Q2 2021 MakeMyTrip Ltd Earnings Call
Today's conference is scheduled to begin momentarily until that time your lines will again be sent home. Thank you for your patience.
[music].
Good morning, My name is Andrea and I will be your conference.
Conference operator today at this time I would like to walk on every one.
To make might treat limited fiscal 2021 quarter do you greetings call all lines have been please on mute to prevent any background noise. There will be a question and answer session. If you would like to ask a question. During this time. She P. Press Star then the number one on your telephone keypad. If you would like to withdraw your question.
Yes, the pound key thank you very much now I would like to turn the call over it. So our first presenter for today Mr., Jonathan Huang Vice President of Investor Relations. Sir you may begin the conference.
Thank you and welcome everyone to make my trip Limited's physical Twentytwenty, one second quarter earnings call.
I would like to remind everyone that certain statements made on today's call are considered forward looking statements within the meaning of the safe Harbor provision of the U.S. Private Securities Litigation Reform Act of 1995.
Statements are not guarantees of future performance are subject to inherent uncertainties and actual results may differ materially.
Any forward looking information relayed on this call speaks only as of this date and the company undertakes no obligation to update the information to reflect changed circumstances.
Additional information concerning these statements are contained in the risk factors and forward looking statement section of the company's annual report on form 20-F filed with the FCC on August 17 2020.
Copies of these filings are available from the FCC or from the company's Investor Relations Department I am joined today by Steve, Colorado make my trips founder and group Executive Chairman, Ron Josh Margo Cofounder and group CEO and Mohit Kabra Our group CFO now.
Now I'd like to turn the call over to deep to begin todays discussion.
Thank you John.
Welcome everyone to our fiscal second quarter earnings call.
I sincerely wish all our listeners good health and safety as the board continues to grapple with the ongoing COVID-19 pandemic.
It is encouraging that the water the water and in India as well at a multiple vaccines, we try and various stages of trials promising up fuel sooner than later.
That should clearly help restore normal to see to Prequaled. It is something that we are all looking forward to.
We have to make my trip continue to believe that the need for travel you need in humans and while we are already seeing green shoots of demand across different traveling services. We believe business recovery will significantly accelerate once the vaccine becomes widely available.
As for India recent trends seem to indicate that we up off the B D can phone call with 19 infections.
It is also helpful that despite having the second largest number of confirmed infections globally the country's modality.
No.
This has helped us to get some traveling back and the travel industry is also adapting and innovating to address the concerns off the travelers in such times.
While we have updated on the gradual unlocking in the country forced me during our last call in August that often we have seen the unlocking gain for the momentum.
As we speak the country's domestic airlines have been committed to operate up to 55% of that capacity as in the same period in the prior year by the DGCA, which regulates the sector.
The actual basson just loan have already recovered to about 40% less.
As for international flights with restrictions remain in place until at least October 31st So many bilaterally country bubbles.
Have already been established especially BOPUS flights and new arrangements are currently being negotiated but in countries, such as Italy, Bangladesh, Kazakhstan and Ukraine.
These existing bilateral arrangements along with tourist destinations like them all of these and Dubai has opened up the borders are helping to revive demand from customers you could travel beyond India.
We continue to believe the international travel with Big long looked at a couple and for the next few quarters domestic travel will lead the business recovery for us.
When it comes to domestic hotels currently about 50% of the properties across our network have resumed operations and almost 30% of demand has been restored.
One of the silver lining from this pandemic has been de acceleration of digital and E commerce adoption globally and across India, driven by increased demand for context as transactions as a result of social distancing agreed to hide you never know.
This trend towards online will inevitably provide a long term growth still waiting for companies like ourselves considering that a majority of travel in this country still booked offline.
To ensure we maintain and further gain share we remain keenly focused on our customers experience without Brad we.
We have therefore launched a new version of our loyalty programs across both brands make my trip and white people.
During this quarter.
The new version Allpoint make my trip last was relaunched in September powered by more benefits for consumers in association with our partners, which is likely to give better engagement and retention results in the future, while helping up program economics since.
Since its re launch to make like a black program has enrolled 820000 members so far simpler.
Similar Leaguewide People's New loyalty program called go tribe has also registered a one half a million members since its recent launch more.
More exciting is the fact that three quarters of core tribes be on new customers to our rewards program.
Apart from reviving traveler demand, we remain focused on cost optimization to reduce our losses and conserve cash there.
Therefore, our marketing approach has been very disciplined.
We greatly leverage the use of direct online channels and be enjoying the strength of our brands a school would really to travel restrictions were lifted.
We also employ tactical but targeted campaigns to nudge customers to travel as well as reactivate dormant users without CRM campaigns.
I live in south traffic on our platform has been growing consistently now over the last quarter with organic traffic direct and its youre touching 90% of older Classic.
