Welcome to MakeMyTrip's Fiscal 2015 Fourth Quarter and Full Year Earnings Call. The company wishes to remind you that certain statements made on this call are considered forward-looking statements within the meaning of the Safe Harbor provision of the U.S. Private Securities Litigation Reform Act of 1995..

Forward-looking statements are not guarantees of future performance and, by their nature, are subject to inherent uncertainties. Actual results may differ materially. Any forward-looking information relayed on this call 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 is obtained in the Risk Factors and Forward-Looking Statements sections of the company's Annual Report on Form 20F filed with the SEC on June 6, 2014. Copies of this filing are available from the SEC or from the company's Investor Relations department..

I would now like to introduce the speakers from MakeMyTrip, Deep Kalra, Rajesh Magow and Mohit Kabra. Please go ahead. .

Thank you, and welcome, everyone, to our fiscal 2015 fourth quarter and full year earnings call..

During the past fiscal year, the MakeMyTrip team worked diligently to execute on our key strategic objectives. These objectives included improving the net revenue mix from our Hotel and Packages business and driving mobile adoption and conversions.

I'm happy to share that we improved our full year H&P net revenue mix by over 7 percentage points, driving contribution of non-air [ph] businesses to an all-time high of over 48%..

Furthermore, today, more than 40% of our Indian online visitors are found via the mobile platform versus 19% a year ago. In the strategically important domestic hotel section, mobile now accounts for over 38% of total online transactions..

For the full fiscal year 2015, we exceeded $1.6 billion total gross bookings and reported nearly $139 million in net revenue or revenue less service costs, which represented growth of 32% year-on-year in constant currency terms, exceeding the top end of the guidance we provided last quarter.

Furthermore, we were able to achieve these goals while delivering a modest adjusted operating profit for the full year..

As we enter fiscal 2016, we're excited about the rapid growth of online users in India. According to a recent analyst report, India is forecasted to have 1 billion online users by 2030. This growth led by one of the youngest populations globally who love their smartphones is expected to add 300 million new online shoppers in the same timeframe..

We also remain confident about India's rising long-term growth prospects. We are optimistic about domestic and outbound travel demand of the expanding middle class and the inevitable rise of Internet penetration, which continues to drive increased e- and m-commerce awareness and adoption in India. .

Our commitment to our customers' experience, which we believe is the key driver of sustainable success behind the MakeMyTrip brand, will allow us to further expand our market leadership in online travel in India now and for the long-term..

We are thus increasing our investment in the MakeMyTrip brand to more effectively inspire the travel ambitions by expanding and changing customer base, particularly in India.

We believe the current series of TV advertisements and online media content will further strengthen the connection with our audience at the emotional level, and we hope we'd stir the innate travel bug within the Indian consumer, while highlighting the white -- wide breadth of travel options MakeMyTrip offers..

Coupled with the existing excellent booking experience across platforms, including the m site [ph] and apps, we expect the reposition will further propel our brand ahead in the marketplace..

In keeping with our commitment to customer delight and satisfaction, we also recently launched our Uncancel viral campaign. Uncancel is the first of its kind feature that allows customers to rebook the exact same trip that they have previously canceled, while still maintaining the same cost of the initial booking.

By opting for Uncancel, customers who need to reschedule travels do not need to cancel their plans. Rather, they can simply push out and travel to a later date without additional charges. This is just another example of consumer focus innovation for MakeMyTrip that keeps delighting our customers and expanding the brand further..

I would now like to give you an update on our Innovation Fund, which was set up to invest in U.S. startups and early-stage companies working on innovative ideas and business models within the online travel technology space. In April, we announced our acquisition of certain key assets of Mygola and the integration of their team.

This acquisition is focused on curating in-destination travel content to help Indian travelers research, plan and, in some instances, book their experiences right on their smartphone app. We will also be leveraging this outstanding team to work on new product innovation in the online travel space..

Today, we also announced our investment in Inspirock, Inc., which owns and operates www.inspirock.com, an online planning tool that allows users to build a completely customized itinerary online. .

With these investments, we are looking to drive higher customer engagement during the trip planning phase. We also hope to enhance our customers' in-destination travel experience through steps consistent with MakeMyTrip's existing value proposition..

We are well on course to achieving our strategic objective of driving the Hotel and Packages business to account for over 2/3 of the net revenue mix over the next 3 to 4 years. We also expect to transform the business into a mobile-dominated business and drive a broader reach via more vernacular options, particularly on mobile..

