Q3 2023 MakeMyTrip Ltd Earnings Call

Speaker 1: Certain statements made during today's event may be considered for looking statements within the meaning of safe harbor provision of US private securities litigation reform act of 1995. These statements are not guarantees of future performance are subject to inherent uncertainties and actual results may be for material.

Speaker 2: Any forward-looking information relayed during this event speaks only as of this date and the company undertakes no obligation to update the information to reflect changed circumstances. Additional information concerning these statements are contained in the Risk Factors and Forward-Looking Statements section of the company's annual report on Form 20F filed with the SEC on July 12, 2022. Use 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.

Speaker 3: Thank you Vipul. Happy New Year and welcome everyone to our third quarter earnings call of fiscal 2023 for the last quarter of 2022.

Speaker 4: 22 started with a cautious optimism amid the Omicron third wave, but as the year progressed, we witnessed steady improvement in the COVID situation in India and most countries in the world which helped demand led by leisure-related travel. The COVID situation haseping swaying in

Speaker 5: and the demand recovery trends improved with each successive quarter.

Speaker 6: The reported quarter is the second high leisure travel season quarter of the year, aided by winter and festival breaks and long weekends. We leveraged on this demand and executed our business strategies well to get back to full recovery over pre-pandemic levels in gross booking terms.

Speaker 7: while driving operating leverage from the cost optimization initiatives over the last few years. As a result, this has been our highest ever quarterly performance both in terms of gross bookings and adjusted operating profit.

Speaker 8: Gross bookings for Q3 stood at $1.74 billion, witnessing an increase of 64.4% year-on-year and 15.9% quarter-on-quarter in constant currency terms.

Speaker 9: Adjusted operating profit stood at $19.7 million versus profit of $13.2 million in Q3 fiscal year 2022.

Speaker 10: As we enter 2023, consumer sentiment continues to stay positive for travel while we watch the COVID situation with China opening its borders, global inflation and other macro challenges in the world closely.

Speaker 11: Friends suggest that travelers are back on all travel segments with leisure, business, pilgrimage, and corporate events, and will continue to drive the growth in the coming years as well. While domestic travel led the recovery in 2022, we believe that full restoration of supply the recovery from apologize course and continue to drive follow-up allow them

Speaker 12: Aided by some fair rationalization and easing of these processes could help international travel recover to pre-pandemic levels soon with improved travel, traveler sentiment. During this quarter, the industry witnessed strong recovery into domestic aviation traffic which is good news for the airlines and the other partners. Aided by some fair rationalization and easing of these processes could help international travel recover to pre-pandemic levels soon with improved travel, traveler sentiment.

Speaker 13: Government is committed to the growth of the sector and it is projected that in the next 5 years, Government and other private entities are going to spend up to 12 billion dollars on the infrastructure development of the airports.

Speaker 14: As per plan, in near future there will be capacity expansion in many of the existing airports and new greenfield and brownfield airports will be set up. Recently, a second airport was operationalized in Goa with an annual capacity of 4.4 million passengers.

Speaker 15: go eyes among the most popular tourist destinations in the country and this will help drive tourism growth. A new terminal in Bangalore is now functional and expansion work in Delhi airport is underway.

Speaker 16: India is now the third largest aviation market globally as per government data and initiatives are being taken to drive tourism and air traveler to smaller cities. In the last eight years, 72 new airports have come up in the country. In coming years, air travel growth will be driven by a

Speaker 17: addition of new airports, infrastructure growth and increasing disposable income. All Indian Airlines have placed record orders of new aircrafts and this will help drive penetration further into smaller cities.

Speaker 18: Outlook for aviation market is favorable and we expect a prolonged period of sustained growth on the back of these initiatives. Another important pillar for domestic tourism growth is ground transport and world class highways are a prerequisite for fast and seamless movement.

Speaker 19: This has been a focus area of government. The length of national highways has gone up by more than 50% from 91,287 km as on April 2014 to more than

Speaker 20: 140,000 km in March 2022. Government has set an ambitious target to develop 200,000 km of National Highway network by 2025.

Speaker 21: Similarly, for accommodations, the outlook continues to be robust. Almost all hotel chains have announced expansion and increasing their footprint in India. In next couple of years, there's an estimated increase of 25% in the number of hotels for these hotel chains. But increasingico model and games through the screaming newsprint has become a huge

Speaker 22: coming to highlights of the reported quarter now.

Speaker 23: We restarted our brand campaign both on TV and digital media platforms for both Miqma Trip and Goi Weibo. After a gap of two and a half years, we launched 360 degree campaign to capture large chunk of demand. The campaign focused on relevant value proposition such as enhanced flexibility, book hotels, and more.

Speaker 24: with the no upfront demand and numerous choices best suited to varied customer needs.

