Jonathan Huang - Vice President, Investor Relations Deep Kalra - Founder, Chairman and Group CEO Rajesh Magow - Co-Founder and CEO, India Mohit Kabra - Group Chief Financial Officer.

Manish Adukia - Goldman Sachs Shyam Patil - SIG Viju George - J.P. Morgan Sachin Salgaonkar - Bank of America Shaleen Kumar - UBS Ranjeet Jaiswal - Jefferies.

[Call Started Abruptly] I would now like to turn the call over to Jonathan Huang. Please go ahead..

Greetings. And welcomed everyone to MakeMyTrip Limited’s Fiscal 2018 Fourth Quarter and Full Year Earnings Call. We wish to remind everyone that certain statements made on today’s 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 are contained in the Risk Factors and Forward-Looking Statements section of the company’s Annual Report on Form 20-F filed with the SEC on July 18, 2017, copies of these filings are available from the SEC or from the company’s Investor Relations Department.

On our call today are Deep Kalra, our Founder, Chairman and Group CEO; Rajesh Magow, Co-Founder and CEO, India; and Mohit Kabra, our Group CFO. And now, I would like to turn the call over to Deep to start off the discussion for today..

Thanks Jon. And welcome everyone to our fourth quarter and full year earnings call for fiscal year 2018. As we enter fiscal year 2019, the team and I are very proud of what we have achieved during the last year, immediately after the Ibibo merger, and equally optimistic about the long-term runway ahead of us.

As the leading online travel agency in India, with unrivalled market share, scale, and brand recognition, we believe we are well-poised to capitalize on the strong travel trends that India can provide, as the fastest growing large economy globally in 2018 and 2019.

In fact, the strong domestic aviation recent growth trends continue to reaffirm our optimism as the market is expected to remain robust into fiscal year 2019 per CAPA’s forecast.

For example, during the past quarter, reports from leading low cost carriers have shown very high load factors driven by recent strong pent up demand for air travel and increasing seat capacity. In response to the strong growth trend, domestic carriers are expected to induct over 100 new planes in fiscal 2019.

Additionally, the second round of the government’s Regional Airport Connectivity Program called UDAN has also awarded 50 additional new routes to IndiGo, SpiceJet, and Jet Airways, which should help maintain the strong growth momentum seen lately in the industry.

Similarly, on the hotel front, we remain bullish regarding the large opportunity ahead of us as the domestic online hotel market remains lowly penetrated at an estimated 15%, which is expected to double in the next two years to three years.

From a longer term perspective, we are even more excited about the headroom available from the steady demand for domestic travel in India, as more travelers look to book hotels instead of staying with friends and family. According to a recent Morgan Stanley report, India is roughly eight years to nine years behind China in terms of trips per person.

Total domestic trips per person in India was 1.25 in 2016, which is similar to where China was in 2008 and India’s total hotel room night demand per capita of approximately 0.3 lags China and other more developed markets significantly.

Fueling our continued optimism is the concerted push for digitization in India, driven by 0.5 billion plus net users in the country today, making us the second largest Internet population globally.

Furthermore, this number is forecasted to rise to over 850 million by 2020 as the rollout of mobile and affordable 4G data usage continues throughout the country and increasingly coming from places outside of the top metros.

In Tier 2 and Tier 3 locations we believe that the next wave of Internet users will largely demand vernacular and localized content, with machine to person interactions using voice. We have already been preparing our products and technology in response to this emerging trend, as you will hear about shortly from Rajesh.

Furthermore, we continue to see rapid rollout and adoption of digital payments enabled by the Reserve Bank of India’s UPI or Unified Payments Interface, which is making online transactions very easy for the masses.

Today there are over 800 million bank accounts in India which are linked to Aadhaar a unique identification system which forms the backbone of UPI and allows instantaneous transfer of funds.

More encouragingly, in April alone, there were more than 200 million monthly UPI-based transactions that took place and that base is expected to keep rising as new products and platforms like Google’s Tez, Flipkart’s PhonePe and WhatsApp payments have all been at the forefront of this new digital payment system for India’s e-commerce users.

We believe these strong growth trends provide a long tailwind for MakeMyTrip over the next few years as many of the new Internet users should mature from consumers of online content only to become actual e-commerce shoppers.

As the clear market leader today, we plan on expanding our leadership position further by continuously evolving our business to keep pace with rapid changes in technology and consumer trends, while maintaining focus on reducing friction for travelers, when they research, shop, book and travel with us.