Now let me hand the call over to Rajesh to give you more highlights in the quarter and the past fiscal year. .

Thanks, Deep, and hello, everyone..

In the fiscal fourth quarter and full year, we delivered strong operating and financial results despite a few headwinds facing the back half of the year, from a temporary airline supply reduction by one of the airlines and certain [indiscernible] of key domestic holiday destinations.

We believe our mobile focus, unrelenting commitment to our customers' experience and speed-to-market allowed us to maintain our leadership position..

Specifically, in the seasonally slow Q4, revenue less service costs grew 28.4% in constant currency terms, which was in line with our plan. For the full year, we achieved revenue less service costs of $138.9 million, representing growth of 32% on constant currency terms. Our results were ahead of our both our guidance and plan..

Let me start with sharing our progress on the mobile front now. We believe that mobile adoption in India is in the early stages of a revolution that will change the way our citizens access, engage and transact online.

In the past year, we achieved additional 4.6 million downloads of our mobile app, with over 7 million cumulative term downloads to-date. .

We have also been making continuous improvements in our mobile app to enhance customer experience. Recently, we updated our iOS app to support the Apple Watch, added new cheaper airfare cards to Google Now, refreshed the app's home screen for enhanced usability and added a fare calendar for even easier flight searches.

Additionally, we introduced enhanced push notifications from the MakeMyTrip app, an improvement that has been drive eyes and audience [ph]. In addition, we also added the ability for mobile users to book their tickets up to 120 days in advance to their updated app.

These ongoing improvements and enhancements to our mobile experience are already yielding strong results..

Moving on to the Hotel and Packages business. In Q4, net revenue grew by nearly 50%, and for full year by nearly 58% year-on-year in constant currency terms. This robust growth resulted in the contribution from H&P and increased to 45% of total net revenues.

We also expanded our domestic hotel supply to take the hotels count to over 24,000 developers within India that are bookable online now..

Internationally, we also expanded the property count to over 205,000 available for our customers across our multiple brands in key outbound geographies. The strong growth performance can be attributable to the spend [ph] of the MakeMyTrip brand and mobile platform, especially for standalone hotel bookings..

In Q4, we registered over 180% year-on-year increase in the number of mobile [indiscernible] transactions booked and over 260% year-on-year increase in mobile net revenue.

We plan on further improving the mix going forward in fiscal year '16 and beyond as we drive solid growth is H&P segment, driven by our continued push for mobile adoption, tapping into new customer segments, well supported by the increase in shift from offline channel in the low penetrated domestic hotel market..

Now let's move on to discuss our Air Ticketing business, where we continue to retain an industry-leading domestic air market share of over 15% in March, which was a significant improvement from the 11% share a year ago..

During Q4, overall Air Ticketing transactions grew by nearly 40% year-on-year. The strong transaction growth rate was boosted by a rapid growth from our mobile channel, which reflect nearly 150% year-on-year increase for the quarter and represented 19% of the total online transactions..

Going forward, we will expect to see continued high growth via mobile as conversions continue to improve and as a greater percentage of our business comes from the mobile as opposed to the desktop channel. .

Year-on-year, net revenue grew by 17% in constant currency terms, which was in line with our expectations. However, overall net margin compressed by 20 basis points to 6.2%, reflecting the lower average airfare..

For the full year, the results from our Air Ticketing business came in stronger than what we anticipated when we began the year. Year-on-year, Air Ticketing transactions grew by nearly 36%, and we gained material domestic market share.

From a net revenue perspective, we registered nearly 17% year-on-year growth, even with net margins compressing to 6.1% versus 6.6% a year ago..

Going forward, as we have consistently shared, we do expect to see further compression in the Air Ticketing take rates [ph]..

Let me now hand the call over to Mohit to share our quarter results in detail. .

Thank you, Rajesh. In Q4, MakeMyTrip delivered net revenues of $36.4 million, resulting in full year net revenues of $138.9 million, with reference to constant currency growth of 32% exceeding our plan and previously guided guidance. I'll now update on the financial performance across our key business segments..

For the quarter, net revenue from the Air Ticketing business grew by 17% year-on-year in constant currency terms.

This growth was largely a result of strong year-on-year transaction growth of nearly 40%, partially offset by about 15% drop in average transaction value in the low season quarter coupled with compression of about 20 basis points in the net revenue margins as compared to similar period last year..

