MakeMyTrip - Q2 2025

Transcript

Vipul Garg (VP of Investor Relations)

Hello, everyone. I'm Vipul Garg, Vice President, Investor Relations at MakeMyTrip Limited, and welcome to our Fiscal 2025 Second Quarter Earnings Webinar. Today's event will be hosted by the company's leadership team, comprising Rajesh Magow, 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, and 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 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 and forward-looking statements section of the company's annual report on Form 20-F, filed with the SEC on July second, 2024. Copies of these filings are available from the SEC or from the company's investor relations department. I would like to now turn the call over to Rajesh. Over to you, Rajesh.

Rajesh Magow (Co-Founder and Group CEO)

Thank you, Vipul. Welcome, everyone, to our Second Quarter Call for Fiscal 2025. We are pleased to report another quarter of strong business results with robust growth in the top line and bottom line. Gross booking value for the quarter stood at $2.3 billion, registering strong year-on-year growth of 24.3% in constant currency terms. Adjusted operating profit at $37.5 million registered a year-on-year growth of about 33%.

We managed to deliver this strong performance across all our business segments, leveraging our brand and distribution strength, and despite the short-term headwinds due to unusual heavy rainfall that impacted demand momentum a bit in an otherwise traditionally low season quarter for leisure travel. We've been consistently outpacing the industry's growth on the back of continued supply-side expansion, catering to a variety of travel needs of the Indian consumer, implementing several AI and data science-driven product features, leading to personalized recommendations to improve customer experience and high proportion of repeat customers.

On the macroeconomic front, India's strong growth trajectory remains a compelling narrative on the back of advancements across sectors. As per IMF estimates, India is expected to become the world's third-largest economy by 2027 after the U.S. and China. The economic rise is fueling the growing consumer class, leading to higher discretionary spending. Travel and tourism industry is one of the biggest beneficiaries of this increased discretionary spending. Furthermore, our younger generation, aged between 25 and 34, are increasingly willing to travel and explore more.

A fifth of the population will age into that group soon, helping the travel segment to grow further. As per Bernstein estimates, the annual spending on foreign travel by Indians will nearly triple to $89 billion in three years. The number of valid Indian passports has also nearly doubled from 52 million a decade ago to 93 million this year. On the other hand, India's digital economy has been tagged as one of the fastest-growing in the world, and the government's path-breaking Digital India initiatives are playing a critical role in increasing internet and e-commerce penetration.

We've been capitalizing on some of these macro trends by constantly improving our product and value proposition for the international outbound travel market. We enhanced the business class funnel experience for international flights and have revamped the premium economy class booking flow as well. The new funnel features rich features, rich visuals, and detailed amenities, delivering a premium and seamless booking experience that aligns perfectly with the high-end services offered. Similarly, for international hotels, we are enhancing supply and offering options that are relevant to Indian consumers.

On the customer journey flow side, we have been dialing our features that cater to the unique needs and preferences of Indian consumers. For example, culinary preferences, family-friendly services, et cetera, thus offering a more personalized experience. As a result, our international air ticketing business and international hotel business continue to witness faster growth than the industry. International air ticketing business posted year-on-year revenue growth of over 39% in constant currency terms and now accounts for 38% of the adjusted margin in the air ticketing business, compared to 33% in the same quarter last year.

Our international hotels outbound business revenue grew 62% year-on-year in constant currency terms and now accounts for about 17% of the adjusted margins from this segment, compared to 12.5% in the same quarter last year. We are not only growing in our traditional markets like Thailand, Singapore, the Middle East, and Malaysia, but also in new destinations like Georgia, Vietnam, Hong Kong, Azerbaijan, Kazakhstan, et cetera. During the quarter, we sold 32,000 plus international hotels across 2,384 cities in 165 countries, which is the highest ever spread achieved till now.

Total air ticketing business witnessed strong growth. Adjusted margin grew by 21.1% year-on-year in constant currency, despite persistent supply issues in the domestic market. Our accommodation business overall, which includes hotels, homestays, and packages, continues to grow at a robust pace as well. We recorded 21.4% year-on-year growth in the adjusted margin on a constant currency basis. As mentioned earlier, the prolonged monsoon, along with a significant increase in heavy rainfall, had impacted demand during parts of this quarter.

However, our combined strategy of supply side expansion and sharper targeting of a variety of customer segments with multiple distribution channels has helped us grow in the twenties. In our holiday packages business, growth was led by emerging destinations like Australia, Japan, and Egypt. During the quarter, we partnered with Legoland Malaysia Resort to offer holiday packages with a unique blend of Lego adventures and rich Malaysian cultural experiences. In our bus business, we continue to see broad-based growth across all regions in the country.

On the product side, our localization push continues with launch of Telugu funnel on Android and extending the Tamil funnel on the mobile web. Bus ticketing in some of the international markets where we are present continues to grow faster, with the contribution of revenue from international markets now reaching 12% of the total bus revenue, compared to 10% in the same quarter last year. Our investments in other transport services, such as intercity cabs and trains, helped us to deliver 17.6% quarter-on-quarter growth in constant currency in a seasonally weaker leisure travel demand quarter.

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 59,000 plus, and for Quest2Travel, the active customer count has reached 462 large corporates. We continue to enhance our product capabilities. We completed over 60 integrations with travel and expense management solution partners like MyClaims, Darwinbox, Zoho, and FastCollab. We also went live with complete self-serve HRMS integrations, connecting more than 200 organizations through the HRMS connector to enable better management of travel expenses.

On Q2T, we introduced the official Q2T mobile application, providing greater accessibility and convenience for corporate clients. Overall, we now have a lifetime transacted user base of 77 million customers across all our three brands. We continue to deepen engagement with our existing customers and add new customers to the platform every quarter. To help consumers make all their bookings on a single platform, we have launched a considerably improved connected trips experience, completely built in-house on the strength of our data science capability, enabling consumers to book other products and services needed for the trip. It is helping us drive cross-sell and upsell other services.

