MakeMyTrip’s results for the April-June quarter tell a familiar story of double and triple-digit increases across the board in terms of revenue, room nights and flight segments, with sales and marketing costs and net losses also on the up.
This quarter’s numbers include the impact of the Ibibo Group businesses following the 2016 merger.
Talking to analysts, the executive team continued to highlight the immediate and short-term importance of market share gains and customer acquisition in order for the business to succeed in the long term.
Underpinning this approach are a number of macro factors which feed into MakeMyTrip’s long-term plans, with the Indian government’s generally proactive approach to travel and the digital economy helping greatly.
Execs highlighted the UDAN initiative, which is intended to increase regional connectivity across India by insisting airlines offer a certain number of discounted seats on flights between designated secondary airports.
The Indian government has also launched a BHIM, a payments app which provides a nationwide platform to users to transfer money.
Deep Kalra, MakeMyTrip’s CEO said: “This will undoubtedly benefit all e-commerce companies over time by bringing in a new segment of users into the market”.
The private sector too is also helping MakeMyTrip. Reliance JOI, one of the country’s biggest mobile networks, has been upping its presence with “disruptive and affordable smartphone and data plans.”
Other positive macro tailwinds include the generally strong outlook for the Indian economy – GPD up 6.6% this year, 7.2% next year according to the IMF.
And the aviation sector in India will expand. “Indian carriers have already placed more than 1,300 new orders, with 250 planes expected to be come into service over the next two to three years,” Kalra noted.
The theme here is the importance of so-called second/third/fourth tier cities and India’s rural population. Taking to analysts Kalra confirmed “Large opportunities for new user growth will likely come from the non-urban parts of the country, where penetration levels are estimated at 16%.”
MakeMyTrip is already actively pursuing this segment and has launched a MMT Lite, a 1-megabyte Android app which has been built to address storage issues on entry-level smartphones, favoured by many new users.
The positive soundings around the future for online travel and India’s digital economy in general comes in the context of a some impressive growth figures for its April-June quarter. In volume terms, standalone hotel room night bookings was up by 192% at just under 5.5 million. Air segments were also ahead, up 65% to around eight million in the quarter.
Gross bookings for the three months broke through the billion dollar barrier and were 81% up on the same period last time. Revenue was up 54.6% to $192.1 million compared with the same quarter last year, while revenue less service cost was up 135.0% at $141.2 million.
The net result however was a net loss, which came in at some $53 million for the quarter.
Sales and marketing costs for the quarter were up 152.5% to $133.0 million thanks to “significant customer inducement and acquisition programs expenses.” Execs were keen to explain to analysts that the efficiency and return from its sales and marketing spend were improving. Kalra noted that sales and marketing costs this quarter were around 12% of revenues – he expects that to drop to around 5% “within three to five years”.
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