For the full fiscal year, net revenue from the Air Ticketing business grew by 16.7% year-on-year in constant currency terms.

This was largely driven by strong year-on-year increase in transactions by nearly 36% as a result of return of [ph] strong passenger growth in the domestic aviation market, driven by [indiscernible] for the airlines throughout the year and the ongoing shift from offline to online booking.

In the international outbound air segment, we saw transaction growth of over 44%..

As anticipated, the Air Ticketing margin saw a compression of about 50 basis points from 6.6% in fiscal '14 to 6.1% in fiscal year '15. We expect to see a similar trend on margin compression in the coming forthcoming fiscal as well..

Now I would like to present the financial highlights of our Hotels and Packages business. In Q4, our revenue less service costs from the H&P business grew to over $16.4 million, which was nearly 50% year-on-year growth in constant currency terms.

The growth was driven by increasing transactions of over 32% and margin expansion from 12.1% in Q4 of fiscal '14 to 15.7% in the current quarter. This margin expansion was largely on account of better trade negotiations in the new season quarter, coupled with performance leave incentives achieved and realized on a full year basis..

For the full fiscal 2015, our revenue less service costs in the Hotels and Packages business reached $62.6 million, which is driven by 57.8% year-on-year growth in constant currency terms.

This strong year-on-year growth was driven by more than 59% growth in transactions and being primarily driven by the transaction growth of over 70% in our standalone Hotel business. .

What's exciting to report is that alongside this robust transaction growth, we were also successful in expanding take rates from 12.6% in the previous year to 13.2% in the reported fiscal year.

This was made possible with the rationalized use of incentives to drive adoption and transaction growth while leveraging our scale to negotiate better economics with the suppliers.

This fiscal 2016 is being targeted as the year in which we can drive Hotels and Packages to account for the largest pie of the business mix, with overall sound [ph] performance in this business segment in the currently reported fiscal gives us confidence that growth in this segment can be driven by our scale, but not affect brand strength and the superior experience on mobile..

For the fiscal fourth quarter, we recorded a small administrative operating loss of $962,000, which reflects the revenue seasonality of our business and our commitment during the quarter to invest in marketing activity to drive mobile and online hotel adoption. .

For the full fiscal year, we are pleased to report a modest adjusted operating profit of over $457,000, which was a material improvement from the $3.9 million loss recorded in the previous fiscal 2014. .

By the strategy being rescued [ph] and higher market expense to drive mobile and hotel adoption throughout the year, we successfully improved our operating margins by optimizing personnel and selling and general administrative expenses during the reported full year fiscal of 2015..

As we head into fiscal 2016, we remain optimistic of our future long-term growth prospects, driven by the low penetration of hotels being booked online, as well as the way mobile and livelihood change the way people transact.

In fiscal 2016, as mentioned by Deep, we plan to focus on driving mobile adoption and further improving the business mix in favor of Hotels and Packages. We will, therefore, continue leveraging these areas of strategic growth, while drawing leverage on other operating expense like personnel, selling and general administrative costs..

We also expect further compression on the Air Ticketing margins in fiscal 2016. Accordingly, we are pleased to ensure that our full year revenue less service costs guidance for fiscal 2016 with a constant currency growth range of 22% to 26%..

With this, I'd like to open the call for Q&A.

Operator, please?.

[Operator Instructions] And our first question comes from the line of Lloyd Walmsley with Deutsche Bank. .

Wondering if you can just comment on what is going on in the bookings line for H&P. It seems like that's decelerating quite a bit on both the transaction side and the booking side.

Is that a competitive issue? Is there somebody else kind of taking share there?.

And then, what, I guess, as a follow up, what should we expect the H&P bookings numbers to look like for this coming fiscal year as you lap the acquisition of Easytobook?.

Yes, that's a good question. Let me just say, this is Rajesh. So 2 points here. One, of course, that -- if you look at on a full year basis, the transaction growth is actually fairly robust on a year-on-year basis, so you should perhaps take a holistic view of the full year on the H&P transaction growth. .

But more specifically for the quarter, it's a low season quarter. I think 2 aspects kind of contributed to this. One is generally low season travel quarter. So on a travel basis, the bookings growth was relatively lower.

And more importantly, the overall average transaction value, if you would notice when you look at the numbers, specifically within the segment, the mix is kind of moving towards a standalone a la carte fares. And that has kind of resulted in overall reduction in kind of on the packages as some lower growth on the bookings on travel visit.