As part of our retention and loyalty strategy, we revamped our MMT Black program on MakeMyTrip and goTribe loyalty program for our Goibibo customers last quarter, with more relevant inclusions like meal and room upgrades, airport pickup, F&B offers, et cetera, for our customers. This quarter, we launched our new co-branded credit card in partnership with ICICI Bank, which is one of the leading private banks in the country. With its impressive value proposition, this should help us drive both new customer acquisition as well as repeat transactions on our platforms.

Before handing over to Mohit, I want to provide an update on our initiatives regarding the deployment and adoption of GenAI, a core part of our innovation strategy. Last quarter, we introduced our GenAI chatbot, Myra, on our international flights funnel. The initial response has been encouraging, with Myra successfully handling queries on topics such as date changes, flight details, and ancillaries. This quarter, we've launched Myra to enhance the hotel and homestay booking process by offering real-time assistance.

Leveraging Generative AI and years of proprietary data, including customer reviews, the chatbot delivers accurate and personalized responses to even the most detailed inquiries. We plan to further expand its capabilities to handle pricing and availability queries, as well as provide personalized hotel recommendations. This aligns with our strategy of using AI-driven solutions to boost customer satisfaction and drive growth.

Similarly, our AI deployment initiatives have been very successful in addressing pre-journey queries on the redBus app via the GenAI-based bot, which has not only resulted in an improvement in customer satisfaction scores, but also productivity gains, with an almost 45% decrease in the involvement of customer service agents. With this, let me hand over the call to Mohit for the financial highlights of the quarter. Thank you.

Mohit Kabra (Group CFO)

Thanks, Rajesh, and hello, everyone. We have achieved another quarter of growth in the twenties, showcasing strong performance across all business segments. Gross bookings for the quarter came in at $2.3 billion, compared to $1.8 billion in the same quarter last year, reflecting a 24.3% year-on-year growth in constant currency. Revenue growth, as per GAAP, came in stronger at 26.5% year-on-year in constant currency. This performance is particularly noteworthy given the ongoing supply challenges in the domestic air market and the impact of unusually high rainfall during this monsoon season in India.

Moving on to our segment results. Our air ticketing gross bookings for the quarter came in at $1.4 billion, witnessing a year-on-year growth of 20.4% in constant currency. Adjusted margin stood at $96 million, registering a growth of 21.1% in constant currency. We continue to expand both our domestic and international outbound business. While Rajesh has updated about the continued outperformance in the international ticketing side, let me share some more color on the domestic air ticketing business.

In the domestic air ticketing market, while supply was broadly at similar levels in the last quarter, the market growth picked up marginally to about 6% year-on-year on flown basis. We continue to grow faster than the market, and our market share stands strong at 30% plus in the domestic flight ticketing business. Gross bookings for our quarter in the hotels and packages segment came in at about $517.2 million, registering a growth of 21.2% year-on-year on constant currency basis.

Adjusted margin growth was 21.4% year-on-year in constant currency terms, resulting in adjusted margin of $90.7 million during the quarter. While the last couple of years have seen higher than inflationary increases in room rates, this year we are seeing that the room rates have started stabilizing and price increases have moderated. We continue to drive supply expansion by going deeper and wider in the Indian market and growing directly contracted hotels in key international markets which are of interest to Indian travelers traveling overseas. As a result, we now offer over 84,000 domestic accommodation across 2,100 cities through the length and breadth of the country.

We are scaling our direct contracting for international hotels in line with demand trends, and now have directly contracted hotel supplies in over 40 international cities, up from about 21 cities last year. In our bus ticketing business, gross bookings for the quarter stood at $263 million, growing at 21.5% year-on-year in constant currency terms. Adjusted margin stood at $27.1 million, registering a year-on-year growth of over 25.6% in constant currency terms. The take rates in our business continue to remain stable and in line across all our business segments, that is, air ticketing, hotels and packages, as well as bus ticketing.

Similarly, our customer acquisition cost, that is marketing and sales promotion expenses, remain efficient and in line with the same quarter last year at 4.6% of gross bookings. This is slightly lower than the 4.8% in the previous quarter, linked to change in seasonality. In addition to driving strong bookings and revenue growth, we remain focused on building operating cost efficiencies and driving operating leverage in our fixed costs, including personnel expenses and general or administrative selling expenses.

As Rajesh has already highlighted, the significant deployment of GenAI in some of these areas. Accordingly, our adjusted operating profit for the quarter came in at $37.5 million, registering a year-on-year growth of 32.9%. Our cash generation continues to be robust, and cash and cash equivalents at the end of the quarter have now gone beyond the $700 million mark. Besides maintaining a healthy war chest, we will continue to leverage this strong cash position to invest in potential organic and inorganic opportunities.

We had called out our intent to pursue opportunistic share repurchase or buyback programs at the start of this year. While we could not manage any meaningful repurchases during the reported quarter, we remain committed to the program. With that, I would like to turn the call back to Vipul for Q&A.

Vipul Garg (VP of Investor Relations)

Thanks, Mohit. Any participant who wants to ask a question can click on the Raise Hand button on their screen, and we will take the questions one by one. I already have a couple of questions, so the first question is from the line of Sachin Salgaonkar of Bank of America. Sachin, you may please unmute and ask your question now.

Sachin Salgaonkar (Managing Director)

Thanks, Vipul. Congrats on a good set of numbers. I have three questions. First question, wanted to understand a bit more on hotel booking growth. It did appear to be slightly slower than previous quarters, but I did also hear the comments from Rajesh early on about unexpected monsoon. Is this a one-off we should look, and then the growth should normalize going ahead, or anything else which has started to impact the growth out here?

Rajesh Magow (Co-Founder and Group CEO)

Yeah. Hi, Sachin, maybe I can take that. Yes, I guess at the way, you know, I was alluding to, and if you break the quarter, we actually saw July and August growth were normal and some temporary headwinds. You know, thanks to the excessive monsoon in certain areas that we saw, you know, sort of causing disruption and hurting the demand momentum a bit. To the best of our understanding, it appears to be temporary because we haven't really seen this continuing. We have seen this bouncing back as well.