Speaker 25: For GoiWeibo, we ran a campaign promoting daily steal deals on both hotels and flights, a collection of deals unique to GoiWeibo. We deployed a digital focus campaign across platforms in order to target relevant consumer segments to drive efficient conversions.

Speaker 26: As for business segments now, starting with their business, we continue to add value for our customers.

Speaker 27: through our industry first features. Quick book feature for frequent flyers which was launched last quarter has led to reduction of 15% in time taken for bookings for these travellers. During the quarter, we strengthened our free cancellation flow within 24 hours of booking.

Speaker 28: This is again an industry first initiative. All these innovations help us remain the first choice of customer.

Speaker 29: We continue to maintain our leadership position in our market share in domestic aid ticketing this quarter's total 30.3%

Speaker 30: We witnessed a jump in domestic air traffic during this high season quarter. Domestic air ticketing for us has gone beyond pre-pandemic levels while international air ticketing recovery is still lagging. Traffic to most of the domestic leisure destinations have now surpassed pre-pandemic levels and has started to grow. For more information, visit www.fema.gov

Speaker 31: for international destinations.

Speaker 32: We witnessed steady recovery for short haul tourist destinations across Southeast Asia of the Middle East due to tourism demand. Demand for international long haul destinations however improved in this quarter but still faced high fares and visa backlog headwinds to full recovery.

We expect this to normalize during this year as stated earlier.

Our accommodation business which includes hotel strategies and home stay segment.

With continued focus on expanding accommodation offering on our platform, our inventory is now comparable to pre-COVID levels. This has also helped us now offer stay options over more than 2000 cities.

Traded with seasonality, this quarter we sold more than 53,000 unique properties, which is at par to pre-COVID levels.

The recovery continues to be strong across all price points, barring the super budget segment of $20 or lower for room night stay.

Overall gross booking for hotels has recovered to pre-pandemic levels on constant currency basis on the back of strong growth in premium and medium premium segment and partially aided by higher loom tariffs.

We continue to innovate and invest in our product.

Book at rupee one launched last quarter that offered flexibility to the customers.

which help drive growth in longer advanced purchase bookings.

Ghost Stage, which is our flagship program for certified budget hotels, is now contributing to over 40% of the overall budget volume with much better customer experience and NPS.

International Outbound Travel, opened in March 22, 2022. And since then we have been witnessing a steady recovery for short-haul destinations. While we saw some slowdown in international travel bookings with COVID-Scare as China

opened at the end of the quarter, but overall we witnessed good traction. And during 2023, we hope to see a travel to Europe and long-awaited destinations also returned fully.

Home stays continue to lead recovery in overall accommodation category. 10,000 plus unique properties across 640 plus unique destinations have been sold during this quarter.

During this quarter, we launched a new section of properties called Hidden Genes, where every property in this set as unique USBs and are away from the center of the city.

We also launched our brand campaign specifically for home stage to create more awareness among travelers. The campaign emphasized on the concept of stay for every need and highlighted various day options, including pit friendly willers, cool willers and willers best suited for large families.

Moving to packages business, you would recall that last quarter we talked about how we have scaled up this business to the addition of holiday experts and franchisees. We are now reaping the dividends in the high season quarter. Total packages, bookings are now more than 150% of pre-pandemic volumes.

with online channel leading the growth. Domestic packages are now more than twice of the pre-pandemic volume and for international packages the recovery is now picking up.

Our bus ticketing business revenue recovery was at around 113% as compared to same quarter pre-pandemic on a concurrency basis.

This quarters saw growth in inventory compared to pre-COVID with both number of private bus operators and the number of?

Recovery in southern markets, which has been traditionally strong for buses slower than expected, as large IT workforce is still working remotely. This slowness has been made up by non-traditional markets in central, north and east, which have witnessed growth as an increasing number of people in the world.

bus operators are adopting online channels for their distribution in these regions.

Our initiative is to drive high revenue.

through value added inputs to our customers and partners have gathered steam in Q3.

Red Bull Sechorance Program that protects the customer from bus cancellation has also seen increased traction.

Our other ground transport services such as intercity cabs, rail tickets, etc., continue to scale well and gross booking value touched an all-time high. We have now opened up our trip guarantee product for non-bookers. So wherein a user who has a wait-listed train ticket booked from any channel, who has a

outside of make one trip.

can buy a trip guarantee product by paying a small fee. If the ticket remains wait-listed at the time of charting, the user is eligible for a 3x refund, which you can use to book an alternative mode of transport.

Business travel is now normalizing and both our corporate platforms are growing at a robust pace.

Active corporate count for MyBiz has crossed 42,000 while on Q2T, which is our platform for large enterprises. Active customer count has reached 231 as compared to 114 in December 2021.

We have doubled the number of customers in last one year. On product side, on my base, we went live with enhanced workflows to support in-app approval and to support easy reconciliation. We went live with our reporting module.

The new reporting module allows corporate to customize and schedule reports according to needs of different corporates and their departments.