But robust growth on the standalone a la carte hotel bookings, but on a mixed basis, the overall number looks relatively lower. However, if you really see the revenue side of it and you see the margins side of it, so there's very decent expansion on the H&P side, both on -- in the quarter, as well as on the overall business. .

Specifically from a competitive landscape standpoint to your question, yes, there have been some amount of competition, the discounting that is going on in the marketplace, from one of the players, not necessarily across the board.

But -- and the way we have tried to kind of counter that as part of our strategy is to pick our battles in terms of doing the intelligent kind of push on the mobile front if we are to [indiscernible] any kind of margin.

But also [indiscernible] we should, based on our overall yearly volumes, basically supplies, to not necessarily have a valuation on margin as you would notice. But very intelligently, perhaps, also make sure that you don't kind of lose the ground on an overall basis, specifically on standalone a la carte hotel bookings on the mobile side.

But on -- but at the same time, not necessarily -- and I'm just knocking dollar-by-dollar kind of a strategy because we don't believe that that's sort of the sane strategy.

And the kind of overall leads [ph] will be call that we took when we look at full year performance and the way we have seen growth on the mobile side as we mentioned on the script earlier. .

And so all of these factors contributed to relatively for this first quarter lower transaction growth, but very high on margin expansion and revenue. And going forward, we're pretty sure that we'll kind of on sight with the overall growth in H&P segment, driven both by transaction growth, as well as, incrementally, margin growth. .

But can you give us a sense for what the year looked like without Easytobook? Or what the contribution was from Easytobook? Because now that you're lapping that, one would think the growth will be harder to bounce back, as you say, in terms of transaction growth and bookings growth.

Can you kind of give us a sense for what that contribution was? And why you think it's going to grow faster this year?.

Yes, sure, sure. No, EasyToBook, actually, in all our metrics wasn't a significant contribution in any case. So it was actually a small -- a very small kind of contribution because it wasn't really either a new buyout or a transaction buyout, if you will.

The EasytoBook was much more, if we leverage the technology team and the front-end technology and the front-end capabilities that they have. .

So I don't think we should look at it, the majority of this growth or majority of these numbers coming in from the India business. And going forward also, it's not that EasytoBook is going to materially contribute. .

And our next question comes from the line of Manish Hemrajani with Oppenheimer. .

Dramatic improvement in hotel margins. How does the mix of standalone hotels compared to last year? You talked about better negotiated rates with suppliers. Are you seeing that with chains or with independents? And how seasonal is this margin improvement? We all know that the Indian hotel industry occupancy rates continue to be challenged.

Should we expect to see similar margins as we go through the year?.

Yes. So -- sorry let me just start, and then Mohit can add. Specifically on the margins, I'd limited to give you more color on that, Manish. .

So is it going to be a consistent thing for a particular quarter because the quarter expansion of margin that you see that we reported out is a factor of 2 things.

One is one low season quarter, and then, obviously, because of the occupancy, relatively lower in the low season quarter, you end up getting more incentives from the suppliers, and we managed to do that.

And second is also, on an overall basis, in some cases, [indiscernible] link to the annual kind of delivery target incentives that are attached to it. .

So therefore, when we look at it, on the margin analysis, we should look at full year margin analysis for H&P rather than looking at specifically for a particular quarter. And then, you do the quarter split obviously, you keep the seasonality in mind. .

So if you look at full year number, that is in line with our expectation, the margin expansion [indiscernible], 13% now. And we can continue to hope that as we've been talking about the aspect long-term, we do expect that we can potentially take it to about 14.5%, 15%.

So incrementally, on a full year basis, you should expect, as we keep growing our volumes, an incremental gain on the -- or expansion on the overall margin for the full year..

And yet to your point on the independent properties, yes, clearly, while this would be -- the lap structure would be true across the board, wherever we would be driving volumes, they're kind of irrespective of the category, but most skewed towards independent properties where we are driving more volume then we play the kind of quite open to -- given the performance, our performance with those specific independent properties wide open to kind of give us performance links with better margins.

So clearly, coming in from there. .

For the mix, I am going to hand it over to Mohit given last year's comparison. .

[Indiscernible] even on the margin side, Manish, as you would recall in Q1, we have reported slightly lower margins on the Hotels and Packages segment compared to full year of previous year.

But we have called out that this margin is more like a quarter-to-quarter kind of an issue based on seasonality and a lot of other things, and it is better to look at it on a full year basis.