And also as you go deeper, you know, as we see some of the specific destinations, for example, you know, and on an overall quarter basis, if you compare with the, you know, earlier year, same quarter, we also saw, let's say for example, Himachal Pradesh as a territory, or all the mountains in general, were very badly impacted last year because of floods and this quarter, same, this quarter, this year, we saw a robust recovery coming back into those destinations as well. So, so if you look at more detailed data, it did not point towards, you know, sort of, that any kind of signal, you know, continued slowdown. It appeared to be temporary in nature, for sure.

Sachin Salgaonkar (Managing Director)

Thanks, Rajesh. Pretty clear. Just a quick follow-up out here. Multiple companies across different sub-sectors are talking about consumption slowdown, not only just tier two, tier three cities, but also impacting consumers in urban areas. Any sense in terms of, you know, how you guys are looking, especially as we go into holiday sales season booking? Any signs of consumption slowdown you are seeing?

Rajesh Magow (Co-Founder and Group CEO)

You know, so early days in this quarter, given that it's just the beginning of the quarter. But so far in the, you know, whatever number of days that have passed in October, we haven't really seen that, at least in our category. And so and it could be a function of, just a sort of, you know, September, maybe a, you know, temporary slowdown backlog catching up in October. And there were some specific period where people were not necessarily traveling, et cetera, and sometimes, you know, that period, the other category consumption also takes a hit.

I think we will have to wait and watch for this quarter, just because it has. It happens to be, you know, seasonally high quarter for at least the leisure travel. But the way October has started seems like it'll be a good season. But like I said, you know, we will have to. It's early days. We will have to just wait for, you know, some more time getting into the quarter more till, you know, say end of October, middle of October or middle of November rather for us to be able to, you know, jump to any kind of conclusion. But the early signs don't look anywhere close to slowing down.

Sachin Salgaonkar (Managing Director)

Thanks. Second question: as you scale your GenAI Myra, what kind of revenue benefits and cost savings we should see? I hear your comment of 45% decrease in customer service agents.

Rajesh Magow (Co-Founder and Group CEO)

Yeah.

Sachin Salgaonkar (Managing Director)

Any sense in terms of positive impact on numbers?

Rajesh Magow (Co-Founder and Group CEO)

Again, early days, Sachin, I would say, but there are two areas broadly that we are, you know, sort of working on deploying this technology. One, as you rightly pointed out, and as we called out as well, is actually the areas where we will see more productivity gains, more efficiency gains. And one of the prime areas there is after-sale service. You know, all our contact center, you know, sort of customer service use cases, we are deploying one after another. We are just mapping the entire journey, and we're deploying, and picking up areas and deploying this technology, which is definitely giving us efficiency gains.

But for it to sort of, you know, reflect completely on P&L, I think it will be a quarter or two down the line, and we will see the full impact of that. And that is one area, just more on the cost efficiency or productivity gain side. The other more important area, where there is, hopefully, potentially there will be a larger impact on the, you know, better conversion on the back or better experience is going to be more on the, you know, booking customer journey of flows, where, you know, this, whether, you know, on the, like, for example, one or two, or you know, front-end use cases that we've gone live with, it's addressing all the open queries, but also helping doing the trip planning.

As we sort of continue to enhance the capabilities of this interface, we believe that, you know, there will be a, you know, better top of the funnel, like absolutely top of the funnel experience getting enhanced, and therefore we are getting more and more traffic and hopefully helping the conversion to get better. But again, for that also, it'll be for the impact to sort of reflect on numbers in any meaningful way, because it's going to be a journey. Because as you solve the problems, you get more insights and you keep refining the product, will be a couple of quarters down the line.

So we'll see how it goes, but we are very, actually encouraged with the early results that we see in some of the metrics that we are measuring in terms of either the time spent on this kind of an interface more and more, or the accuracy of the results that the interface is throwing, or on the cost side, you know, part of the journey, as we called out in case of redBus, that we've seen, you know, clear sort of efficiency gains on the reduction of some headcount already there, as well. So early results are very encouraging, but I would say for it to show any kind of material impact on the numbers overall, it'll take a couple of quarters.

Sachin Salgaonkar (Managing Director)

Thank you, Rajesh. And my last question is on this IndiGo direct push. Clearly, this quarter, your numbers, both on booking and take rate, were not impacted, but some of your peers appear to be impacted. Any general sense in how we should look at the impact of that on MakeMyTrip, if any?

Rajesh Magow (Co-Founder and Group CEO)

You know, I would actually say, Sachin, that, you know, it again revolves around the fact that, you know, how consistently you are, you continue to keep working on improving the customer experience, not necessarily on the booking floor, but also, you know, the after-sales flow, and keep adding more, new features, differentiated features. So our endeavor has been, just to keep working on that relentlessly and keep coming up with.

You know, we've recently come up with many industry-first features, which is, you know, on the back of the rich data that we have, and, you know, building data science models on top of it, whether it is free cancellation, or date change, or fare lock or, you know, even on the other categories like trip guarantee, and so on. And, because of, you know, all this, these new features and overall experience, you know, focus from our side, we believe that we will continue to keep getting, you know, our sort of customers or loyal customers back.

I mean, if you see our market share, overall, despite, you know, whatever might be happening in the market, we would have only marginally improved, although, you know, just maybe in decimal points. But, you know, on an already, pretty high share, of the domestic air market, we would have only improved. So, I, you know, I guess we will continue to keep our focus on that front, and, and so far it has worked out quite well.

Sachin Salgaonkar (Managing Director)

Thank you. Very clear, and all the best for future.

Rajesh Magow (Co-Founder and Group CEO)

Thank you.

Vipul Garg (VP of Investor Relations)

Thank you, Sachin. The next question is from the line of Manish Adukia of Goldman Sachs. Manish, you may unmute your line and please ask the question.