My partner, our travel agent platform added 2,892 agents during the quarter, taking the overall number to 34,600+.

Quarterly repeat rate for buying travel agents is at a healthy 80%. Coming to international businesses, our OTA business in GCC growing slowly and steadily. Ross Booking value grew 29.6% quarter on quarter. We launched our first radio brand campaign in November to increase make my trip awareness among

Emiratis, Arab and Western experts in the UAE. We reached about 780,000 audience with presence across English and Arabic radio stations.

Our Red Bus International business is showing robust recovery in Malaysia. Red Bus has more than doubled its business in Q3 as compared to the same period pre-pandemic and emerged as a clear market leader with a 25% share of the overall market.

and running properly.

The same playbook is being replicated in other big bus markets in emerging countries in Southeast Asia and Latin America.

With this, the contribution of international to overall bus business has now crossed double digits in Q3.

With this, let me now hand over the call to Mohit's for Financial Highlights of the Court.

Thank you, Rajesh. Hello everyone and happy new year.

We will improve travel sentiment. We witnessed good uptake in this seasonally strong quarter and I have delivered strong performance both in terms of business growth and profitability.

Q3 Gross Bookings were at $1.74 billion, witnessing a growth of 64.4% year-on-year and a 15.9% growth quarter-on-quarter in constant currency terms.

It's just an operating profit was at $19.7 million as compared to $30.2 million during the same quarter last year and improvement of 48.6% year on year. As stated by Rajeshwarya, this is the highest ever quarterly gross bookings and it's just an operating profit achieved by the company.

For the 9 months ended December 31, 2022, YTD gross bookings grew by 141% in constant currency terms and came in at $4.9 billion, while our YTD adjusted operating profit came in at about $51.3 million as compared to $11.2 million for the same quarter last year.

witnessing a jump of over 4.6 times. Our 8-tiketing cross-pookings for the quarter work at 1.1 billion dollars witnessing a growth of 71.6% year-on-year and 7.5% quarter-on-quarter on constant currency basis.

of over 4.6 times. Our A-ticketing gross bookings for the quarter were at $1.1 billion, witnessing a growth of 71.6% year on year and 7.5% quarter on quarter on constant currency basis. As this was a.

High season quarter on expected lines the take rates normalized to about 6.6% compared to about 7.4% in the previous quarter. As a result, adjusted margin stood at about 700.2 million registering a strong 45.2% year on year growth in constant currency tops.

Growth bookings for the hotels and packages segment were at $445.7 million, witnessing a strong growth of 55.4% year on year and 36.9% quarter on quarter on constant currency basis.

Q3 is a seasonally strong quarter for tourism and travel, and we recorded a strong growth of 150% year on year in our packages business. Due to the increased mix coming in from the packages business, our margins are degraded from this segment.

is student about 16.2% as compared to 17.2% in the previous quarter.

Existed margin for our HotelGym packages business stood at $72 million in Q3, witnessing a growth of 45.3% year on year and a 28.8% growth quarter on quarter in constant currency talks.

In our bus ticketing business, gross bookings for the quarter were at $227.1 million, growing at about 51.9% year on year and 24.1% on a quarter on quarter basis on constant currency terms. Take rates were at about 9% which is in line with the previous quarters.

I just imagine student $20.3 million is doing a strong year-on-year growth of 57.6% and a quarter-on-quarter growth of about 24% in constant currency talks.

Our adjusted margin in all the other businesses in Q3 was at $9.6 million, which is a 79.1% growth on a year-on-year basis and 30.6% growth on a quarter-on-quarter basis in constant and Supreme city measure s today I 2, myself, the

In terms of operating expenses, the operating leverage in terms of rationalized costs during the last few years and more efficient customer acquisition spend the helping us drive bottom line gains with improving scale. The high season quarter also saw as we start our brand campaigns across the brands after a gap of over two and a half years.

Also, the higher brand marketing expenses were more than offset by efficiencies in other marketing and promotional costs. Accordingly, overall marketing and sales promotion costs for the quarter came in at about 5.2% of gross bookings lower than the 5.4% in the previous quarter.

and lower than 5.6% in the same quarter last year. This has helped us achieve the highest ever quarterly gross bookings, surpassing the pre-pandemic peak and at the same time achieve our highest quarterly operating profit of $19.7 million.

With that, I'd like to turn the call back to Vipul for Q&A.

Thanks Mohit, anyone who wish to ask the questions now can click on the raise hand icon on their application and we will take the questions. We'll just wait for a minute for Q2 assembly.

The first question is from the line of Sachin Talgaonkar of Bank of America. Sachin, your line has been unmuted. You may unmute yourself and ask the question now, please.

Thanks Vikul. Good evening everyone. I have three questions. First question is more as a follow up to the comments that you made. Looking at the take rate at both the air ticketing and the oxygen packaging. Clearly it looks like this time around as compared to historical Q3Q the decline was slightly higher.

