MakeMyTrip clocks $9M loss on $26M revenue in Q1; hotel booking generates 41.7% of revenue, air ticketing revenue down again

NASDAQ-listed online travel services firm MakeMyTrip (MMT) reported a 8.9 per cent rise in revenues less service costs which stood at $26 million for the first quarter ended June 30, 2013 over the year-ago period. Overall revenues rose 20.3 per cent to $77.1 million in the quarter while gross bookings, which represent the total amount paid by a customer while booking on its platform, rose 26.5 per cent to $335.5 million.

The decline in revenues less service costs (a crucial metric for OTAs) was led by yet another quarter of fall in revenues from its key revenue earner air ticketing, which declined 8.9 per cent to $14.2 million. Hotel & packages booking was the sole growth engine during the quarter and contributed around 41.75 per cent of revenues, up from 29.8 per cent in the same quarter last year. Revenue from other businesses, which includes trains, bus and cab booking, also shrank.

The OTA reported a net loss of $9 million against a loss of $0.8 million in the year-ago period and an adjusted net loss of $5 million during the quarter against adjusted loss of $1.8 million.

Adjusted net loss excludes employee share-based compensation costs, M&A-related expenses, amortisation of acquisition-related intangibles, net change in fair value of financial liability in business combination, net loss on change in fair value of derivative financial instrument and income tax (benefit) expenses.

While the firm continues to see pressure in its key air ticketing business, it reported better numbers compared with the previous quarter ended March 31, 2013 when it saw a 1.4 per cent decline in its revenues less service costs over the year-ago period.

Deep Kalra, chairman and group CEO of MakeMyTrip, said: "Our undisputed market leadership has allowed us to deliver strong operating results in a challenging environment, while making great strides in our hotels and packages business."

The firm reiterated full-year revenue less service costs growth guidance of 15-20 per cent on a constant currency basis, but adjusted the range to approximately $95 million to $100 million to account for the forex swing. It had earlier given a guidance of $101 million to $106 million for FY14.

Air ticketing: The number of transactions rose 15.4 per cent to 1.272 million during the quarter but revenue from air ticketing business decreased 11.4 per cent (9.2 per cent in constant currency) to $15.2 million in the quarter ended June 30, 2013 from $15.6 million in the quarter ended June 30, 2012. Revenue less service costs decreased 8.5 per cent (6.2 per cent in constant currency) to $14.3 million in the quarter compared with $15.6 million in the year-ago period. Gross bookings grew 17 per cent (19.9 per cent in constant currency) year on year, mainly due to an increase in transactions by 15.5 per cent and aided by higher airfares in the quarter ended June 30, 2013. The company attributed the decline in revenue less service costs to a fall in net revenue margin (defined as revenue less service cost as a percentage of gross bookings) to 5.7 per cent from 7.3 per cent a year ago, mainly due to a reduction in airlines' base commission.

Hotels and packages: The number of transactions rose 72.1 per cent to 182,000 during the quarter. Revenue from hotels and packages business increased 33.4 per cent (36.1 per cent in constant currency) to $61 million in the quarter ended June 30, 2013 from $45.8 million in the quarter ended June 30, 2012. Revenue less service costs increased by 52.7 per cent to $10.9 million from $7.1 million in the quarter ended June 30, 2012. This was due to an increase of 48.6 per cent (51.5 per cent in constant currency) in gross bookings primarily due to a 72.2 per cent rise in the number of transactions and an increase in net revenue margin from 12.5 per cent in the quarter ended June 30, 2013 to 12.9 per cent in the quarter ended June 30, 2013. The growth in this segment was further aided by the acquisition of Hotel Travel Group and ITC Group in the quarter ended December 31, 2012.

Other revenue: Other revenue decreased to $0.9 million in the quarter ended June 30, 2013, from $1.2 million in the quarter ended June 30, 2012, primarily due to lower advertisement income on its websites.

FY14 outlook

In the first quarter of FY14, the firm faced ongoing operating challenges, including a capacity constrained air market, slowing economic growth and increased volatility in the rupee to US dollar exchange rate. The firm reiterated its revenue less service costs growth guidance of 15 per cent to 20 per cent on a constant currency basis, but adjusted the revenue less service costs guidance in the range of approximately $95 million to $100 million for FY14, to account for the current rupee exchange rate of 58.79 per US dollar.

(Edited by Joby Puthuparampil Johnson)