Manish Adukia (Equity Research Analyst)

Yeah. Thanks, Vipul, and hi, good evening, team. Thank you so much for taking my question. So first question is actually just a follow-up on the previous question, right? About this whole airline direct thing. So Ajay, I mean, have you seen this trend also play out in the past with, let's say, either IndiGo or other airlines? And historically, have these been, like, short term in nature or, you know, have you seen them persist, and if so, you know, what have been the offsetting levers?

I appreciate the response you gave to the previous question, but just trying to understand it from an economic standpoint. Does it make sense for a low-cost carrier to drive traffic directly on their website, given if the traffic comes through you, you bear part of the cost, payment gateway, after-sales cost of service? So just trying to make sense of the economics of direct push by low-cost carriers versus that getting booked through you, and like-

Rajesh Magow (Co-Founder and Group CEO)

Sure.

Manish Adukia (Equity Research Analyst)

any past precedents there.

Rajesh Magow (Co-Founder and Group CEO)

Yeah. No, no, happy to give more color on this, Manish. I would say actually two aspects, and I'll come to the specific thing that you mentioned, the economics part of it. But before that, I think what is also important to sort of keep in mind is that from a consumer point of view, typically, you know, even if there are relatively speaking, fewer options, and now the same consumer would be traveling domestically, you know, and also looking to travel internationally, would always look to you know, explore more options, right? You know, so the selection before you end up sort of making the choice.

So I think we should always keep that thing in mind, and from that perspective, there will always be exploration on the platforms to look for more options before you end up making your choice. That's point number one, and that's always long term, that is, and that will be, I would say, across categories, not necessarily in a particular category or in a particular product, and then coming to economics, you know, the way the current model and the overall sort of, you know, market dynamics in terms of, you know, let's say, cost of customer acquisition in the online world today, in India, where the search engine has, you know, the lion's share of the total market, it's obviously very competitive.

It's not necessarily, you know, cheaper or less expensive for anyone to be able to sort of acquire and compete in the marketplace and acquire traffic. So from that point of view, there will always be a challenge. You know, and given that, you know, not only us, but all the other digital players across categories over the years have built that, you know, those capabilities quite deep for them to be able to optimize and sharply target the customers, et cetera, whereby, thereby optimizing the cost of customer acquisition.

Not only that, and also the brand built over a period of time also sort of helps. And then the other, you know, cost, which is an important cost attached to this, is also cost of servicing. And so, you know, the post-sales cost in the aviation world is non-trivial, to my mind, because every now and then, there is something or the other that happens, more from a macro disruption standpoint, you know, whether it is weather-related or it is, you know, something else going on, in some part of the world.

Every now and then, there will be disruptions, as we have seen. And in that situation, you know, you have to have those capabilities for you to be able to service the customers, and that comes with the cost. Over the years, because of our volume, because of our, you know, effort to sort of streamline the process, et cetera, you know, we've come a long way in terms of just the maturity of all those processes and all of that.

Now, having said all of this, you know, I, we also believe that, you know, if you have to look at the full, you know, so out of the 100%, and it's not that there is one channel who would be able to meet all the needs, given that this is a massive growing market. There is so much of supply that is coming. The future outlook is so robust for travel and tourism. So if the market is going to expand, there is room for all channels to grow You know, there is definitely room for us to grow. There may be some room for direct to grow if the economics work out for any of the, you know, direct channels.

And therefore, you know, we don't necessarily sort of see it, you know, like in an overtly obsessed manner. Rather focus on just, you know, delivering value to the consumer, delivering value to the partners, work closely with the partners, and see how can we sort of maybe take the lion's share of, you know, whatever, you know, number of consumers that are out there in the market, and the rest will fall in place. I guess that's really has been our approach, you know, in you know, over the years, and it has worked so far, and we would like to continue it that way.

Manish Adukia (Equity Research Analyst)

Thank you, Rajesh. Really appreciate that, detailed insight. My second question may be directed to Mohit. I mean, Mohit, you mentioned north of $700 million of cash now maybe generating more than $150 million of annual cash EBITDA, and you talked about opportunistic buyback and maybe some organic and inorganic initiatives.

So, I mean, one, trying to understand this $60 million cap that you have on buyback program, like, how are you thinking about that? Is that, like, cast in stone? And you know, what will make that number of $60 million move higher? And if that number right now, that $60 million, does that mean the remaining $100 million of surplus cash that you're generating annually, you are at this point in time looking at deploying that kind of capital towards, you know, inorganic opportunities? Are these inorganic opportunities likely to be largely in international markets, or could there also be domestic opportunities? Thank you.

Mohit Kabra (Group CFO)

Let me begin with the repurchase program, Manish, and, you know, probably wanted to just clarify that the current kind of, you know, plan that we have in place already, it was a plan that was started with about $150 million and still has about $135 million or so, available for deployment in the repurchase program, so it's much larger than $60 million. And secondly, like we had called out, this is an existing plan, and since we haven't really utilized the plan fully as yet. In fact, we've kind of just about, you know, dipped about 10% of it has been utilized out of the $150 million that we had carved out initially.

And therefore, we haven't kind of made any change to the overall plan numbers in terms of deployment that we can do. But once we kind of fully or get closer to fully utilizing the plan, I'm sure we'll be happy to kind of, you know, add more, you know, kind of amounts to the larger plan program. So this is more gonna be a continued effort, and I don't think we'll get constrained by the size of the plan that is out there currently.

Manish Adukia (Equity Research Analyst)

Great. Thank you. No, I was just referring to the $60 million number, I think, which is the annual number maximum for share buyback. I thought I saw that in your 6-K.

Mohit Kabra (Group CFO)

No.

Manish Adukia (Equity Research Analyst)

No. Okay. Okay, sure. Maybe. I'll take a look again.

Mohit Kabra (Group CFO)

No, yeah, yeah. We don't necessarily kind of need to restrict anything to a, you know, an annual number. I think, our targeting was that, you know, we haven't really been able to deploy significantly, so let's at least kind of, you know, try and ramp up at least to that extent to begin with.

Manish Adukia (Equity Research Analyst)

Understood. And just on the organic, or inorganic opportunities, where do you see them, if at all, in international or domestic markets?