So just wanted to check apart from seasonality is there anything else which is impacting these margins and how should ideally one look at going ahead should we see normalization now that the seasonality gets behind us?

Sure, if you like, like I was mentioning, you know, particularly if you look at the hotel and packages business, you know, overall, due to the high seasonality, you know, packages kind of, you know, came in much stronger terms of the overall mix. And packages that you know, is a, is a lower margin business.

And that contributed significantly to a little bit of a, you know, dropping off of margins, you know, for the segment as a whole. The other thing that we've been calling out is if you recollect that in the entire recovery process, you know, the mix of the budget segment of hotels has been coming down. Therefore, to some extent, you know, that's also kind of keeping the

you know the overall margins on the hotel side on the lower end of our range. There is a good kind of probability of the overall margins improving on two counts. One as the mix kind of you know gets restored more in favor of hotels as we get to kind of you know regular seasonality.

And the second is as the mix from budget segment kind of keeps improving. So I would say possibly there remains an upside of about about a percent each point or so for the margins to improve in the Udoos and Takas segment overall compared to this particular quarter for the reasons that I have just explained.

On the 8-degree side,

Again, you know, if you look at on a normalized basis, possibly we have been guiding the 86% plus kind of margins is where we see longer term kind of a degree margin stabilizing and

Tactically you are based on a quarter of basis depending upon how the load factors are and what is the emotional activity that the airlines want to drive in terms of driving load factors through a platform that will kind of you know you know marginally tweak the

the overall take rate for the domestic A-ticketing business. But otherwise, A-ticketing business longer term, I think this is a healthy margin to kind of remain at. And we believe unless there is a significant kind of drop in the load factors.

our margin should largely remain in line with this with a plus or minus kind of half a percentage point range. So very broadly this is how I would put it. Thanks, Maik. Second question, you know clearly this as you rightly indicated was a season is stronger quarter and despite that we did see the air ticketing revenues being down QOQ.

I did see the bookings are up. So just wanted to understand, you know, what happened and you know, why was air ticketing revenue down?

Yeah, exactly the same thing. You know, the link to the previous one, because the gross margins on the, on the a-listening business have kind of come down. That's how we see their revenue kind of all over, just a margin coming down a little bit, but the growth overall in terms of segments in large bookings is higher.

So, and similarly, you would see, you know, even on the marketing and promotional expenses, you know, they have come lower than even the previous quarter for that matter, despite the marketing investment. So it is a, like I said, you know, some of these promotional expenses as they kind of you know, coming from the airlines can optically look at a kind of, you know, take the margin also higher.

and take the overall marketing promotional expense also higher. In this quarter because the incremental kind of promotional intent is provided by the airlines who are on the lower end, that's how we are seeing that effect coming through both in terms of the adjusted margin coming down and also the promotional and marketing expenses coming down.

So, you know, Muth, thanks for that. I did look at that, you know, obviously there is a margin dip which happened last quarter, you know, 3Q and so on and so forth. Out there, the airline revenues did not dip despite the take rate going down. So, this time around it has more to do with the promotional expenses what you mentioned.

No, no, see promotional expenses don't count. When you look at the overall adjusted margin, you know the promotional expenses don't make a difference. It is purely, you know the overall delta is is weighted on a quarter and quarter basis. It's gone down even compared to the previous quarter. That's what's kind of causing the data change.

on the margin side. And maybe if I can just add an additional point, Sachin, if you look at the numbers as Mohit was explaining on gross booking side and the air segments growth, it is positive, it's not a decline. It's like on a constant currency basis, it's 7, 7.5%.

The only additional point that I will make to what Mohit has already said, you know, as I was indicating it earlier as part of my script as well, that the while domestic flights have recovered or domestic oprah traffic has recovered, actually more than recovered to the pre-pandemic levels, and this national is still lagging behind.

So international bookings, international, especially long haul flight bookings have not necessarily fully recovered. And in fact, you know, towards the end of the quarter, second half of December , because of the China opening up, there was a bit of a scare on COVID as well. You know, thankfully, after one week, you know, it sort of died down, and things got started to get back to normal.

But you know, all things considered because of the high fares, you know, with fuel price, fuel prices going up, or the overall focus being on yield by all the airlines. And the, you know, the backlog of operational issues like backlog of visa clearance, etc.

continue to sort of play in terms of just putting international booking under pressure. And that's really just one more additional factor on just overall air despite being the high season.

while the consumer sentiment remain positive and people want to travel. But you know, if you continue to see high fares on the international side, then you know, sort of plans get pushed if they're not necessarily essential travel related and stuff. So that I think that's the additional point you should keep in mind.

