MakeMyTrip's Q2 revenue climbs 15.6% as air ticketing business swings to growth; hotel booking continues to outpace

NASDAQ-listed online travel services firm MakeMyTrip (MMT) reported a 15.6 per cent rise in revenues less service costs which stood at $23.3 million for the second quarter ended September 30, 2013 over the year-ago period. Overall revenues rose 3.8 per cent to $47.4 million in the quarter while gross bookings, which represent the total amount paid by a customer while booking on its platform, rose 17.9 per cent to $272.6 million.

The rise in revenues less service costs (a crucial metric for OTAs) marks a turnaround for the firm as it has been declining due to lower revenues from air tickets, which is the largest business driver for the company.

Air ticketing revenues rose 5.1 per cent last quarter to as against a decline of 8.5 per cent in the first quarter. Hotel & packages booking, which has been growing faster in the recent past and also commands higher margins, was up 43.4 per cent against 52.7 per cent growth in the first quarter.

Hotels & packages contributed 30 per cent to the overall revenues against 24.5 per cent in the same quarter last year but declined sharply sequentially from 41.5 per cent as year-on-year growth decelerated and air ticketing business picked up.

Revenue from other businesses, which includes trains, bus and cab booking, also marked a turn-around, growing 38.1 per cent to around $1 million.

The OTA reported a net loss of $7.5 million against loss of $1.2 million in the year-ago period and loss of $9 million in the first quarter ended June 30, 2013.

Adjusted net loss stood at $2.9 million against $5 million during the first quarter and $1.17 million in Q2 FY13. 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.

Deep Kalra, chairman and group CEO of MakeMyTrip, said: "Our undeniable market leadership and superior brand recognition continues to drive MakeMyTrip to outpace overall market growth in a volatile travel environment, while making advancements in growing market share in the 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 $93 million to $97 million, against the previous estimate of $95 million to $100 million, to account for the forex swing. It had originally given a guidance of $101 million to $106 million for FY14.

Air ticketing

Revenue from air ticketing business increased by 5.6 per cent (18.8 per cent in constant currency) to $16.2 million in the quarter ended September 30, 2013 from $15.3 million in the quarter ended September 30, 2012. Revenue less service costs increased 5.1 per cent (18.2 per cent in constant currency) to $15.2 million in the quarter ended September 30, 2013 from $14.5 million in the quarter ended September 30, 2012. The increase in revenue less service costs was contributed by a 24.7 per cent increase in transactions due to lower airfares in the quarter, while average transaction value declined by 21.5 per cent year on year. Net revenue margin percentage (defined as revenue less service cost as a percentage of gross bookings) increased to 7 per cent from 6.5 per cent a year ago largely due to a decline in average transaction value.

Hotels and packages

Revenue from hotels and packages business increased 2 per cent (18 per cent in constant currency) to $30.2 million in the quarter ended September 30, 2013 from $29.6 million in the quarter ended September 30, 2012. Revenue less service costs increased by 43.4 per cent (58.2 per cent in constant currency) to $7.1 million from $4.9 million in the quarter ended September 30, 2012. This was attributed to an increase in gross bookings by 39.2 per cent (55.3 per cent in constant currency) primarily due to a 58.5 per cent increase in the number of transactions year on year. This was largely driven by the growth in its international hotel bookings aided by the acquisition of Hotel Travel Group in the quarter ended December 31, 2012.

Other revenue

Other revenue increased to $1 million in the quarter ended September 30, 2013 from $0.7 million in the quarter ended September 30, 2012, primarily due to an increase in facilitation fees on travel insurance.

(Edited by Joby Puthuparampil Johnson)