And even in Q1, we were confident that on a full year basis we should be able to bounce back and see some improvement on a year-on-year basis on the H&P margins. That plan seems to have played out, and we were working to have kind of done well for the year as a whole. .

Coming to the mix part, we clearly have made significant progress in terms of improving the mix of standalone hotels within the H&P segment. And compared to [indiscernible] 50% mix until last year, standard hotels now account for over 60% of the H&P mix currently.

And we believe we should be able to continue to see this shift going forward as well and take it more closer to about 70%, 75% for the next couple of years. .

I mean, I understand the seasonality in margins. But these margin levels we haven't seen in the past ever.

So should we expect to see similar margins like these in weak seasonal quarters, when hotels have difficulty in filling up their rooms and getting up to a certain capacity level?.

No. And right, this quarter, a large part of the significantly higher margins that you're seeing comes in from the performance-linked bonuses, which are kind of annual target-linked or full year performance-linked. The likelihood of achievement of the same continues to depend upon how the performance goes through over the full year basis.

And therefore, some of these, we started getting factored in on an ongoing basis going forward. One of those that happened during the year is we've significantly increased the number of properties that were listed on the site.

And therefore, the ability to kind of predict that volume commitment over the year and likely achievement over the year was difficult during this particular year because we already had a significant expansion mode on the supply side. I think this will be largely more moderated across quarters and this forthcoming fiscal. .

One question on guidance. It seems a bit conservative especially as we look at robust air growth expectations at least for this calendar year as you're seeing capacity increases both in added routes and new airlines.

Also maybe can you give us some color on how do you expect air and hotel growth to pan out?.

So Manish, what we have factored in, and this obviously based on the estimates at this point in time, like beginning of the year, and as you've seen in the developing markets kind of evolve, especially air market has been fairly dynamic in that sense, and some of which unpleasant surprises.

But what we obviously took into account, what we -- our knowledge and information at this point in time at the beginning of the year.

So there's the bigger impacts that we have taken in the overall numbers, so the guidance range that we have given is actually on the margin dilution, which we have on the air side, not on the Hotels and Packages side but on the air side, which we've been talking about for some time. And we've been clocking that about 6%, over 6% even this year.

And that seems to be -- at least our estimate at this point in time is that, that will get diluted probably about 10% this year. And therefore, that has impacted. And you're absolutely right in terms of just a generally overall capacity improving in the domestic air market, generally improving and going in the right direction.

But the 10% dilution in the margin will have a material impact on the revenue side. And since I issued the guidance around the revenue side, we do expect transactions to grow. But this is one of the key factors that kind of probably optically will be reflecting on the overall guidance range.

But as we go along and we will see how the market grows and evolves and as we've giving out, I guess, progress update and revision every quarter, we'll keep watching this space and we'll keep updating it as we go along in the year. But at this point in time, this is what we thought was the good estimate from our point of view. .

And our next question comes from the line of Gaurav M. from Citigroup. .

Just coming back to the hotels business, I understand that this is a seasonally slow quarter. But given the fact that this is still a fairly underpenetrated market, even if I look at the mix of transaction volume as well as value, year-on-year growth of almost 11%, 12%.

Given where we are in terms of the whole penetration cycle in the hotels business, just wanted your thoughts on that, especially air, which is much more mature, seems to be growing much faster right now.

So any thoughts on that as to where these numbers should -- would look like, say, in a year's time?.

Gaurav, a couple of things over there. Rajesh did kind of call out that in this low-season quarter, we could particularly tend to see the average transaction value to be much lower compared to actually some quarters. But even on a year-on-year basis, a couple of points over there.

If you look at it on the air side itself, as Rajesh has called out, there has been a significant reduction in the average airfares over the last year and over a similar quarter of the previous year as well.

So when you look at the overall ATV's coming down, particularly on the Hotels and Packages business, this particular quarter has seen a lower growth on the overall gross booking business. But if you look at it overall transaction growth, it continues to be much better, much higher.

And also if you look at this overall, revenue growth continues to be low. And as we've been calling out, we do see this kind of temporary quarter-upon-quarter kind of changes on specific business factors in this segment.

But overall, the trend, if we look at it for the last 4 quarters and for the year as a whole, it seems like there has been both [indiscernible] gross booking and net revenue level as well as on the transaction side overall while not losing anything on the margin side, and in fact, I think the margins on a year-on-year basis.