Even more encouraging is that the mix of new users increased meaningfully since the lifting of travel restrictions and lead me in.
Indicating we continue to gain share from both online and offline users.
Lastly, before I hand, the call over to Rochester showed greater details on our achievements during the quarter I'd like to mention on newly launched advertising platform. This platform started out as an idea generated during the last time I was one of the most recognized and visited online consumer brands in India today.
We believe we have an opportunity to leverage and monetize the value created over the years and films of visitors to our sites.
Utilizing our technology advertisers can access sets of automated platform by advertising space.
Utilize a bidding system for sponsored listings and leverage at real time inventories flattening and optimization system to increase that are telling us.
Going forward our teams plan to keep improving this platform to make it even more useful and value additive for users and help us drive incremental revenue to the group.
Now I'd like to hand, the call over to Roger.
Hi, good deep.
Hello, everyone.
I hope everyone is saying Hey, we unveiled during this ongoing pandemic.
Before I begin I would like to thank the entire team where I'd been booking relentlessly doing this last couple of quarter or not.
Second screen been Wyman to head for doing this for you to the opening.
Slowly bring me quite sit back on the track all business recovery.
Let me now shift or somebody off our fiscal second quarter Girlfriendy Brandywine.
The <unk> the booked for the quarter or along the journey on recovery at school rig 19 travel restrictions was largely one lifted in June.
Since then.
We have seen and graduated or done enough demand that.
Sequentially, we are going to be good performance that is fairly in line with lifting off localize restrictions and opening up all modes of travel and accommodation in the country.
[noise] accommodations in the country integrated model.
Since restrictions were lifted rebut encouraged to see pent up demand for the short stay leisure breaks segment, where travelers floor to nearby.
Every destination after having fatigue dog due to the severe logged on conditions in most of Q1.
The pace of recovery remains uneven state by state we.
We are encouraged to see continued momentum into the beginning of the festive season fitted in India.
You put it typically traveled to celebrate with friends and families.
Now I would like to share some details on how our different lines of business spread during the quarter along with the efforts we have put in to help us maintain the momentum of Arctic already going forward you.
You know I hope this isn't there as mentioned by view.
Currently almost 50% of the properties across our network have resumed operations and we are seeing domestic demand recovering to almost 30%. So far during this active season, though.
Their mind or somebody is currently led by sharp figure to litigations.
Great traveling and naturally hygiene equally sip properties.
To aid in the recovery Europe automotive business, we've been deeply engaged with partner to work out the right pricing for travelers and opening tempting to use it in the marketplace.
To address safety concerns we launched several initiatives.
Moving on to like 50, Mboe six programs with the Black Knight registry.
Which strips their fear Nigel protocols regrets concerning them doing with my.
Furthermore, the programs are validated by third party property orders as well.
As well as use that abuse.
In addition, we rolled out on pick lift chicken, which allows guests to upload via at required documents ahead of time, increasing the speed and 50 off the profit.
Today more than 500 off our prepared our offering that to be true and we anticipate more partner to join and soon to allow this feature at the property.
One of the other consumer insights gained exiting the lock down was the uncertainty around travel plans in.
In order to offer customers a complete flexibility in the plan, we expanded the coverage of our fleet cancelable rates to more than 90% of our partners properties.
You are also offering a beautiful your mind at the time of booking option to further drive booking gone for denser dot brands.
On the bosses front, we made multiple changes to ensure easier discoverability off on my trips customer support module and directly linked supplies with books to drive faster and better customer support resolutions, while optimizing our servicing costs.
On the Bakken, we made improvements to our supply management system or extraordinary by creating a new color Center Threerd block note that shedding a big news and video part of it.
Manhattan system also helps improve partner listing by providing a quality score based on attributes like on things that matter for lifting and amenities offered reducing greater likelihood of bookings.
Now I would like to share some of the achievements made enough flights business.
Similar to what I said I'm pleased to share there had been a sequential improvement in feed capacity and demand in the domestic AD market since the unlocking took place in June.
Fiscal second quarter, the daughter lumber up and just flowing them the market was about 40% off pretty equal over 11.
The capacity or 31% of the quarter.
More encouraging.
Is that currently domestic capacity has reached roughly 40% in terms of the doctrine.
The daily passengers loans, returning to more than that could offer equaled 11 [noise].
[noise], indicating strong recovery momentum so far during the festive season.
For the coming winter months or do you. Just you had approved domestic ideas to operate up to 55% of their prior years domestic flights, which should further help with capacity constraints during the typically strong travel quarter.
More encouragingly syncing exiting the locked down we have seen buyers behavior changing even more in favor of online is there anything you're not market share improvement by 240 basis points in September when compared to February now.
Now I would like to share some of the things are being developed and implemented.
Which I believe has allowed us to improve our leading market share position photo.