Now I’d like to move on and reflect upon the accomplishments achieved by the MakeMyTrip Group during fiscal 2018. In the past year, we successfully combined two well-recognized OTA businesses and teams to strengthen our market leadership in India’s online travel industry, while accelerating the growth trajectory of market leader redBus.

Along the way, we also achieved new financial and operational scale, as our business continues to reach new highs. For example, in Q4 alone, we had more than 167 million total unique visitors come to our platforms, registered nearly 31 million live to-date transacted customers and engaged with more than 18 million monthly mobile active users.

The success achieved so far has been driven by our clear go-to-market strategy, which leveraged multiple well-recognized brands and backed by our unwavering commitment to delivering the best possible online travel experience for our consumers across all income levels and travel preferences in a highly fragmented Indian travel market.

During fiscal 2018, we also greatly enhanced our user’s experience by delivering highly relevant and more personalized content. We are leveraging big data and machine learning. We also introduced artificial intelligence of AI-based chatbots aimed to drive consistency across our post sales experience.

In fact, our chatbot Gia is now serving up to 5,000 unique users per day for their post sales queries. Gia has also been trained to perform over 300 unique actions, including enabling web check-in for flights.

Going forward, we plan on rolling out more functionalities including, enabling travel bookings in a more conversational manner by leveraging the power of NLP, Natural Language Processing.

We believe this will help us attract the next wave of first time net users who may be more comfortable transacting over chat and voice, and typically may hail from smaller towns and rural areas even given the massive 4G mobile proliferation across the country.

In fiscal 2018, following our successful merger with goibibo, we have been working relentlessly to drive higher customer loyalty and retention. Towards that end, we launched two new loyalty programs called MakeMyTrip Black and a subscription based program called MakeMyTrip Double Black, which now have 750,000 and 30,000 members, respectively.

I’m pleased to share that since the inception of both programs, we have been able to scale the Black program rapidly and seen members contribute up to 20% of our topline, with transaction repeat rates that are two times greater than non-Black members.

The Double Black program while still in its infancy has provided us with invaluable customer insights and we are able to scale that up in the coming quarters confidently. Going forward, we plan on leveraging both programs to drive greater loyalty and retention and to help further optimize our marketing investments.

During fiscal 2018, we also made a foray into the SME corporate market with the launch of myBiz. Going forward, we plan on adding and enhancing features on this platform for our corporate users in order to further penetrate into this largely untapped travel segment.

Now, before I hand the call over to Rajesh, who will discuss our recent quarterly accomplishments, I’d like to comment on our new partnership with Flipkart. We are pleased to be able to partner with India’s leading e-commerce platform to offer travel services on their platform.

With this partnership, we are able to bring MakeMyTrip, popular travel shopping experience to Flipkart’s large base of e-commerce users. While the partnership is fairly new, currently, we are happy to see that the leading online companies in India are working together to deliver the best possible experience for all end users.

With that, I’d like to turn the call over to Rajesh..

Thanks, Deep, and hello, everyone. I would like to begin by sharing a quick summary of our accomplishments achieved in fiscal 2018.

I’m delighted to share that we continue to scale our business and as a Group, reported gross bookings of over $4.5 billion and over $577 million in revenue less service cost or net revenue for the full fiscal year, which is a growth of nearly 111% on a reported basis.

The contribution of our Hotels and Packages business to total net revenue now stands at over 54%, which is in line with our long-term vision of scaling the accommodation business to over 70% in the business mix.

During the last year, we reached nearly 22 million actual room nights stayed across our entire hotels and packages business, which was a growth of over 21% year-on-year on a pro forma basis. On a standalone hotels basis, we also achieved nearly 21 million room night stayed, which is over 28% year-on-year pro forma growth.

In our Air Ticketing business, more than 33.3 million flight segments were flown by our customers during the last fiscal year, which was a growth rate of over 23% on a pro forma basis.

During Q4, our air segments also grew robustly by nearly 40% year-on-year on a pro forma basis and we continue to improve our unrivaled leading domestic air market share on the back of robust overall air passengers’ growth, as well as continued booking shift to online channels.

Our bus ticketing business also witnessed strong growth momentum with more than 39 million tickets traveled for the fiscal year, a growth rate of nearly 48% year-on-year and growth of nearly 55% year-on-year in Q4 on a pro forma basis.

