend changing depending upon seasonality, depending upon competitive dynamics. We are more focused on ensuring longer-term growth and longer-term market share remaining holding at the 30% plus level. That's more on the overall change in kind of market participants and the reporters there from. Coming to overall competitive dynamics, no significant change as such, Manish, largely in line with what it has been for the last few quarters, for the last couple of years, including on the direct side. I think the dialing up of supply and direct is something which we have always said. All suppliers will be, of course, looking at maintaining or increasing their share of direct share of the overall demand size.
We want to make sure that we continue to gain a meaningful share of most of our suppliers. We are not looking at doing 100% of any supplier, but we would want to have a rightful share and also provide distribution at the most efficient level and in the most effective cost of distribution. That's what makes sure that a longer-term growth with each of these suppliers remains consistent.
Manish Adukia (Equity Research Analyst)
Thank you, Mohit. My last question, Mohit, to you is on just capital allocation. In the March quarter, we saw some buyback from public shareholders in June. Of course, you had that large share repurchase from Trip.com, but outside of that, I don't think we saw any buyback. You obviously have $800 million of cash in the books and you're noting significant cash. Is there like a formal buyback policy that you're looking at beyond what you've put in the, you know, letter that there's a maximum amount that you will allocate towards buyback? From a buyback strategy perspective, is there like a certain share price number that you have in mind that if it goes below that, you look to intervene and buy back? How are you thinking about that? Some color there would be helpful.
Mohit Kabra (Group CFO)
No, sure. Happy to share some color. If you really look at it, during the primary offerings also, we had called out that we were looking to deploy up to about $200 million from the balance sheet to kind of achieve the objectives of the overall repurchase program of Class B shares, right? It so happened that we were able to upsize the offerings, and therefore, we didn't have to deploy from the balance sheet. Otherwise, the intent during this quarter was to largely deploy in terms of repurchase of Class B versus Class A because that works even better from a company's standpoint and even from the point of view of the minority shareholders. That's been the objective.
That said, I think if you really look at it in terms of the overall size of the repurchase program, we've been able to significantly dip into it through the quarter, which is a transaction that we have already reported. We'll remain open to dipping into further buyback even in the rest of the year because we haven't really deployed directly from the balance sheet through the quarter. In terms of a program, whether we want to get into any steady program, like we have said, at least at this stage, we want to keep it more like an opportunistic program, and therefore, we'll deploy it as we believe there's a right opportunity to do so. In the future years, we'll remain open to looking at it in a steady program as well.
Manish Adukia (Equity Research Analyst)
Thank you for taking my questions. All the best.
Rajesh Magow (Group CEO)
Thank you, Manish.
Mohit Kabra (Group CFO)
Thanks, Manish.
Vipul Garg (Head of Investor Relations)
Thanks, Manish. The next question is from the line of Aditya Suresh of Macquarie. Aditya, you may please ask your question now.
Aditya Suresh (Head of India Research)
Thank you, Vipul. Thank you, Rajesh, and Mohit for taking my question as well. The first one is on hotels. I had two questions within hotels. One is, you mean, your standalone kind of room nights was up about 18%. I'm just curious to understand, was there any kind of downtrending which you all witnessed in your platform through the quarter?
Mohit Kabra (Group CFO)
Sorry, what? Say that again, Aditya.
Aditya Suresh (Head of India Research)
Was there any kind of drop in the average room nights, the rate for the room night booked in the quarter?
Mohit Kabra (Group CFO)
Yeah, no, I got it. I got it. No, very interesting question and very interesting sort of trend also that we noticed in the quarter. See, this is, you know, as we mentioned, this is supposed to be a, you know, high travel season quarter for leisure travel for sure, and that was muted. Just because overall sort of sentiment was down, general expectation was that there, you know, there will be impact on ADRs or there will be, you know, the prices might go down significantly and all. The reality was that that did not happen. There was like, you know, small, literally 1 or 2 percentage points in certain segments drop, but nothing significant, nothing material.
Aditya Suresh (Head of India Research)
That's really interesting. Thank you for clarifying that, Rajesh. Within hotels, again, can you clarify what proportion of your activity is MICE-related? Was that a bit of a growth tailwind here for you this quarter?
Mohit Kabra (Group CFO)
Overall corporate, you know, because it was a non-leisure travel use case, right? It was non-discretionary, if you will. Overall corporate and MICE is part of that corporate, you know, actually has been growing very, very well for us and continued to keep sort of growing even in the quarter that we are reporting out. MICE was no real exception, but pretty healthy growth there as well.