So I think given largely related to ATVs being lower, I guess, and also the fact that there has been a mix shift in favor of hotels, the average transaction value tends to be much lower compared to Hotels and Packages. .

And just to add, Gaurav, to what Mohit said and just want to give, I guess, a long-term view on this, specifically the mix changing in several hotels, it's actually quite healthy. Right now, in a particular quarter, we do see the mix changing and certainly the average transaction value goes from $342 to $280 per transaction.

So obviously, it will have an impact on the gross booking levels.

But otherwise, as the mix as an overall, strategically with the way we want to just kind of move the mix to because it's largely online when the shift is happening, and slowly and gradually this whole value will also improve in terms of changing -- our customer mix changing as we go along as well.

So in fact, actually we are not particularly concerned about changing the mix per se. We're actually quite happy as it continues to happen because we know the packages business is from a customers' point of view, there is a segment of customers that actually likes to buy there.

But from an operating leverage point of view, the more and more we can push that to online, whether it is a la carte hotel booking or a combination of [indiscernible] hotel booking or a customer and package booking, we would love to do that. So from that, I just thought to mention at this point that we should keep that point in mind.

And then this transition happens, obviously you would see few metrics going up and down. But on the transaction growth per se, compared to the previous quarters, relatively looks lower. And that also happens because in a low-season quarter on the packages side, you see less travel happening.

But on a booking basis, we don't see any kind of a reverse trend in that sense, at least at this point in time. So I don't think you should read too much into the quarterly -- specific quarterly growth numbers or transaction numbers, especially from those points of view.

We should see overall full year number growth on every aspect on Hotels and Packages side. And that, we believe, is fairly robust. .

And our next question comes from the line of Arya Sen with Jefferies. .

Firstly, for this quarter, what will the growth be in gross bookings for standalone hotels versus growth in packages?.

So we'll just give you that number. But we haven't really been reporting that out, the split of Hotels and Packages. So directionally, like Mohit was highlighting earlier, the mix on the net revenue side is skewed more towards hotels. It's about 60% hotels and 40% packages of the total segment.

And the total transaction value on an overall basis is about $280 and transaction $342 on previous quarter. So I guess, you can kind of do the math and go backwards regarding that number. But we haven't really been reporting now to the split number just from a reporting standpoint. .

But [indiscernible] the growth in the gross booking on the hotel side was clearly far higher than the overall segment. .

Right.

And sorry, the 60% standalone hotels that you're referring to is just for the fourth quarter or the full year?.

This is for the full year mix. .

Okay.

And how much was it last year if I can just sort of get the comparison?.

Closer to 50%. .

50% has gone to 60%, right?.

Yes, in terms of mix, and they were on a standalone basis. .

Okay. And in terms of how much of your transactions are happening on mobile, I think you mentioned 38% of hotel transactions.

So is that the full year average? Or is that the exit rate for the fourth quarter number?.

That's more the exit rate for domestic hotels that booked online. .

Okay.

And how much was it last year? And what was the exit rate last year?.

It was a little lower than 20%. .

Lower -- 19%.

And then what is the overall number across -- or maybe for Air Ticketing or across all your businesses, what is the proportion of transactions across mobile?.

22% overall, I think. .

Okay.

That again is the exit rate?.

Correct. .

Okay.

As compared to what was it last year?.

In the low-teens. .

Low-teens. Okay. And I mean, sorry to repeat this.

But I mean, is it possible to give a breakdown of the guidance of 22% to 26% in terms of what is the expectation from Hotels and Packages versus Air Ticketing?.

[indiscernible] particularly on the air business, the Air Ticketing side, it's been a bit of a seesaw in terms of how the industry has played out over the last 1 year. And therefore, they're also kind of factoring in the expectations that we might see compression on the air margin side to continue in the coming fiscal as well.

Keeping that in mind, we kind of come out with this overall company growth guidance in the range of 22% to 26%. Now clearly, with the air margin compression being factored into, the large part of this growth is clearly coming in the Hotels and Packages business.

And this is kind of largely evident even from the continued shift that we are seeing in the business mix, getting more and more in favor of Hotels and Packages.

So we believe we're starting to see this business mix shift further in '16 in favor of Hotels and Packages as we expect the highest part of the growth guidance to come in from this particular segment. .

Okay. And so you did mention, that you're factoring in a compression of margins by about 10% for next year in Air Ticketing.

What's the sort of expectation in terms of -- I mean, do we expect a more normalized year in terms of gross booking growth in Air Ticketing? Or do we expect it to remain on the stronger side?.