Expanding reach to Tier 2 and Tier 3, during Q4, we worked hard to further expand our brands reach beyond top metros in order to position ourselves to accelerate the shift from off to online bookings.

We introduced new mass media campaigns for brand MakeMyTrip aimed squarely at driving greater online hotel bookings with the best price guarantee proposition for users. For brand goibibo, TV campaigns were also employed to highlight the value of our Digital Wallet program and have led to the acquisition of brand new users and app downloads.

During the quarter we also partnered with Connect India, a logistics operator with over 4,000 stores to help drive travel bookings and drive app downloads at 400 locations across India.

We have also begun leveraging the free Wi-Fi locations provided by Google to drive brand awareness across 450 plus rail stations in the country and are rolling out kiosks across new airport towns to further enhance our reach.

Recent innovations, beyond expanding our brands reach, we continue to drive the pace of innovations faster, utilizing machine learning and AI, and launched new products and features which are relevant for our customer base.

For example, we launched the Book now Pay Later option for our hotels and international flights products, allowing customers to make a reservation with only INR 1.

Similarly, we have also introduced a product called Pay Later, whereby credit is extended to customers via third-party banking partners and in some cases by MakeMyTrip, for this program, we have heavily leveraged proprietary algorithms enabled by machine learning to extend the limited credit for booking hotels on our platform.

Also earlier this month, we have launched Goibibo Express, a conversation-based app targeting the next 100 million Internet users, who are fairly new to the web and primarily users of low cost smartphones. The app is only 1.5 MB in size supporting voice-based and chat-based inputs from users in both Hindi and English.

This app currently allows hotel bookings, trend status updates, and status check of waitlisted train bookings, soon the app will also offer bus and train bookings, and be positioned as the go-to-app for the next-generation of the net users across India.

Lastly, we have also deepened our integration with WhatsApp for business to better connect with our MMT Black and MMT Double Black, loyalty members, as well as launched AI-based post sales support for flights on the platform itself.

In addition to these new customer focus features, we have made further enhancement to our hotel supply, which now spans over 53,000 domestic accommodation properties available across India.

During Q4, our approach to our domestic hotel business remains in line with the previous quarters, which is to improve the quality of our room night bookings from customers, while further improving the spread of unique properties booked relative to supply.

The MakeMyTrip hotel’s team continued to focus shoppers experience towards more premium hotels, by adding collections of premium hotels and showcasing the experience versus value proposition that these properties can offer.

Furthermore, we have invested to vastly improve and upgrade the content available to users, added new smart filters and introduced highly personalized dynamic pricing that’s all geared towards improving conversions. We also continue to capture value conscious customers via our goibibo, a credited hotel called GoStays.

I’m pleased to share that progress in expanding this product has gone well, as during Q4, we have seen the number of unique hotels sold across exceed 90% of the 4,600 plus listed GoStays properties.

Furthermore, we are also creating a new and differentiated shopping and booking experience for GoStays, which will allow users to purchase budget hotel easily through us. This new experience has also been deeply embedded within the newly launched Goibibo Express app mentioned a moment ago.

At every location that has GoStays available, users can simply choose a location and budget and we will select the auto book and the best hotel available for them.

This experience will be backed by clear customer experience assurances and will be helpful for customers who are now -- who are new to a location and do not have full information about hotels and their desired destination.

Lastly, with recent, our OYO rooms integration, we have added 3,600 of the unique budget hotel properties onto our platform, which provides additional choice for our value conscious customer base.

Now, I would like to comment on the strength of our Domestic Air Ticketing business, where we continue to benefit from a very strong domestic air passenger market in fiscal Q4. As a Group, our Domestic Air Ticketing segments grew by over 38% year-on-year on a pro forma basis, outpacing the market growth of roughly 24%.

In the month of March, due to strength of the air market and our continued share gains, MakeMyTrip Group’s share of the total Domestic Air Ticketing market increased to an all-time high.

During the quarter, our outbound International Air Ticketing segment also continued to witness very strong momentum, which carried over from Q3 to grow in excess of 54% year-on-year on a pro forma basis.

In the quarter, we focused on partnering with air carriers as they begin new UDAN flights, which serve smaller towns and cities to drive new customer growth. We also introduced new features like multi-city booking capabilities since many of our travelers like to have multiple stops on their journey.

We have also added deeper integration of ancillary products like seat selections and onboard pre-purchases of meals at the time of booking. Furthermore, we are providing more relevant search results, leveraging machine learning by requesting more data from users at the beginning of their booking experience.