Mohit Kabra (Group CFO)

So actually, both. I mean, you know, as you know, our focus kind of remains on the domestic Indian customer, you know, whether traveling for domestic purposes or overseas. And therefore, we do believe that a large part of our organic or inorganic investments will continue to happen in the domestic space, you know, our target, you know, from a point of view of servicing the Indian customer. But like we have called out, we've also kind of made some moves. We have set up an OTA operation in UAE. We have also kind of set up participating operations in multiple countries in Southeast Asia, and therefore, these are areas where we'll kind of keep expanding.

Also, if you really look at it, there are, there are new customer segments, whether on the, you know, corporate side or on the, on the small travel agent side, you know, the B2B kind of segments that we have kind of gotten into. Right now, like we have said, we've only gotten into it from a domestic kind of, you know, customer targeting point of view, but there is always opportunity for us to kind of, you know, go into international markets also, you know, on these customer bases. So all of these would remain as potential opportunities for us to look at, in terms of future investments.

Manish Adukia (Equity Research Analyst)

Thank you, Mohit. Thank you for taking my questions. All the best.

Mohit Kabra (Group CFO)

Thank you so much.

Rajesh Magow (Co-Founder and Group CEO)

Thank you.

Vipul Garg (VP of Investor Relations)

Thank you, Manish. The next question is from the line of Gaurav Rateria of Morgan Stanley. Gaurav, you may please unmute your line and ask your question.

Gaurav Rateria (Executive Director)

Hi, thanks for taking my question, and congratulations on a very solid performance amidst this industry backdrop. My first question is on getting some sense on repeat, you know, behavior versus a new customer driving how much of growth, and to that extent, is it possible to bifurcate the total advertising and promotion spend between the new customers and the existing repeat customers?

Mohit Kabra (Group CFO)

I could take that, Gaurav. You know, like we have said, we've been trending at about 70% of our transactions, you know, coming from existing customers. So that's the, that is the key metric that we kind of keep calling out because we believe that's, that's kind of very indicative of, you know, how well are we able to kind of, you know, target our existing customers in terms of, you know, repeat buying behavior. So that continues. That hasn't kind of, you know, really changed, and therefore, the repeat metric in that manner has remained consistent and strong over the years.

In terms of, you know, bifurcation of spends, like I said, you know, see, there are multiple kind of, you know, ways that we kind of trying to target, you know, our customer acquisition. This includes both brand marketing, you know, just to kind of keep going the organic traffic. As you know, we have a very high share of organic traffic coming onto our platforms, and which keeps our overall, you know, customer acquisition costs very efficient. But these are slightly longer-term rewarding kind of programs, because the effect immediately is not necessarily entirely kind of, you know, received in a quarter or two.

These are more for driving continued brand recall and keeping the brand alive in the customer's mindset. Plus, doing a variety of programs, both in terms of tactical, you know, customer acquisition via online platforms or kind of, you know, doing promotions on our own platforms in terms of direct engagement with the customers through our apps. Now, again, here, since we don't necessarily are in a single segment per se, there's a lot of, you know, overlap in terms of, you know, customer buying behavior across the segments.

And therefore, while the customer may not be new to the platform, he might be new in terms of, you know, certain transactions that he might be doing, which might be for the first time on the platform in terms of the services that the customer is availing. So I think we would kind of therefore recommend looking at the overall blended customer acquisition cost as the most appropriate metric, because we've always called out that as far as in the manner that we believe, you know, the best way to look at overall expenses is at a platform level rather than, you know, by segment, whether in terms of business segments or in terms of customer segments.

Rajesh Magow (Co-Founder and Group CEO)

Absolutely.

Gaurav Rateria (Executive Director)

All right. Thank you for the detailed answer. My second question is on trajectory of margins. Last year, if you see, despite seasonality, you were able to hold on to the margins, very stable, consistent throughout the quarters. This year also, first half has seen very consistent margin performance. Should one expect some bit of a seasonality to play out, not just in revenues in second half because of a strong season, but also flow-through effect on the margins, and assume that second half margin could be a tad better than the first half?

Mohit Kabra (Group CFO)

Actually, if you look at it on the margin side, you know, we've been calling out for the last few quarters that we do believe that we are likely to remain in a stable, you know, kind of range, you know, across businesses, you know, across business segments, actually, honestly. While we could see some kind of, you know, impacts coming on a quarter-on-quarter basis.

But broader term speaking, we do believe that these margins will largely remain in range, and therefore, if you look at it, I've called out specifically that across business segments, margins have continued to keep coming in line with our estimates, and we expect that to continue. Luckily, if you look at it from a seasonality point of view, both H1 and H2 have one better seasonality quarter and one slightly lower seasonality quarter, and therefore, I don't really see too much of a change on the margin structure, at least as of today, you know, whether in the second half as well.

Gaurav Rateria (Executive Director)

All right, and last question: Any metric on cross-sell that we can share that helps us to understand your strategy of going after the other segments like, you know, train and all, has helped to acquire, not just acquire customers, but also to cross-sell them, your existing offerings? Thank you.

Mohit Kabra (Group CFO)

So if you look at it, Gaurav, we've started kind of now sharing gross bookings in our other segment, you know, which is largely representing the gross bookings coming in from rail or kind of, you know, cab transactions. And the growth in that kind of, you know, is indicative of how well kind of, you know, those categories are growing. And also the fact that overall repeat, you know, despite the continued increase in terms of overall transacted base of customers, which has kind of kept increasing, now kind of stands at about $77 million.

Despite the continued increase in the transacted customer base, we are still able to manage close to about 70% transactions coming in from our existing increasing base. So I think that kind of goes to suggest that, you know, irrespective of which segment that we are targeting, based on, you know, market dynamics at any given point in time, the repeat behavior or the cross-sell behavior continues to remain strong.

Gaurav Rateria (Executive Director)

Thank you.