This year, it could be more or less normalized. As you know, growth concerns the fact that on a year-over-year basis, it's very unlikely that the average airfares will kind of go any more southwards.

Last year, fortunately, was a year wherein the airfares continued to kind of see significant decrease over the previous year, aided by a variety of things, including the improvement or the benefit on crude oil prices side. This year, we don't kind of see the average airfares to show a similar kind of trend of softening airfares in the full fiscal.

And that should kind of slightly temper growth for the industry. But we still believe in [indiscernible] that we'll see robust growth if we look at it comparably over the last few years. .

And our next question comes from the line of Shaleen Kumar with UBS Securities. .

So I just need to look at your operating cost side now. So your operating costs have increased ahead of your revenue. So if I see it, it's more of you have spent money towards advertisements and pushing sales onto H&P. So basically, it's difficult to gain operating leverage than over here.

So how do you see this thing going to change going forward? Do you see that revenue growth will surpass the operating cost?.

So Shaleen, this is Deep Kalra. During the beginning of the year, kind of we were targeting to go in favor of growth instead of we were targeting to move in favor of profit revenue over the year. So we kind of trying to achieve a breakeven or close to breakeven year and trying to set up the growth as well as possible on the Hotels and Packages side.

And that is exactly what we've done over the year. And a large part of this [indiscernible] therefore has grown in terms of trying to drive mobile adoption, our growth on the mobile side because that is where we see large part of the customers moving from our platform of -- from a choice in terms of platform.

And also in terms of promoting or driving more and more online transaction booking on the hotel side.

So this is something that we believe are significant opportunities that the market is presenting to us, particularly in terms of mobile adoption by not only the existing customer set but by the new customer set that's kind of coming onboard or coming online through the mobile platform, particularly through the smartphone.

So that and trying to leverage that customer base to drive more and more online hotel bookings is something that we'll continue to invest behind, at least for the immediate short term. And when I mean in the immediate short term, at least for the next year or 2.

So while we're continuing to drive a lot of operating leverage on other expenses, whether it is personnel costs, whether it is selling or general administrative expenses, we will continue to flow back part of it or most of it in terms of driving growth in these key areas. .

Okay. And Mohit, on the acquisition which we have done recently, Mygola and the other one, I didn't get the name clearly.

So in terms of the -- is there any cost in the Q4 also with respect to Mygola in P&L? And what kind of impact can we see on the cost side because of these 2 acquisitions in the coming year?.

Listen, Mygola was actually -- again out of the technology and innovation plan, and therefore, more investment essentially in the team. It's about a 14-member team, including 2 founders. So from that point of view, it's a very niche kind of team acquisition that we have done, so unlikely to lead into significant expansion on the cost side.

Similarly, Inspirock is the other acquisition that we announced today.

And that isn't really an acquisition per se but more like an investment because we've kind of invested in that particular company and they happen to be in the trip-planning space and don't really see any increases of the overall operating costs from either of these acquisitions in the forthcoming fiscal year. .

And our final question comes from the line of Pinku Pappan with Nomura. .

I would like to how to think about ATVs on a year-over-year basis. So as your mix continues to shift more towards these standalone hotels, should we think, therefore, then that your ATVs will also -- so this year, there was a decline of around 6% in your Hotels and Packages ATV Y-o-Y basis.

So that kind of a low single-digit decline will continue?.

Yes, Pinku. That will be kind of fair to kind of building from a margin point of view because what we've been calling out, and as Rajesh has been mentioning as well, we'll continue to drive the mix more and more in favor of Hotels and Packages. And within the H&P segment, we continue to see drive in favor of standalone hotels.

So therefore, some of margin compression in line with what we have seen over the year is likely to continue at least for the immediate future. .

Okay.

And could you quantify how much you spend on marketing and advertising in the current fiscal and also give some sense of how much is that going to be likely in the next -- in the current fiscal or in FY '16 rather?.

Yes. So while marketing continues to be reported under operating costs, I can give you some flavor in terms of how the market expense have moved over the year. So from [indiscernible] of about an overall spend of 2.2% at a gross booking level, marketing cost have gone up to about 2.6% of gross bookings over the current fiscal.

In the last quarter, as you can kind of fairly assume, it was higher than 2.6% as well.