Now, before I turn the call over to Mohit, I would like to share some highlights of the redBus business, where we are aiming to further expand our domestic leadership in India’s highly fragmented bus market and leverage the potentially large base of current bus customers to cross and upsell other forms of ticketing in hotels.

During the last quarter, we continued to see high growth as we added new suppliers from regional government, operated bus companies on to our platform. Similar to our other lines of business, we have leveraged the Whatsapp for business platform to automate and handle customer query in a conversational and vernacular manner.

We have also formed a WhatsApp group for fellow bus travelers to let them help one another with boarding locations, arrival times, as well as connect directly with bus operators for any on journey complaints in real-time.

During Q4, we introduced LazyPay to allow payment at a later time for customers with good credit scores to improve conversion rates and added a redBus store on PhonePe to provide additional payment options. Additionally, we rolled out free rescheduling to provide greater flexibility and encourage advance booking behavior from customers.

Going forward, we plan on driving rapid growth of this segment by adding more domestic bus inventory, acquiring new customers in Tier 2 and Tier 3 towns by localizing the user experience for non-English speaking users and drive international growth with the brand.

Now, let me hand it over to Mohit, who will share more details of the quarter and full year’s financial performance..

Thanks, Rajesh, and, hello, everyone.

I’m pleased to report that in the fourth quarter of fiscal year 2018, we continue to make significant progress in pursuit of our strategic and financial goals for the year, which were to drive strong year-on-year growth coupled with reducing quarterly losses via improved efficiencies across our operations particularly in customer acquisition spends.

Considering that this is the first full fiscal year of operations being reported, following the ibibo Group merger in 2017, I would like to begin by presenting highlights of our annual performance in constant currency terms, as compared with the pro forma financials published for fiscal year 2017, including the ibibo Group.

Our revenue less service cost for full year 2018 grew by 39.5% on a year-on-year pro forma basis and adjusted for the Air Ticketing one-time incremental revenue called out in Q3 of last fiscal, the growth was even stronger at 42.7%.

Net revenue growth in our Hotels and Packages business stood at 41% fueled by 55.6% growth in standalone India hotels booked online over reported pro forma of last fiscal year 2017.

The robust annual growth in hotels was driven by nearly 9 percentage point improvement in the average realization per room night through focus growth in premium segment of hotels, while driving spend efficiencies in the budget segment of hotels.

As a result, this robust growth has been achieved along the reduction and adjusted operating losses over last year’s pro forma numbers. We have also built operating leverage in most of our key expense lines.

For instance, adjusted people costs excluding share based compensation is stood at 1.5% of gross bookings, compared to 1.9% of gross bookings during the last year’s pro forma results.

Similarly SG&A costs, which large comprise of outsourcing expenses also stood at 1.5% of gross bookings, compared to 1.9% of gross bookings per pro forma results for last year.

This balance performance through the year of high growth along with reducing losses was made possible by tactically focusing more on growth in the first half of the reported fiscal and followed by sharper gains in operating efficiencies in the second half.

Keeping in mind the prevailing competitive dynamics in the coming quarters of the new fiscal year, we will continue to tactically place sharper focus on driving growth and/or operating efficiencies across the coming quarters of the new fiscal to keep driving twin objectives of growth and reduced losses.

We believe the company’s deep history and knowledge of India’s travel market, market leadership and a strong balance sheet with nearly $390 million in cash and cash equivalents we are very well-placed to leverage the growth potential in India’s travel industry, as well as counter any potential pricing irrationality by an existing or new competitor.

I would now present a few snippets from our quarterly performance. In the fiscal fourth quarter, we reported gross bookings of over $1.18 billion, representing a reported growth of over 70% year-on-year in constant currency terms.

Net revenues at $145 million represented a year-on-year growth in constant currency terms of over 67%, driven by Air Ticketing growth of about 74% and H&P growth of about 55%, fueled by growth in India Standalone Hotels booked online, growing at about 156%.

Our Q4 adjusted operating losses at $23.5 million were lower than the previous quarter’s losses of $33.9 million.

We are pleased with the operating efficiencies achieved during the quarter and for the first time, post the ibibo Group merger, our marketing and sales promotion spends have dropped below 10 percentage points of gross bookings during any quarter, which is a marked improvement from about 12.5% spend in H1 or 11.2% spend doing Q3.