Vipul Garg (VP of Investor Relations)

Thanks, Gaurav. The next question is from the line of Aditya Suresh of Macquarie. Aditya, you may please unmute your line and ask the question now.

Aditya Suresh (Head of India Equity Research, Managing Director, and Board Member)

Yeah. Thank you for the opportunity. Can you help unpack the share of international in gross bookings for air and hotels separately?

Mohit Kabra (Group CFO)

The impact of air and hotels in international mix, I mean, we've largely given it for our adjusted margin, Aditya, and that we've been sharing that, you know, if you really look at it, on the mix from international air has now improved to about 38%. When it comes to hotels, the mix now stands at close to about 18%.

Aditya Suresh (Head of India Equity Research, Managing Director, and Board Member)

Okay. And just as a follow-up on this, was on the ancillary services, right? Can you help kind of clarify and contextualize? As you kind of book more international, my understanding is that you will see greater sales of maybe insurance and FX on these things. Can you help us understand the attach rate here, which you all are looking, which you all are seeing, and therefore we can then make some sense on potential growth in ancillary services? Thank you.

Mohit Kabra (Group CFO)

We don't really see any kind of, you know, significant change in terms of attach rates. They kind of continue to be in line with how they have kind of trended in the past. A large part of the increase that you're seeing on the other segments growing much faster comes in from the fact that we now have a lot of kind of, you know, new services being clubbed under the other segment. Like we had called out, as I said earlier, this would largely be comprising of insurance and, say, tech services.

Now we have got car rentals out there, we have got Forex out there. Plus, as we kind of, you know, keep dialing up the non-B2C platforms, all the kind of, you know, continued improvements in the booking of services that we are adding, you know, for our corporate or for our trade partners, those are also helping drive up the, you know, the other segment at a much faster pace. So that's the reason that others is kind of has been growing much faster for us.

Aditya Suresh (Head of India Equity Research, Managing Director, and Board Member)

Thanks, Mohit. Maybe just one final piece that, for the hotel segment in this quarter, it seems like the value per booking has come off, right? And this is despite you seeing more international in the mix. Can you help us understand that?

Mohit Kabra (Group CFO)

I'd actually call that out, that, you know, if you really see, the price increases have moderated. So, you know, and we used to call this out, we have been calling this out for the last quarter or two, that we do believe that we'll kind of get into more stable kind of, you know, price regime in this particular year compared to, say, the last two years. The last two years actually also saw an overall catch-up in terms of prices because, you know, prices hadn't kind of, you know, seen an increase since pre-pandemic, right?

So it was almost like four years of increases coming through in like, you know, two years. Whereas now it's gonna be more moderate, and that is what we're kind of seeing. Prices are largely holding or seeing slight kind of, you know, increase. No significant kind of, you know, hyperinflation in the room prices currently. But the mix, you know, the slight improvement that we kind of continue to see on a year-on-year basis will continue because the mix is improving in favor of international. But within the respective segments, prices aren't really kind of, you know, seeing any significant increase.

Aditya Suresh (Head of India Equity Research, Managing Director, and Board Member)

Thanks, Mohit.

Mohit Kabra (Group CFO)

Thank you.

Vipul Garg (VP of Investor Relations)

Thanks, Aditya. The next question is from the line of Vijit Jain of Citi. Vijit, you may please ask your question now.

Vijit Jain (Director)

Thanks, Vipul. Congratulations on a great set of numbers. My first question is on, you know, the international outbound hotel business. Does this have, you know, lower share of package trips versus your overall, hotels and package business? Because I'm just looking at the, you know, service costs you charge to hotels and packages, and that seems to be a bit more flattish. Just wondering if that's the case here.

Mohit Kabra (Group CFO)

Sure, Vijit, maybe I can take that. Actually, you know, Q2, from a seasonality point of view, is a low season quarter for holiday packages and more so international packages, and therefore, you know, this is more in line with seasonality than anything else.

Vijit Jain (Director)

Absolutely. Okay. But I actually was just looking at the YoY number only in there, and it seems like, you know, your hotel business, obviously, the overall hotels and packages is up about 20%. This number seems to be up maybe only 10-.

Mohit Kabra (Group CFO)

Right

Vijit Jain (Director)

despite international doing well, and I would've thought international would have higher share of packages?

Mohit Kabra (Group CFO)

Vijit, the international that we have called out, I think, is international hotels, not hotels and packages.

Vijit Jain (Director)

I see.

Mohit Kabra (Group CFO)

Yeah.

Vijit Jain (Director)

Okay, okay. Got it. Got it. The second question I had was, you know, so in your mix in hotels, right, sticking to the international rate, to what extent do you have direct bookings versus, you know, agent bookings?

Mohit Kabra (Group CFO)

So, you know, it's generally, if you see for any OTA, you know, you'd kind of have much larger share of, you know, direct contracting when it comes to your home markets. But on the international markets, you tend to have a mix of your own directly contracted inventory, as well as inventory that you're taking from, you know, your partners. We believe, you know, our endeavor has been that as volumes for any particular city, you know, keep increasing, we keep dialing up the direct contracting effort.

In many a cases where the particularly, say, for instance, in the long tail of cities where demand is kind of, you know, much lower, it is often kind of, you know, more rewarding to have affiliated inventory rather than kind of, you know, putting your own resourcing in terms of directly contracted, you know, agreements over there. But we have been scaling that up. Like I've called out, almost we now have directly contracted hotels in over 40 cities, international cities, compared to, say, about 31 cities during last year, and this effort will continue. In terms of percentage of, you know, room nights which come in from directly contracted hotels, this generally tends to hover around the 50-60% mark.

And we believe even in the longer run, irrespective of the number of cities that we kind of dial up, at least a third of the, you know, business will tend to keep coming in from, you know, say, partnered programs rather than necessarily directly contracted programs. So at least in the medium term, say, over the next two to three years, we do believe our endeavor would be to try and see if we can keep it within the 50%-65% range.

Vijit Jain (Director)

All right. Mohit, and-

Rajesh Magow (Co-Founder and Group CEO)

Maybe, Vijit, sorry.