So as I was just kind of calling it out, marketing growth, as Rajesh said, is something that we'll continue to drive and continue to be aggressive behind, particularly to embrace ongoing opportunity in terms of getting customers to move online through the mobile platform and also to drive more and more online shift in the hotel segment. .

So going by your previous statement, you do expect for the next year or 2 that this marketing spend of around 2.6% of GB, that kind of a range will continue?.

Yes. So while it's not an increase as you have seen in the last fiscal, but expect it to wind up in [indiscernible] by maybe 10 or 20 basis points in the current fiscal as well. .

Okay.

And lastly, can you give us some sense of what your market share on OTAs would be in the hotel booking space?.

So we don't really have a third-party report, which is kind of clearly [indiscernible] other industry report on the hotel side per se. But Morgan Stanley has kind of come out recently with a report on the hotel sector. And that would be kind of fairly indicative in terms of what is the market share being held by these OTAs. .

So I mean, if you could kind of quantify that, sorry. .

I mean, while it is very difficult to call out a specific percentage in specific percentage terms, what we believe we continue to have a leading market share from among the OTA pie on the hotel side as well. .

Just to add and maybe give you a little bit more color. PhocusWright's report had put us overall more than 47%, 48% for us. And that's an overall OTA market share. And I guess, that's a good indication.

And given that we've only been growing our market share on the air side, so we think that overall on a gross booking basis, our total market shares in the OTA market would have only improved.

And specifically for the hotels also, given our growth rate and based on our kind of triangulation of immediate data point reaching out to suppliers, et cetera, we believe we continue to have a leading share there as well at a similar range 40%, 50% of the overall OTAs for the domestic hotel market.

And unfortunately, there's no real third-party data that is available. It is a market, what Mohit was referring to, as overall market kind of sizing their board, if you will. But specifically, from an OTA share perspective, only PhocusWright has reported an overall market share data but not necessarily broken into segments. .

By the way, the Morgan Stanley report kind of puts our market share of the online hotel market at close to over 22.6%. So if you kind of extrapolate that, you'll slightly have as good a market leadership position on the hotel side as we had in the overall travel segment. .

And that includes the Supply Direct. And that's the total online market, including the Supply Direct, not necessarily the OTA. .

Including the supplier, sorry?.

Including the Supply Direct, [indiscernible] hotel online market. .

Got it. And if I could squeeze in maybe one more.

Could you maybe comment on the competitive landscape in the hotel booking space? Have you seen any changes there in terms of discounting by your peers?.

Pinku, this is Deep. So definitely I think the year has been more competitive than the previous one.

And the inventory, as Rajesh alluded to this in his opening comments, I think in the domestic there as we are seeing particularly a couple of players from time-to-time being fairly aggressive in discounting different rates, so couponing or with some independent hotels, we are seeing aggressive discounts.

And therefore, just to kind of connect the dots, therefore, our strategy not just to match dollar-for-dollar to keep share but actually to do different stuff like Uncancel or be on the boil on mobile, one step ahead, so like the launch of Hotel Right Now, which is kind of win/win strategy with the last-minute perishable inventory with hotels and offering back to customers, I have good margins.

So we're trying to play the game on different dimensions. We don't think just matching dollar-for-dollar is the way to go. We have seen that kind of movie play out in a couple of markets, most recently in China. And we think that there is a smarter way to do this to create value for the brand as well.

So expanded the scope of hotels to 24,000 [indiscernible] with different hotels, and then helping those where perhaps more help than needed in the nonchain or the non-large hotels, where we are typically able to get good margin and hold our own.

Again on mobile, now there is this 7 million base, a very large number of them active, we are now doing very interesting push notifications, trying to stimulate people based on where they are, more interesting deals, including weekend deals because really you're getting a more frequent purchase item, and at the back end, going out and contracting these and offering them.

So we are seeing good traction there. And therefore, going ahead, we think this year, we should be able to see growth come back for sure. But I think we are going to see an intensity of competition kind of remain the same of the year. It's the most important phase. There are a couple of new players as well focused exclusively on hotels.

And everyone is throwing their hat in. You will be obviously aware, there's a lot of financing going on, on the [indiscernible] space. So the early stage there is also getting some. I think what will help is the fact that we are seeing more organized inventory happen in the budget level as well.

So we are seeing budget level, independent hotels getting more organized and therefore, presenting more options for customers to see. And of course, the big shift of move to online, move to mobile. Well, I think, we will be able to maintain our position for sure. .

And there are no further questions at this time. Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. To you all, have a great day. .

Thank you very much..