Aditya Suresh (Head of India Research)
Okay. With ancillary services and bus, you've clearly kind of demonstrated really strong growth in this quarter. Just on ancillary services and what you all speak about outside of ground transportation, because there, I guess your margin is a full dropdown, growth here is strong. What sort of headroom do you all think about in terms of growth and the growth potential? Could we kind of think about this 30% kind of pace of growth sustaining, say, for the next three, four, five years, or how do you all think about that opportunity?
Mohit Kabra (Group CFO)
I think we are actually rolling out, like I said, we're increasing the number of ancillary services that we are putting on the platform. That is also another driver for growth, particularly in the other segment, because all of these largely get clubbed under others. Therefore, not just the depth of supply, but the width of supply in terms of new services that we are putting on the platform will continue to be a big opportunity. In fact, we have called out that this year we also want to dial up activities and experiences, which again will be reported as part of others to the extent that they get booked on a standalone basis.
We feel confident that with all the initiatives that we have taken in the last few years and are continuing to take, this will be a segment which will continue to grow faster and possibly in the 30% range, even in the years to come.
Aditya Suresh (Head of India Research)
Thanks, Mohit. Rajesh, can you just clarify, there have been changes in the board with Trip.com's shareholding coming down. Could you call out any key changes which have happened from a board composition perspective?
Mohit Kabra (Group CFO)
Yeah, I'll let Mohit take that. Yeah, sure. Essentially, the number of nominees from Trip.com has gone down by three. They now have only two nominees on the board. Therefore, we've kind of brought in independents on the board apart from myself. We've got two independents on the board, and I have also kind of joined the board once again. This has been the broad change. Nothing exceptional to call out.
Aditya Suresh (Head of India Research)
Thank you, and all the best.
Mohit Kabra (Group CFO)
By the way, the other two changes that we have made is, we've also, just as part of the board management, we've also now constituted a nomination committee. We didn't have that earlier, but now that we have quite a few independent directors on the board, we thought it would be appropriate to set up a nomination committee as well. We're also looking at increasing the size of the audit committee from two independent members to three independent members.
Vipul Garg (Head of Investor Relations)
Thanks, Aditya. Thanks, Aditya. The next question is from the line of Vijit Jain of Citigroup. Vijit, you may please ask your question now.
Vijit Jain (Director and Lead Analyst in Internet)
Thanks, Vipul. Hi, everyone. Congratulations on the successful transaction last month. In a challenging quarter, I see that your adjusted margins are now at the lower end of your guidance despite the growth headwinds you saw in the quarter. My first question is, how should one look at your margins guidance from here? Growth in the subsequent quarters, as you mentioned earlier, is going to pick up to achieve greater than 20%. You have all these cost measures that you've implemented. That's my first question. How should one look at that guidance in that context? I'll come back for other questions, please.
Mohit Kabra (Group CFO)
Yeah, see, the overall guidance remains of wanting to get into that 1.8 to 2% range as a percentage of gross bookings on the adjusted operating margin. Of course, within quarters, we'll remain tactical. Like I said, while operating was a good growth, but therefore, we were going the normal course. During May and June, we realized that growth was being tepid. Therefore, we've dialed up on better operating margins at the net level. I think we'll continue to keep doing tactical moves in line with how the market is behaving or how the markets are shaping up. Very broadly, I think we'd want to settle down in that range of 1.8 to 2% on a full year basis before we revisit the longer-term outlook.
Vijit Jain (Director and Lead Analyst in Internet)
Got it, Mohit. Mohit, my second question is just on the ANP spends, right? I know you've spoken about how you calibrated them. When I look at the split of it, I would have normally thought that the customer incentive bucket is where you would have more immediate flexibility. I do see that air ticketing, the customer inducement spend kind of went up in the quarter, right? I'm just trying to understand, is that more to do with closer to the end of the quarter where you were looking to also support growth, or if I'm looking at it a bit differently? That's the second question.
Mohit Kabra (Group CFO)
No, probably not in those lines. Like I've always said, a large part of the sales promotion numbers which are put out on the bridge between the GAAP revenue and the adjusted margin that we report is based on last distribution, right? Therefore, probably may not be most kind of representative, particularly if you look at it in a snapshot basis, right? If you look at it only for one quarter or over a longer period of time, it is still more reflective. Therefore, it is much better to look at the overall customer acquisition costs, therefore marketing and sales promotion put together. There, I believe we've kind of come in at about 5.1%. Like I've been saying, we would be fine anywhere being closer to the 5% range. We have generally been kind of below the 5% mark.