Vijit Jain (Director)

Yeah.

Rajesh Magow (Co-Founder and Group CEO)

Maybe if I can just add one more comment on what Mohit said.

Vijit Jain (Director)

Yeah.

Rajesh Magow (Co-Founder and Group CEO)

You know, 50%-60% is an overall number. But in the cities where we've been, you know, giving huge amount of throughput, historically, and it's only growing, like there's, you know, Southeast Asia, a few examples like Thailand, Malaysia, Singapore, and all, this number goes as high as 75%. So anywhere between 70%-75% business will come from directly contracted hotels.

Vijit Jain (Director)

Yeah. Correct. And, you know, my next question is, in general, for the hotels, you know, for your hotel business, right, or rather the hotels that you work with, what do you think is the, you know, B2B-B2C kind of a mix? I'm just trying to get a sense of, you know, in your B2C part of the business, you know, what could be the steady state online penetration? It would definitely not be 60% or 70%, right? Realistically speaking.

Mohit Kabra (Group CFO)

Vijit, all the numbers that we're calling out are for the business as a whole, and I think, I'd like to stick to that.

Vijit Jain (Director)

Okay. No, I meant in general, say online penetration within, for hotel segment

Rajesh Magow (Co-Founder and Group CEO)

You mean for international hotels or for domestic?

Vijit Jain (Director)

Both, in fact. I was just, like, trying to get a-

Rajesh Magow (Co-Founder and Group CEO)

Yeah.

Vijit Jain (Director)

... general sense of

Rajesh Magow (Co-Founder and Group CEO)

I'll tell you.

Vijit Jain (Director)

where the online penetration rates.

Rajesh Magow (Co-Founder and Group CEO)

Happy to give you a directional sense on the online penetration for hotels. You know, relative to, by the way, flights, domestic flights, is much lower and therefore more headroom.

Vijit Jain (Director)

Right.

Rajesh Magow (Co-Founder and Group CEO)

Within the hotel segment, international hotels is even lower.

Vijit Jain (Director)

Right.

Rajesh Magow (Co-Founder and Group CEO)

So international hotels, and, you know, I guess that is the point that you were alluding to earlier as well, that maybe your outgoing packages share is higher. That used to be the case historically, but of late, given the digitization drive in the country and consumer behavior changing rapidly, the online hotels, à la carte bookings, have been growing...

Vijit Jain (Director)

Okay

Rajesh Magow (Co-Founder and Group CEO)

significantly, and therefore penetration is improving. But just to give you the numbers that the international hotels penetration would be anywhere between, you know, around 10-15%, if that, and therefore a lot of headroom. So a lot of that will be offline, you know, through the packages, et cetera, historically, and also very fragmented. On the domestic hotels, if you include homestays, alternative accommodations, et cetera, again, it'll be between 15-20. But if you look at certain segments of the hotels, especially premium hotels, it might be between 20-25.

Vijit Jain (Director)

Got it. And, I mean, with the premium hotels, it's harder for it to go up above 15%-20%?

Rajesh Magow (Co-Founder and Group CEO)

No, no, no, absolutely not. See, if you look at some of the international, you know, countries benchmark, overall, there are many countries where it has touched, and I'm talking about Western world, Europe and U.S., anywhere between 40%-50%.

Vijit Jain (Director)

Okay. Got it. Perfect. Thanks, Rajesh. Those were my two questions.

Rajesh Magow (Co-Founder and Group CEO)

Yeah.

Vipul Garg (VP of Investor Relations)

Thanks, Vijit. The next question is from the line of Ankur Rudra of J.P. Morgan. Ankur, you may please ask your question now.

Ankur Rudra (Executive Director)

Hi, hi, everyone. Thank you, and good quarter. Maybe the first question, you know, you shared the salience of the international business, both in air and hotel. Just as a reminder, is that volume or value?

Mohit Kabra (Group CFO)

That's value.

Rajesh Magow (Co-Founder and Group CEO)

Value, value.

Ankur Rudra (Executive Director)

Okay.

Rajesh Magow (Co-Founder and Group CEO)

The revenue line. Adjusted-Adjusted margin line.

Ankur Rudra (Executive Director)

Okay, excellent. Thank you. So just, you know, a very basic question again, just to remind us, why is the salience of international by value so much lower in hotel versus air? Is this more of a supply issue, or is this more about, you know, what the average price of room nights comparison between international and domestic is different from what is in the air segments?

Mohit Kabra (Group CFO)

I could take that, Ankur. You know, largely stemming from the fact that if you really look at it, we have been trying to kind of, you know, get into the international air ticketing market for many more years than the kind of, you know, curation of the international hotel business, which has happened only over the last, I would say, possibly, like, five to six years. And therefore, it's more recency of kind of getting into that particular segment. Just like, you know, the buying behavior even on hotel side, if you really look at it overall, even domestic hotels, you know, the online penetration is much lesser compared to, say, domestic flights. And that same buying behavior kind of, you know, reflects on the international segments as well.

Ankur Rudra (Executive Director)

Okay, so then one would still say it's more of a partnership supply, sorry, is it more consumer perception of value-from your platform, or is it more of the supply you have? Just to sort of differentiate-

Mohit Kabra (Group CFO)

Combination of-

Ankur Rudra (Executive Director)

between those two values?

Mohit Kabra (Group CFO)

Yeah, combination of, I would say, customer buying behavior, and therefore, how the kind of, you know, platforms have responded to it over a period of time.

Ankur Rudra (Executive Director)

Okay, understood. Secondly, if I just wanna dig a bit deeper on the strength in air you've been seeing. Beyond the mix where international is growing more, is there anything more that you're doing which is helping your volume and GOV growth?

Mohit Kabra (Group CFO)

On the air ticketing side?

Ankur Rudra (Executive Director)

Air ticketing side, yeah. I mean, your volume versus market, and the GOV growth versus market.