Thanks Rajesh. And last question is now that you guys got the NCLT approval for MiG matter by vivo, looks like the key regulatory hurdle for a potential India listing is behind. So any thoughts in terms of timeline and how you guys are thinking about it? So from a regulatory hurdle point of view, I think

you know, yeah, this is one kind of, you know, fundamentally good step to kind of, you know, taking in that direction. But, you know, like, like we've been calling out, you know, tapping into the Indian capital market kind of, you know, is probably there on the agenda, but not necessarily in the,

So we will kind of remain open to it and we will kind of really come back and update as and when we kind of are able to crystallize our plants around it. Thank you and all the best. Thanks. Thanks again.

Thanks Sachin. The next question is from the line of Gaurav Rit area of Morgan Stanley . Gaurav you may unmute yourself and ask the question now.

Hi, thanks for giving me the opportunity. So I have a couple of questions. Firstly, when I look at the volumes in each of the individual segments, they haven't reached the pre-COVID levels compared to the same quarter during the pre-COVID. So somehow the recovery has been a little slower than expected. So is it largely because of international?

you know 90% whereas our recovery you know is kind of close to about 100% plus. So therefore you know while we are kind of you know growing ahead of the market but the market recovery itself is you know at an industry level is lagging. You know the pre-pandemic kind of you know segmented volumes. So that's one reason and secondly if you look at it in terms of the overall you know a ticketing kind of a phase.

like Rajesh was calling out, international hasn't really bounced back as strongly. So that's the other reason for the lag in the overall recovery for the A-

All right. Second question, how should one look at the lower customer inducement charge as percentage of the cross booking? Is it that the competition or the competitive activity has subsided in the market and hence there is no need for that high customer inducement charge?

Is it more tactical like a shift between branding versus customer and use when charge. How should one think about like overall add in promotion spend you have always been saying 5 to 6%. But it's kind of come out the lower end so how should one think about it on a sustainable basis.

I think on a sustained basis like we have been saying, possibly the range would be more like 5-6%. And a couple of things going in over there. One theory is the extent of competitive activity that we are seeing in the market. And as you have seen, that kind of makes a difference.

Secondly, and more importantly, I think it is also about building a certain amount of base of volumes, you know, in each of these relevant or important segments, you know, particularly including the hotels and kind of, you know, packages segment or, you know, overall accommodation segment there, if you see over the last almost like, you know, six, seven years, we have gradually built, you know, robustly, you know, build volumes over there. And as you know, is is kind of, you know,

inherent in the e-commerce models or the online models. As you build volumes, your customer efficient costs start kind of panning out much better. So I think it is about getting to a threshold base and therefore you see why there has consistently been a decline in the marketing sales, no much in expenses over the last, I would say six, seven years, that reduction has kind of become sharper over the last few years, as we have kind of crossed that threshold.

pretty much almost, you know, just kind of, you know, pre-COVID is what I would put it around. So that's another factor, apart from the fact that there is, you know, much lower competitive intensity, particularly in the hotel segment.

But last question, the cash balance if I compare versus last quarter, I think has come down from 466 to 449. Is there something missing? You have generated a lot of the like large a bit. I think the quarter should have cash balance should have gone up. So how should one read the decline in cash balance? I think I have made.

And you know this being a seasonally high quarter, even usually we do see deployment in working capital during peak seasonality. And then you also see releases happening, you know, as you kind of move into the, you know, the lowest seasonality quarter of quarters. So it's kind of largely linked to seasonality per se. Nothing else over there.

Thank you so much.

Thanks, Gaurav. Thanks, Gaurav. Just to remind the participants, anyone who wishes to ask a question can click on the raise hand option. Next question is from the line of Aditya Suresh from Macquarie. Aditya, you can please unmute your line and ask the question now.

Thank you, Rupal. First question was just on the competitive dynamics which you mentioned. Can you elaborate a bit about what's happening in the air segment in particular with clear trip? Getting kind of a new lease of life perhaps. So maybe speak about that a little bit and I do kind of note that your customer, inducing cost, it kind of marketing spend that has kind of come down. But in absolute terms, there's still a fairly chunky number in particular in the environment where. And.

Some of your competitors may be challenged for funding. At least the conditions are a bit tighter. So can you speak a little bit about that? One is the competitive density in air and clear trip etc. And two is fiscal 24, fiscal 25. Are you sticking with this 5-6% of gross booking as a guide or is there any kind of absolute kind of numbers, i think providing

kind of look at absolute number per se. And therefore looking at it in terms of a percentage of spend might be a better way to kind of look at it. And yes, we do kind of expect this to remain in the five to 6% range going forward as well. I just invite Rajesh for the first one.