This quarter being an exceptional one in terms of what has played out in May and June, we have been slightly higher. It has also got to the fact that it's also linked into our adjusted margin, also kind of blended basis coming in very strong compared to the earlier quarters and years. Therefore, to that extent, it comes in with an improvement in the blend of business and in the improvement in the blended adjusted margin. It is a good expense to incur. This is largely going in tandem with that, largely in line with how we wanted to play out from a longer-term perspective. Yes, tactically, we'll kind of keep revisiting the overall customer acquisition expense, particularly the longer-term impacting brand marketing spends, based on any specific one-off macro situations that may play out for certain weeks or months.
Vijit Jain (Director and Lead Analyst in Internet)
Got it. You know, ordinarily, when I look at your monthly spread you've given, thank you for providing that additional color in the filing, and also your commentaries around where growth was, you mentioned how international did very well and kind of offset some of the domestic leisure travel plane. Now, when I look at the hotel business, for example, and I see that the nights booked is pretty healthy. You've said that international has done well, but the realizations or the GBV bookings on the hotel side are lower versus the nights booked. I'm just trying to understand, ordinarily, I would have thought international higher should mean in terms of tickets or nights would mean GBV would also see that upward pressure. I'm just trying to understand that.
Related to it, I suppose, with both the May and June events, wouldn't international outbound have seen more pressure than the domestic leisure? Just, yeah, sorry.
Mohit Kabra (Group CFO)
Great questions, both Vijit. Actually, the softening of the gross booking growth % that you see largely comes in because of packages not doing well. Like I had called out, if there are two segments which didn't do well, it was domestic air and domestic holiday packages. Holiday packages, as you know, from a gross booking point of view, are much higher. The average ASP for a holiday package is much higher than a hotel booking. Therefore, you see that impact playing out on the gross booking level. If you really look at it at the revenue or the adjusted margin level, the growth was much stronger because the overall room night growth has remained reasonably stronger. This is largely the impact of holiday packages going down in the mix, nothing else.
Secondly, on the other question, on outbound, yes, there has been pressure and there have been also issues around, say, for instance, certain air spaces being geographically closed at certain points in time. Overall, sentiment on international, we somehow seemed that that wasn't as weak as the overall sentiment on the domestic side. We have seen more muted growth on domestic. International, we were able to still see a good growth. Like I said, I think it is also a little specific to us as a company because while the overall growth on, like, say, for instance, on the international side, like I called out, was about 21%, whereas the market grew only about 7%. It is also specifically because we have been historically also over the last few years driving international very strong. That continues to be a thematic.
We were able to continue to do that even during this reported quarter.
Vijit Jain (Director and Lead Analyst in Internet)
Got it. Understood. I think those were my questions. Thanks once again. Sorry, if I can, one last question though.
Vipul Garg (Head of Investor Relations)
Vijit, just to be in interest of time, I would request you to come back in the queue.
Vijit Jain (Director and Lead Analyst in Internet)
Sure, sure.
Vipul Garg (Head of Investor Relations)
Thank you.
Mohit Kabra (Group CFO)
All right. Sorry, Vijit. We'll take it offline.
Vipul Garg (Head of Investor Relations)
The next question is from the line of Manik Taneja of Axis Capital. Manik, you may please ask your question now.
Manik Taneja (Executive Director in IT Services)
Hi, thank you for the opportunity. I hope I'm audible. While my question related to the customer acquisition cost has been answered, just a couple of bookkeeping questions with regards to the ESOP charge that we saw this current quarter and also on the ETR. If you could help us understand as to how should we be thinking about both these elements on a go-forward basis.
Mohit Kabra (Group CFO)
Yeah, on ESOP costs, like we've been saying, our endeavor is to kind of keep this within the $35 to $40 million bracket for the full fiscal year. Now, depending upon how the exercises pan out, how the grants are made, there could be tweaks between quarters. You would have seen that in the previous years as well. Nothing much more to read out on the ESOP cost per se. On the ETR side, like we have said, we have already recognized the deferred tax asset. Therefore, there is full reversal of that, which is happening in line with the profitability for the respective quarters. Going forward in another two years' time, I think we'll get to full taxability as well.