Rajesh Magow (Co-Founder and Group CEO)

Ankur, as I was mentioning earlier, you know, many, many new, differentiated consumer experience-related features that we keep coming up with, that would, typically, you know, help us some... gain some share from the market. But also, you know, as we've been also sharing in the past, there are other segments that we started to build and grow, right?

You know, the corporate segment is one, other big segment with a completely different, consumer segment that we started to building and growing, and that's growing, you know, quite well as well. So, you know, I think it's a combination of, you know, more distribution channels, more consumer segments that we are focusing on, and the fact that we keep, you know, sort of improving the customer experience, you know, with innovative features as well.

Ankur Rudra (Executive Director)

Okay, understood. Just a last question, and now that you, you know, across, if you look at the different product offerings, whether it's air or hotel or ground transportation, what is the level of tech integration at the back end between the products? So for example, if somebody's booking a trip, with MakeMyTrip with separate air ticket, separate hotel tickets, and transportation, do these talk to each other in the background?

Rajesh Magow (Co-Founder and Group CEO)

Oh, absolutely they do, Ankur. That's a great question, and that is the one that I was alluding to as part of the script in the connected trip feature. You know, and which only happens when the back-end technology is unified, and there are obviously independent funnels because that's the consumer buying behavior that you will; let's say if you are on our platform and you're buying the flight, but there are various ways that we make the connection once you have bought the flight on the app in the same session or off the app subsequently, because that is, you know, typically the consumer behavior.

That I would want to buy and book flight first, and then maybe buy a hotel, then think about, let's say, airport transfer. If I'm going international, maybe I want to buy a Forex later, or insurance later, and so on and so forth. That is one type of, sort of, you know, consumer behavior, and therefore accordingly we make the connection. All of that is obviously, because of the back-end technology is, unified, and the other one is the connected trip, which is we are actually giving a view of, a particular trip for the consumer, that if you bought a flight and there are.

And if you're going, let's say, for international destination or even for domestic destination, for leisure, given that we have the data, and there are, you know, the trip might be just, in terms of just booking or buying the services might just be 25% complete, and therefore, and here are the other products that you could possibly buy to complete your trip. And we keep, there's a, you know, there's a feature that sort of, you know, gives that view to the consumer of a fully connected trip and with the percentage completion of the trip, et cetera. Now, all of that happens only with the, you know, very technology, various funnels at the back end, well connected or well unified, if you will.

Ankur Rudra (Executive Director)

No, thank you. The reason for asking is many of these products have been bought, like redBus or, or, you know, Savaari, et cetera. I was just curious if there's been tech integration since. No, it's super helpful. Thank you so much, and best of luck.

Rajesh Magow (Co-Founder and Group CEO)

Yeah. Yep, yep.

Vipul Garg (VP of Investor Relations)

Thank you, Ankur. We are almost out of time. We'll take the last question from, Manik Taneja of, Axis Capital. Manik, you may please ask your question now.

Manik Taneja (Executive Director)

Hi. Thank you for the opportunity. Just wanted to get your thoughts with regards to the comment that you made around pricing normalization that you're seeing play out in certain parts of the portfolio, more so on the hotel side. Do you think this can be a headwind, especially to our international portfolio from a near-term standpoint, and also any impact on this part of the portfolio?

While I do understand for us, bulk of the business essentially is still largely domestic Indian travelers traveling within India or possibly even outside of India. But, with the way some of the geopolitics and the war situation spreading to more places, do you think in certain parts of our international portfolio, we start to see some near-term headwinds?

Rajesh Magow (Co-Founder and Group CEO)

It's... Sorry, I was just going to make one quick comment, Mohit, and then you can come in.

Mohit Kabra (Group CFO)

Sure.

Rajesh Magow (Co-Founder and Group CEO)

Manik, the bigger point I wanted to make on the pricing is. I think Mohit was, you know, also trying to share earlier, and then we can come to the hotel war situation, potentially, et cetera. You know, I don't think we should read too much into the pricing, or the ASPs, or the both for. Actually, it's not. It's even true for flights as well as hotels being either flattish or, you know, just marginal 1-2% increase, because that was bound to happen. Because of the history, because for several quarters, the prices have been just going up in one direction only. It had to reach a point where it had to, you know, get into a situation where it'll get steadier.

And that's exactly what has happened, point number one. Point number two, we should also, you know, you would also see, that this, current season, which is, you know, high season quarter, and typically when, you know, part of the quarter where, and the peak dates when you will, have, you know, gap in the in demand and supply, you will see prices going up again. So there, there is a seasonality, aspect to it, and there is an overall sort of cyclical, aspect to it that we should keep in mind. So I won't read too much into the price, not going up right now.

Now coming to the potential impact because of any, like, you know, sort of war situation developing or macro for certain destinations, yeah, of course, there is, it you know, goes without saying, if there is any escalation in tension in certain regions or certain destinations, the definitely those particular destination or travel to those particular destinations around the region, around the areas, you know, get impacted. But the, given that there is general momentum on the, you know, on spending the discretionary income in the country, people will just normally will move from one destination to the other destination.

So it is not necessarily there is a complete loss in the demand. It is a, you know, effectively change of destination that happened because there are plenty of new destinations that are developing, and there is interest in the Indian consumers to explore newer and newer destinations as well. So, I mean, the overall escalation of war can have macro, you know, bigger macro sort of impacts on, let's say, oil and fuel costs, et cetera. Now, those aspects notwithstanding, just from a consumer behavior standpoint, in a specific region if there is any disturbance, people just tend to move to the other regions. And that's not necessarily a total loss.

Manik Taneja (Executive Director)

Thank you. That helps.

Vipul Garg (VP of Investor Relations)

Thanks, Manik. This was the last question. We are out of time. Over to you, Rajesh, for your last comments.

Rajesh Magow (Co-Founder and Group CEO)

No, thank you, Vipul, and thank you everyone. And thank you for, you know, all good set of questions. Thank you for your patience and I guess we'll see you in the next quarter. Thank you.

Mohit Kabra (Group CFO)

Thank you, everyone.

Vipul Garg (VP of Investor Relations)

Thank you so much. You may please disconnect. Thank you.