And then it up where social distancing is the norm, we've invested to improve our web chicken experience, even more with the introduction of an industry first option off at Lloyd's should do live chickens, and obviously you've done a a payments.
We also implemented a hub to help navigate the ever changing travel restrictions to further use customers concerns onboard taught me in there as well as wire whatsapp.
Well, it's certainly the Vanguard review screens to ensure customers are fully aware of all options and policy that may have liked to though too that selection.
Fleet, we added an additional door to door baggage pickup and drop services to help drive a better experience for users.
Drive cross sell within the flex funnel because now we also have the option to pick up over time, but in the same drawn direction further reducing the shopping time required to complete didn't die journey.
Now I would like to share an update on our bus ticketing business.
Similar to our other lines of business, we have seen a gradual but steady recovery in terms of supply and demand <unk>. John look unlocking took place in June as we entered the festive season, we've seen more than 50% of the inventories come back online and available to be sold in terms of the mine so far.
In October we have seen a recovery of around 40% on a daily underneath it relative to peak overdue and expect this to only improving the watco.
To inspire confidence with Booker, we strengthened the safety standards all bus operator, deduct 50, plus program by facilitating independent ordered off didn't die safety protocols protocols and compliance.
Hi, Brito destruction feature robust struggling which nor do fight that I go to Savannah desired, but through route. The Yumes operations has now crossed over 1.9 million travelers.
Leveraging this data to help operators to aid in that out.
To aid and did our planning as they continue to that store services going forward.
Now I would like to share a quick update on our other ground transportation business, which includes gaps and metro or train ticketing. During Q2, we introduced home to home within our flights product to offer fifth cabs. Two went from imports. Additionally, we in Britain feature to suggest alternative more don't get on dry.
I spoke to the customers in case that is unavailability off one of them.
On our corporate business site, our focus has been more to acquire new customers and during Q2, we have added 200, new clients on I've got a flip flopper electronic [noise].
And lastly to share an update on our brands for into the GCC region, which we announced last quarter since launch we've seen good traction in terms of App downloads and active users on product development site, we've gotten now investing and building the platform in that habit language, which is the.
Most popular language in the region.
That I would like to hand, the call over to move it to shed more color on our financial recovery and performance in Q2.
Thanks, Vince and Hello, everyone.
During the second fiscal quarter.
Primary focus was to maintain a very tight cost discipline.
We started with the gradual business it could be plus years following the various pieces of unlock being rolled motivating didn't want me.
Well do a little difficulty in terms of gross bookings for the quarter was about 15% the recovery in the exhibit month of September was almost 20 people go there to hopefully other business, we clearly gaining further momentum can be approaching winter quarter.
The adjusted operating loss for the quarter at $12.9 million was lower than the previous quarter's loss of $21.3 million and also better than last years same quarter loss of $19.3 million.
Just take photos for non cash depreciation and amortization expenses.
Quarters, and just to cash operating loss you stood at about $10.6 million compared to $16.3 million in the previous quarter and $14.5 million.
Same quarter last year.
As highlighted by Rogers, we have seen bigger business, because he swore Paul you're not air ticketing business compared to other business segments.
For the quarter.
I think it just didnt margins stood at about $11.9 million you can see that he called me up about 19% in constant currency terms versus Threeq will be limited in the same quarter of last fiscal year.
The adjusted margin, you know, who don't come back into the business stood at $5.5 million.
It was about two and a half million dollars for the bus ticketing business and $3.1 million from other businesses.
I'd now like to share some color on our operating cost line during the quarter the significantly.
Significantly pruned out of marketing and sales promotion expenses.
To that 2.4% of total gross bookings consistent in that business because you during the quarter was ready graduates.
Our first move is the expenses stood at about $24.4 million for the quarter compared to.
About $46.7 million for the same quarter during the last fiscal year and slightly above the $32.4 million during the previous quarter.
This small increase was in view of the graduating this tradition of selling these actions during the reported quarter for most of our employees excluding the top management.
We do expect to fully that's towards having cars for the entire team by the next quarter.
They didn't reduction in these costs compared to the last fiscal year continued to eat a reduction of.
I should just heard operating losses.
During Q2, we continue to focus on cash management and ended the quarter with about $98 million in cash and cash equivalents was about $174 million at the end of June when he was just or it just took cash losses of about $7.6 million during the quarter, our cash balance and through.
During the quarter was also aided by the fact that the.
We are able to realize that actually fines from the tax authorities and you also kind of witnessed significant working capital uses language to graduate business activity.
The cash and cash balances that I called out do not include our secured credit can guarantee facilities of approximately $800 million, we should I mean, we have available to us.
It hasn't been needed.
As the economy continues to unlock and bonds back. We believe you know they placed financially and operationally to benefit call gradually improving the mine because you can determine sector.
That I like to turn the call over to the operator for any to any.