Manik Taneja (Executive Director in IT Services)
Mohit, just with regards to, while we did see some impact through May and June, and you're saying you're seeing some recovery on a day-to-day basis, if you were to hazard a guess between our hotels and packages business and the air business, which of the two segments do you essentially expect to recover faster and get back to the normal trajectory in the foreseeing future?
Mohit Kabra (Group CFO)
If I just look back in the quarter that has already been reported, we saw a bit of disruption in May and June. Hotels have done much better, as you can see from the reported numbers. I think the trending is there to kind of look at.
Rajesh Magow (Group CEO)
Also, maybe if I can just add one more point on top of that. Manik, maybe the right way to think about would be mostly the use case, customer use case, rather than just looking at, you know, a particular travel service, whether it is air booking or hotel or any of the other mode of transport. The impacted segment was only leisure. It was supposed to be a, you know, sort of a high season quarter. This running quarter is not supposed to be a high season quarter because there are no summer vacations, there are no school holidays, and no college holidays, etc. Leisure, if you keep the seasonality in mind, all of the boards should start rising. We've seen that rising already because relatively in any case, there's a non-leisure travel use case that happens in this quarter.
Mohit Kabra (Group CFO)
Also, Manik, usually, I mean, historically, we have seen that from a product point of view, if you really look at it, compared to standalone bookings, package bookings generally take a little longer to kind of come back post any macro disruption. I won't be surprised if, by the next seasonality, peak seasonality of Q3, packages would come back strongly as well.
Manik Taneja (Executive Director in IT Services)
Sure. Thank you for the response.
Vipul Garg (Head of Investor Relations)
Thanks, Manik. The next question is from the line of Aditya Chandrasekar of UBS. Aditya, you may please ask your question now.
Aditya Chandrasekar (Associate Director)
Yeah, hi, team. Thanks for the opportunity. Just a quick question related to what was already asked on competition. I think you clearly stated that in air, in fact, you've gained a little bit of market share. Can you just give some color on hotels and especially buses as well? Because Ixigo has been stating that AbhiBus has also gained market share within the online segment itself. I just wanted to understand how we should kind of think about our market share in both hotels as well as buses. Thank you.
Rajesh Magow (Group CEO)
Maybe take the bus segment first, Aditya. If you really look at the growth numbers that we've reported out on top of the scale and the size that we already have, I think it's a testament of the fact that, you know, even at a very high base, we've been able to deliver a very robust growth rate, which effectively means that, you know, we are getting disproportionate or continue to get disproportionate share of the market. Whether it is Abhi Bus or any other player for that matter, because of the base, there's always a possibility that they may be gaining share. That share also comes from, you know, essentially two sides. One is, you know, the offline market to online will continue to keep growing. The second one is that, you know, there's a long tail of players.
If you end up sort of taking an aggressive approach, sometimes maybe with aggressive promotions, etc., you would definitely tend to, on a low base, get share, right? I think we need to just look at this whole comparison, keeping all these factors in mind, and try to look at it more like-to-like more than, and then maybe sort of, you know, conclude one way or the other.
Aditya Chandrasekar (Associate Director)
On the hotel side, what we say is that.
Mohit Kabra (Group CFO)
Yeah, on the hotel side, we've reported hotels also. As we have said in the past also, Aditya, I think it'll be fair to say that the Indian OTA segment, there is no real other OTA player which has any, and then, on the plot of the public and the numbers are out there, any meaningful. We continue to, on a high base, continue to keep growing. Our brand for hotel booking also continues to become stronger and stronger by the quarter. Therefore, the competition there for us is international players, whether it is Booking or Agoda.
Now, given that they have more global, sort of business model or a playbook versus a very India and a regional playbook, if I may call it, because we've also gone to the Middle East now, our strategy to drive hotel business and consumer behavior is on the, sort of promise to the consumer is very, very different than any of the global players will do. Also, the investments on the ground on the supply side are very, very different. We have built our moat, all aspects of the business, very focused on Indian travelers and Indian market and now Middle East, rather than any of the other global players who would be competing in 20 other markets and having a global sort of platform. They would definitely have more strength on bringing customers from the foreign countries to India, which is like inbound travel.
Also, given our GDPR compliance platform now, at least for people of Indian origin, we've started to get traction because that was going to be our first strategic initiative to attract inbound travel into India. As far as domestic and international are concerned, we continue to, of course, theoretically compete, but continue to lead the show.