Yeah, sure. Happy to happy to move it. The third to your first question, I think a couple of first important points, I just wanted to remind you and everyone, I think you should always keep in mind that, you know, our market share on domestic flights as, as we've been sort of reporting out.

is pretty healthy, we are at about 30% market share of the total market. And also the fact that, you know, whatever it's worth, the flight product for us has been fairly matured and we continue to keep innovating as I was also trying to highlight some of those unique features that pretty much every quarter we will end up sort of launching. And, you know, that helps.

the customer confidence that helps us becoming the first choice in the market and has been the case for a while. And that's precisely the reason no matter what the competitive dynamics might be in the market, we've been either gaining share or has been able to stabilize and try to run 30%.

from our point of view, we've seen they actually work beautifully well when it comes to the repeat rate over a period of time. The stickiness really comes to your platform if you continue to keep delivering the promise on the product side. Now as far as the specific dynamics on every quarter of who's doing what and all that,

Frankly, I'm not sure that we watch the competition, we obviously look at the competition very closely, etc. But we're not necessarily obsessed by what's happening, specifically on a particular day of what kind of discounting that is happening and so on.

I think our strategy has been very clear that we have to continuously keep improving our product experience and eventually that sort of helps get more and more customers and more and more market share and keep managing your P&L or the unit economics accordingly.

a basis, whatever might be the dynamics in the marketplace. So, you know, and if you see the history for last few quarters, going into, you know, specifically on, on, let's say, domestic air market, there might be volatility, there may be, you know, specific quarters, you will see some more.

competitive action, etc. But over a period of time, it sort of stabilizes because that sort of discounting etc. is never stable or never sustainable. So you have to just sort of deal with that on a quarter to quarter.

Thanks, that's clear. I guess the second question was trying to think about incremental epitome margins or incremental profit. You did get a mention quite a few growth levers across different products. Now over time, I think your employee expense has been a fairly large part of the at least as a proportion of revenue.

Can you maybe touch on two things? One is in terms of incrementally, how are you thinking about kind of staff expenses? That's one. And two is therefore, do you have any guide in terms of incrementally EBITDA margin? Let's say you add $100 million next year incrementally. I think it should be much more than that, but let's say you did add 100. How much of that do you think you can keep as a vector?

I will tell you maybe I will take that. You know, if you really look at the numbers of, you know, big scores overall, including kind of, you know, people cause in particular, they kind of now, you know, despite like almost, you know, three, you know, rounds of inflationary increases going through, they are still kind of, you know, below the...

pre-pendemic levels in that manner of sorts and all was getting closer to that, but this kind of slightly behind the same quarter numbers for pre-pendemic years. So that way I think we've kind of done a significant amount of rationalization on the fixed course clearly.

it's not that they remain completely constant, they kind of possibly increase at a lower proportion than the, than the growth in the in the in the bottoms of the business. And secondly, last part of the increase is going to come in more in terms of inflationary increases, because we don't really kind of planning any significant.

headcount increases per se in the business in the quarters or years to come. So that's one part of the question that you asked. The other is what is the margin expansion opportunity? Again, good kind of refrain from getting into shorter term kind of margin gain opportunities, but the longer term opportunities clearly there is a kind of

you know, it will depend on multiple, you know, on multiple factors. But you can see this kind of, you know, as in terms of, you know, the volume change that you see even on a year on year basis, you know, in terms of fiscal year 23 versus fiscal year 22. And then the kind of corresponding changes that you see.

playing ball through an operating leverage on the bottom line, that would be quite an indicative trend. I mean, you know, I wouldn't necessarily say you the same trend would continue, but it would be indicative in nature.

Thank you for the explanation.

Thanks Aditya. Next question is from the line of Puneet Sarawgi of Hill Fort Capital. Puneet, you can unmute yourself and ask a question now.

Hi, this is Hari from Hillford Capital. I had a couple of questions. My first question is on the working capital. Can you just double click on the working capital and why it's higher in this quarter seasonally? How do we generally think about OCF in relation to EBITDA on an annual basis?

My second question is whether an India listing is on the animal at all or not?

But when it may be I'll take both and probably miss some of the you know the earlier kind of you know questions on this but on the working up and like I said, you know this is not involved in the business and generally we do see kind of you know deployment happening in working capital during high season quarters and generally religious kind of coming through in the in the

in the off seasonality. So I think it's better to kind of look at it on a kind of a, you know, more of like a annual basis or a four quarter basis. On an annualized basis, I would just kind of suggest that you need to begin some amount of deployment on the working capital linked to volume. So that's on the

on the overall kind of working capital and the trend lines over there. And when it comes to a second question, yes. I mean, the India capital markets are kind of open to e-commerce platforms, clearly and you have seen some of the e-commerce kind of companies kind of changed

go and tap into the Indian capital market from all point of view. You know, one of the key things is that we're not necessarily looking at any fundraising in the short term. We are kind of sitting at, you know, good amount of cash and cash equivalents on the balance sheet, including free cash, you know, even if you were to kind of potentially look at

you know, setting aside set on amounts, you know, for the convertible bonds that we had kind of raised two years back, even setting after setting the design, we're kind of sitting on a heavy cash balance of those over 250 million dollars. So from that point of view, you know, a tapping into the capital markets on an immediate basis, it doesn't seem like a requirement, but from an overall

you know, kind of investor value creation and from kind of leveraging the brand and multiple other things we would kind of you know.

keep an eye on tapping into the Indian capital market at some point in time. But like I said, probably there's no immediacy to it. But in the longer run, common opportunity to tap into capital markets. I think India will be a more preferred market than tapping it or going into the US market once again. So we're Oxprich, enjoy today's conversation and we'll keep an eye on East Asia capture whether there's an Referral prospect for

That is how I will put it. Thank you so much.

