SUMMARY
Increase in travel demand during the festival and holiday season helped the traveltech company post a profit in Q3 FY23 as against a loss of $9 Mn in the year-ago quarter
Revenue rose 48.3% to $170.5 Mn in Q3 FY23 from $115 Mn in the same quarter last year
While domestic air ticketing for the company has gone beyond the pre-pandemic levels, international ticketing recovery is still lagging
Nasdaq-listed Indian traveltech company MakeMyTrip returned in the black in Q3 of financial year 2022-23 (FY23), posting a profit of $0.2 Mn as against a loss of $9 Mn in the corresponding quarter last year on the back of increase in travel demand during the festival and holiday season.
The company had reported a net loss of $6.8 Mn in the preceding September quarter of 2022.
Revenue rose 48.3% to $170.5 Mn in Q3 FY23 from $115 Mn in the same quarter last year, beating the consensus Street estimate of $170.03 Mn marginally. On a sequential basis, revenue rose 30% from $131.2 Mn in Q2 FY23.
Meanwhile, adjusted operating profit rose to $19.7 Mn during the quarter under review from $15.1 Mn in the preceding September quarter and $13.2 Mn in Q3 FY22.
“Positive consumer sentiment and peak seasonality on the back of festivals and holidays led to improved travel demand during this quarter. As a result, we recorded our highest ever quarterly gross bookings and adjusted operating profit,” MakeMyTrip Group CEO Rajesh Magow said.
Led by the seasonal growth across air, hotels, and bus bookings, MakeMyTrip’s gross bookings rose to $1,738.2 Mn in Q3 FY23 from $1,155.7 Mn in the corresponding quarter last year. The company said it has recovered completely to over pre-pandemic levels in terms of gross bookings in Q3 FY23.
Air ticketing revenue grew to $38.4 Mn in Q3 FY23 from $27.4 Mn in Q3 FY22. Revenue of hotels and packages business also increased over 53% year-on-year (YoY) to $103.3 Mn during the quarter.
“Total packages bookings are now more than 150% of pre-pandemic volumes, with the online channel leading the growth. Domestic packages are now more than twice the pre-pandemic volume and for international packages, the recovery is now picking up,” said Magow during the company’s earnings call.
On the other hand, MakeMyTrip’s bus ticketing revenue saw a 32.6% YoY increase to $19.5 Mn in the December quarter.
“The recovery in the southern market which has been traditionally strong for buses is slower than expected as a large IT workforce is still working remotely,” he said.
However, it is pertinent to note that despite the positive seasonal growth in the travel industry, the company’s air ticketing revenue declined 3% on a sequential basis from $39.6 Mn in Q2 FY23.
This decline can be viewed against the backdrop of a strong demand in domestic air ticketing, which has reached beyond the pre-pandemic levels for the company, while international ticketing recovery is still lagging, noted Magow during the call.
“While domestic travel led the recovery in 2022, we believe that full restoration of supply, aided by some fare rationalisation and easing of visa processes, could help international travel recover to pre-pandemic levels soon with improved traveller sentiment,” he said.
MakeMyTrip shares fell over 1% to $28.54 by 10.30 AM EST today.
Breaking Down Expenses
On the expenditure side, MakeMyTrip saw a 29.9% increase in marketing and sales promotion expenses to $28.9 Mn in Q3 FY23 from $22.2 Mn reported in the corresponding quarter of the prior fiscal.
The rise was primarily driven by an increase in variable costs and discretionary marketing and sales promotion expenditures such as expenses on events and brand-building initiatives in response to the strong recovery in domestic travel demand following the reduced impact of the Covid-19 pandemic in India during the quarter, the company said in a statement.
Meanwhile, the company spent $32.8 Mn in personnel expenses during the December quarter, registering an 8% YoY rise, primarily led by the annual wage increases.
On the other hand, MakeMyTrip spent $56.5 Mn as procurement cost of hotels and packages services during the reported quarter as against $29 Mn in Q3 FY22.
Besides, MakeMyTrip’s other operating expenses increased 8% YoY to $35.6 Mn in the December quarter. The rise was primarily led by an increase in expenses towards payment gateway charges, outsourcing fees and website hosting charges linked to increase in bookings, which was partially offset by a decrease in the provision for litigations of $8.4 Mn.
It must be noted that the Competition Commission of India (CCI) levied a fine of INR 223.5 Cr on MakeMyTrip and Goibibo group in October last year. Taking up the company’s plea, the NCLAT asked MakeMyTrip to deposit 10% of the fine imposed. Challenging the Tribunal’s order, the traveltech major moved the Delhi High Court. However, the HC also dismissed the plea in December.
“A deposit of INR 223.5 Mn (or $2.7 Mn), being 10% of the aggregate penalty imposed on MMT India and Ibibo India by the CCI has been made with the NCLAT pursuant to orders of the NCLAT and the High Court of Delhi. As a result, enforcement of the penalty amount has been stayed pending the outcome of the appeal,” MakeMyTrip said in the statement.