Manish Adukia (Equity Research Analyst)
Thank you and all the best.
Rajesh Magow (Group CEO)
Thanks.
Vipul Garg (Head of Investor Relations)
Thanks, Aditya. In the interest of time, now we will take the last question from Gaurav Rateria of Morgan Stanley. Gaurav, you may please ask your question now.
Gaurav Rateria (Executive Director)
Hi, congrats on great execution. I have two questions, one for Rajesh and one for Mohit. For Rajesh, I just want to check on how do you see AI-led search and booking for travel as an opportunity or as a threat? Can you highlight some initiatives which future-proof our business or even kind of makes it a standout winner, given competition may not have the depth and the bandwidth to invest in such kind of offering? The question for Mohit is that if you look at the last three years as a trend on 1Q, the advertisement and promotion spend as a % of gross booking has gone up from 1Q24 to 1Q25 and 1Q25 to 1Q26. I'm just trying to correlate this to two or three factors. One is competition, which has largely been stable to benign.
Second is share of repeat business, which I understand has been going up. Third could be the incremental investments in the new offering. Could you try and help me understand what could be the factor that is driving these up on a three-year basis? Thank you.
Rajesh Magow (Group CEO)
Yeah, sure, Gaurav. Let me take that AI question. I was smiling because I don't know how, but I anticipated that you're going to ask the AI question. A compliment to you on that. Gaurav, like you rightly called out, right? One, of course, you know, and we've also called out for the last several quarters now that our strategy on product and technology has always been revolving around, on one side, deep consumer insights to cutting-edge technology, whichever might be the new technology that might be emerging. With that same theme, we've seen a lot of promise coming out of GenAI, and we've been investing significantly behind that, and we will continue to keep investing. We see it more as sort of leading the innovation through GenAI rather than overtly getting paranoid about potential disruption.
Now, theoretically, potential disruption can happen, but why would we not be in position to, given that we have massive data, you know, over so many years? Now we have 83 million consumers who have transacted with us live to date on all our brands. We have a huge amount of traffic coming every day on our platform, and transaction-related data, many other input signals from supply side, etc., all of that repository is only going to add more strength to our initiatives for us to be able to just come up with cutting-edge innovation on enhancing the consumer experience, which is one of the main areas where we are sort of investing behind leveraging GenAI.
The other area is, of course, the productivity, which is also a consistent theme across the board where people are looking at and seeing wherever there are productivity gain opportunities, we should leverage the technology. We are, you know, pretty much every, and I highlighted one, sort of one-odd or two-odd features that we released even last quarter. Pretty much every quarter, there will be something or the other coming out, sort of following this strategy. This is an evolving space, and we will continue to keep learning because here the models are changing literally by weeks. The space is so evolving, and we'll also learn along the way.
We will continue to keep investing behind it, and we do believe we are in a better position given all the strengths that I called out for us to be able to just, you know, sort of directionally, strategically innovate better for consumers more than getting sort of worried about the potential disruption. That's really our take on GenAI. Mohit, do you want to take the second question?
Mohit Kabra (Group CFO)
Yeah, surely. Hi, Gaurav. This is a good question again, you know, but what happens is, you know, over the years, if you also look at it, our mix of the business has been changing a bit as well, you know, with more and more kind of, you know, increasing share coming in from non-domestic air kind of, you know, businesses. Therefore, I would just say that apart from looking at, you know, the customer acquisition cost as a percentage of gross bookings, where you could see slight kind of, you know, changes coming in in line with the change in the blended margin. If you look at it as a percentage of, you know, the adjusted margin that we report, it has largely remained at about 47% across the last, you know, three years in Q1.
I would just kind of, you know, also urge you to look at, you know, this as a percentage of the overall adjusted margin because based on, you know, the mix improvements, our ability to kind of, you know, spend a little more will be there.
Gaurav Rateria (Executive Director)
Thank you. Very helpful, and all the best for the future.
Rajesh Magow (Group CEO)
Thank you.
Vipul Garg (Head of Investor Relations)
Thank you, Gaurav. This was our last question. Now over to you, Rajesh, for closing remarks.
Rajesh Magow (Group CEO)
Thank you. Thank you. Thank you, everyone, for your patience and for your time to listen in to us, and for all the good questions that you had. See you in the next quarter. Thank you.
Vipul Garg (Head of Investor Relations)
Thank you, everyone. This brings us to the end of the call. You may please disconnect.