[noise] [noise] [noise].
At this time I would like to remind everyone in order to ask a question. Please press target there number one on your telephone keypad again star one on your telephone keypad, we'll pause for a moment to compile document neighborhood.
Sterne.
We have our first question.
Our first question comes from digits Jain of Citi.
Your line is now open.
Yeah, Hi, guys. Congratulations on a great set of numbers. So there's a big numbers on the just city, but not yet again.
My question is about the I guess dig my vision for the hotels and packages side. The play to be dropped there does that reflect the fact that budget continues to lag.
Premium in that because I mean this quarter. Thank you.
Absolutely because you know you acquired.
Oh, there you know they had been calling mode.
The budget segment Kinda continues to lag in fact, the mix is kind of you know getting skewed more and more in favor of premium properties.
This is kind of a deliberate because this is a period as you know most customers want to you know kind of it was their concerns around safety hygiene et cetera, and believe this is you know better dressed and into premium properties completed the but its properties and therefore, the kind of seeing in.
Once you break up the cup indeed in the independent properties, you know that we have on the lumpy.
Oh on the website, so pretty much coming in from there also have been kind of you know supporting some of our partners Oh, no properties cases, which are used.
Okay, Great and veterans are kinda contributing.
Next Monday, but predominantly this is kind of coming in from the change in mix in favor of 300 properties and so to a large extent I would say probably this is not only slightly.
You know a one off kind of times, we don't really know whether you know this this mixing changing mix is kind of you know Oh, you can speak probably you know we should gradually starting on more and more recovery coming in the other segment go to that price point is right. So probably more time period.
Right. Thank you I know it can be just a little bit color. I know you I know you mentioned Mohit led about some income tax to be finding the the anger working capital as the reason for the roughly 35 40 million odd Nick gained in New York.
Cash venue the movie losses. So can you be backed up also little bit put it.
They come back to me for example.
Yes.
Yes, that's true no no like I had mentioned to you know what they are in a change in the into cash position. If you look at it is close to about EUR $24 million for the quarter up from $472 million totaled $92 million.
I'll probably have this $24 million comes in from income tax refunds or do you kind of see it so that's kind of the old.
You know I showed up the cash balances and the rest is largely a mix of multiple changes on the on the booking deferred billing.
So then my final question or two on two days.
You know cool big lending dropping quite significantly knowing that there was a fall off one month or two.
I know you called me to get a little bit about 59, then about a Nick.
I know at the end of September, but any meaningful pick up you brought this good evening simply and I mean, I would have to be some degree which means that they would be mining would argue Mike but I'm just wondering if.
The behavior team has been quite as fast as the movie drop has been.
Yeah, I read it that's the job I mean take that.
Yeah.
So oh, absolutely I think we have noticed that has been our definitely are distinct uptake I think this.
This uptick probably in the last four to six weeks. So we started noticing youre doing this kind of travel you know or even a bit in September but definitely that after the second October weekend as we know in India as a long weekend I didn't that was a very positive sign there.
But just past weekend for the sad I'd set trial is a pretty positive sign where there was a lot of travel so like I just called out a lot of road trip startup weekend, getaways et cetera, but also know flight stoop youre tourist destinations picking up quite a bit. So all these 50% departures there quite a few tourist destinations all the people.
Send load factor. So boy has become increasingly popular people are now even looking to go beyond into other places. So I think it's it's fair to say that are also was definitely been more reassuring and all that is a week on week kind of increase. So we are hopeful. This will continue a this is big so.
Isn't.
Right right through from October November December there's no doubt that there is pent up demand people want to get away a but people are still grappling with how can we travel safely kind of thing. So I think as more of badness grows around travel or hopefully better <unk> better testing protocols I think that can really help if we have on day to day.
Getting protocols that can be a few would you advantage, but even until then I think the fact that it's been quite well proven that people are not really picking up the infection or there's no transmission wild or they are traveling so that is really helping people oh I didn't give them the confidence that they can travel fought and then.
You know in the choice of accommodation or what people are like you called out you know as a skew towards premium properties, absolutely a lot of them tend to have independent below than cottages, where people lusting also homestays. So that is where we are seeing the skew going right now so the premium chains are definitely gaining some of them and been.
Quite proactive or to put together programs around this.
And ER, we are obviously, helping them a you know in terms of getting.
The word out that there are interesting deals good deals and most importantly, safe you know way to travel that's that's the key message.
All right. Thank you so much.
Thanks Richard.
Again in order to ask a question press Star did the number one on your telephone keypad.
I started and the number one on your telephone keypad.
[noise] presenters no question. So far you may continue.
There are no more questions. Thank you everyone for joining our conference call. Today. If you have any further questions for US please feel free to reach out and you may disconnect. At this time. Thank you.
This concludes today's conference. Thank you all for joining.
Thank you.
[music].