Thanks Hari. The next question is from the line of Vijay Jain of Citi. Vijay, you may please unmute yourself and ask your question now.

Thank you Vipul. Congrats on a great set of numbers. I have three questions. First is within the hotel segment, would you say that barring that super budget category you called out sub $20 a night, every other category, perhaps with the exception of international, is now back to pre pandemic levels?

Same, similar, similar. It's not a substantial change from what we had shared earlier.

Got it. And my last question is just, you know, staying on this international team. Now, in the last two to three years, you've launched these programs like my affiliate and my partner, etc. You're working with a lot of offline agents as well.

So I guess my question is how are you thinking about ramping up your international business in the next one to two years? What would be the focus areas there? And if you can shed more light on, you know, how you're going to use even C trips partnership, etc, to kind of ramp that business up if you can talk a little bit more about that.

Yeah, sure, Vijit. No, I think it's a great question, given that the recovery is lagging behind, but you know, are we really prepared for, you know, when the business comes back and future growth on top of it? And the answer is, Vijit, it's absolutely all set from our side, you know, so when you look at

the levers that you could use potentially to grow international business, given the fact that it is an independent online, independent sort of segment. Even pre pandemic, we, you know, our growth rate was much higher both for international flights and hotels. We are almost sort of restless and waiting for that to sort of open up.

example, or for that matter for international bookings, they're already there all have been actually rolled out tested on the domestic side and we are expanding that to to the international side. In terms of customer acquisitions, like you rightly pointed out, we made investment in some of the other channels also.

you know besides our own core B2C platforms and they would definitely be you know sort of helping us grow or get the incremental demand on the international segment because international international travel market like I mentioned it is under penetrated which effectively means that there is more market offline available as well so we do have a channel which is

you know, my partner, which is through the travel agency can reach out to that B2B2C sort of demand coming our way as well. So whether it is distribution channels, or it is on the supply side, including, you know, leveraging the international supply of trip.com.

multiple sources of supply and the product experience on our platform. So on all fronts, we have absolutely invested in. And like I said, we are all set waiting for market to open up.

Great, thanks, I guess just my final question to Mohit. The brand campaigns spend that you mentioned in this quarter for both Gwavi and make my trip. How should we think about that on a going forward basis? I know you have mentioned in the past that some of these expenses are

between here and the customer incentive spending etc. But just trying to get a handle on how to think about it on a quarter to quarter basis and secondly the fixed cost overall which you mentioned is still below pre-pandemic levels or almost there.

I think last we have is an approximate 14, 15 million dollars a month type of a figure in terms of your fixed cost base. Is that now closer to 17, 18 million dollars? Yeah, you know, so you might be able to look at it.

The first question was maybe more on the brand marketing kind of expenses. Generally, if you see historically, we are kind of usually...

have kind of had higher kind of expenses on the brand marketing side. Particularly in the high season quarters, so that's typically Q1 and Q3 from our fiscal year point of view, which is a very good watch. So generally that is the those are these quarters where you kind of typically would see higher spend on this particular side. But overall like I've always been calling out, you know.

see you know overall customer acquisition cost is what is relevant. You know some of it kind of possibly pays out you know with a shorter duration time frame on some possibly have a longer kind of a deep time as well as a lag effect but I think it's kind of you know relevant to look at more in terms of a blind date number. I would just say you know.

That's the reason that we call out the marketing and sales commotion expenses together, because that gives you a better over or understanding of how customization costs are trending. So, kind of looking at it in isolation, it may not be a great idea, but here it is in kind of.

budget for a slightly higher mix coming in from brand marketing expenses particularly in the seasonal quarters. Got it. Thanks, Smith. And my second question was just on the fixed cost base. So where are we in terms of rendering?

Yeah, so if you look at it in terms of you know, you know, the run rate, the COVID used to be almost like, you know, about 15 to 16 million dollars, there is still just shade below 15 million dollars in the reported quarter. That's what I was calling out that, you know, despite enough, you know, almost green, stationary, these are going through.

we are slightly kind of below that run rate. So reasonably good on that. Got it. Great. Those are my questions.

Thank you Vijay. Thanks Vijay. The next question is from the line of Aditya Chandrasekhar of UBS. Aditya, you may please ask your question. Unmute yourself and ask your question now. Yeah, hi. Thanks, Vipul. I have a question on the air side. So, this has been seasonally wrong quarter, right? And we also saw the passenger data.

have been higher considering the large volumes have we lost I mean I don't think we have lost any market share but it's wanted to get a sense of could the growth be better or should it have been better in clip 3 considering the volumes as well as it being seasonally strong and how should we look at that going forward

Sure, I would care. Like I called out, if you really look at it in terms of recovery during the reported quarter, the domestic areas recovery, the industry recovery was more about 95%, whereas our recovery was close to 100%. So, you know, from that way,

If you look at it, you know, possibly are kind of, you know, market share kind of gains continue to kind of, you know, help us and we're kind of growing ahead of the market. Like, could the overall, you know, industry growth been higher? Yeah, I mean, you know, clearly the potential is there for, you know, the overall domestic industry numbers to kind of, you know, keep increasing.

But quite a few challenges there in terms of the prevailing kind of inflationary pressure or etc and the overall capacity and the in some of them on some of them are challenges being faced by the airlines also on the maintenance and spare availability as a result of which some of the kind of claims are also kind of right now grounded.

So as all of this capacity comes back, hopefully in the coming quarters, we should see the industry expanding faster as well.

I think the important point is you would get excited about at times including us is the peak numbers for certain days but you know I think the important point will be just to look at the full quarter numbers.

even for, you know, sort of overall domestic market traffic, and you will realize that it was sort of up and down. And overall, as Mohit pointed out, you know, the the traffic recovery was for the for the market, it was about 95%. And if I can just give you additional data point on departures, slide departures.

And given the fact that we just literally have, you know, every flight and we sort of monitor that very, very closely as compared to what it used to be pre pandemic was actually 92%. And then the reason for that was is that, you know, the load factors have been high, airlines have been very, very careful in deploying more traffic because they've all been and rightly so, you know, coming out of the tough period.

the financial health of the airlines start to improve with some of these results. We're getting some news from Air India that they might turn profitable, etc. Some of these things that happen, it'll further stabilize, we'll get more capacity for sure. And then because of that, the demand and the growth will also come back. Thanks, Ajay. That was helpful.

Just a very quick question on the marketing side again. So, I mean, quarter came at 5.2% even though we did TV campaigns, etc., after a while. I mean, you've mentioned multiple times that it probably stays in that 5-6% range. Do you think there's also a potential for it to come down also from these levels? Because if you recognize this, there's just not enough information to deal with one of these levels, so you can go on and request …

going forward if we kind of don't do some of these TV or ad campaigns which we probably won't do quarter right and we are seeing efficiencies in the other side of the other marketing cost so you think it could head toward that 5 or before 0.8 or 4.9% or you think largely 5 to 6 is where we should aim for. Like I was calling out. So let's go.

We kind of currently estimated to remain in the five to 6% range. I think it's good that at least in the in the peak seasonality in the reported quarter, we were able to kind of keep it more closer to the lower end of the range while reviving the brand campaign. So let's see as we kind of you know, keep making progress. We keep sharing color, but a current estimate remains five to 6%.

Okay, okay, cool. Thanks a lot. That's it from my side. Thanks Aditya. The next question is from the line of Tarbir Shahpuri of Nidhara Capital. Karbir, you may please unmute yourself and ask the question now.

Thanks Vipul. I think my question is for you. Vipul, when are you going to organize an investor day for us?

We are working on it. Give us some time. We are getting the structure ready. So hopefully soon we will come back with the details. I will come back and tell you what I have to say. Haha. Anyway, good luck.

next year. Thank you. Thanks, Tarbhi. The next question is from the line and it will be the last question. We are out of time. It's with Lester Poon from Hong Kong. Lester, you may please unmute yourself and ask the question now.

Hi. In the past, the management gave guidance that the adjusted operating margins would not be lower than 1% of their growth booking revenue. And for Q3, I did a quick calculation. It's about 0.12%. And Q3 already is a peak season.

So does this mean that in other non-pitch seasons, the percentage may fall below 1% or you are confident that you can maintain the 1% in the future? Thank you. So let me take that. We are guided for this full fiscal year. We would kind of look at growth over 1%.

And if you look at on a YTD basis, we are kind of slightly better than the 1% that we had guided for. And therefore, we do believe that for the pool year also as a whole, we should be able to kind of maintain that 1% or be slightly above that. And we should know in about a quarter's time. We'll share more color about the

about the subsequent DLS as we kind of get into the new fiscal year. Okay, thank you very much. See you soon in person in a conference.

Thank you, Vipul. And thank you everyone. Thank you everyone for your patience, your time and all the interesting questions.

and then look forward to come back to you next quarter. Thanks a lot. I would just add that in case we have not been able to take questions from any of the participants due to the cost of your time, please feel free to write into Wipple and we'll try and get back to you as soon as we can.

Yeah. Thank you Rajesh. Thank you Mohit. This brings us to the end of the call. You may please disconnect. Thank you. Thank you.