As a result, our quarterly adjusted operating losses have reduced from about $52 million in Q1 to about $45 million in Q2 to $34 million in Q3 and $23.5 million in Q4.

During Q4, we also invested significantly behind promoting the Goibibo Brand by creating a marketing campaign around India’s widely popular sport, cricket by associating with one of the league teams of the Indian Premier League or IPL.

Lastly, I also want to share some inputs on adoption of the new revenue accounting standard IFRS 15 with effect from 1st April, 2018.

We have reviewed the new standard and have concluded that application of the new standard will not have a material impact on the consolidated results or financial position except for reclassification of certain expenses related to customer inducements or acquisition expenses, which were previously recorded as a marketing and sales promotion cost and will have to be recorded as a deduction from IFRS revenue in line with the new standard.

These sales promotion costs are primarily incurred to acquire customers and promote transactions across our various booking platforms and include upfront cash incentives, select royalty programs among various other costs.

The company will continue to publish a non-IFRS financial performance measure that is revenue less service costs, as we believe that it reflects more relevant information, regarding the value addition of travel services that we provide to our customers.

Revenue less service costs represents IFRS revenue after deducting cost for the acquisition of relevant services and products for sale to customers and adding expenses in the nature of promotions, which are adjusted against revenue.

I would like to end by saying that having leveraged our multiple brands to sharply targeting multiple customer segments with improving efficiency having formed the right operating rhythm in the first post-merger year and having built the strong partnerships in the Indian travel market during the reported fiscal year.

We remained confident of pursuing our 10 objectives of driving growth and operating leverage, while making the most of the potential opportunity that the Indian travel market has to offering in the years to come. With this, I’d like to thank joining this call and open up the call for Q&A.

Operator, please?.

Thank you. [Operator Instructions] Our first question is from Manish Adukia with Goldman Sachs. Your line is now open..

Yes. Hi. Good afternoon and thank you for taking my questions. First question is just on the room night growth that you saw in the quarter. I think on a pro forma basis, it’s about 19% standalone room night growth, significant deceleration versus the previous quarter.

So if you can just throw some color as to what are we seeing in terms of trends in that particular segment and earlier, you were probably talking about north of 20% kind of room night growth on a sustainable basis, has there been any change to that outlook? That’s one.

Second, if you can comment a bit about your partnership with OYO that you announced a couple of months ago, press reports have indicated that you have delisted or in the process of delisting other budget providers like Fab and Treebo as part of that agreement.

What is the thought process there in terms of what OYO brings to the table for MakeMyTrip? Thank you..

So, Manish, I will take the first part of it, and I will ask Deep or Rajesh to chip in on the second one. In terms of the room night growth, that was close to about 28% for the India online standalone hotel bookings in terms of room nights that were booked; and as we have been saying, the revenue growth was much ahead of that at about 55%.

So, as I’d called out, the strategy during the year was that during the first half, clearly we are driving a much larger agenda on the growth side, and during the second half of the year, we were clearly pressing the accelerator in terms of driving operational efficiencies and improved efficiencies, particularly in our marketing and sales promotion costs.

So these two had to go in tandem, and therefore, overall, if you look at it for the year, it’s been a pretty balanced growth, albeit you would have some quarters with much higher growth on transactions and some quarters with much better operating efficiencies..

And the price point..

Also, one of the key things that we kind of ensured during the second half of the year when we started kind of pressing efficiencies in the spends was that we have ensured that growth in the targeted or the much better placed mid-to-premium segment continues to be very, very strong.

So say, for instance, our premium segment still continues to grow upwards of 40%, and therefore is showing robust growth.

It’s only in the budget segment or the ultra-budget segment where we have been kind of pruning down spends in a significant manner that we are seeing a de-acceleration in growth, and we believe we should be able to kind of bring that back in a couple of quarters..

And Mohit, if I can just clarify, I think on the numbers, so based on the published report, pro forma standalone room night growth in the fourth quarter of the fiscal is about 19%, and you mentioned you are growing with 40%....

Yeah. Yeah. I was..

Right. And you mentioned you grew at 40%....

Yeah. Sorry..

… or thereabout for the premium segment, so which means that at a budget segment, the growth must be really low for the blended number to be at about 19%, so I’m just trying to reconcile that number?.

Manish, the Q4 number is 18%, 19%....

Right..

… whereas what I was talking was largely the annualized number of about 28%, and in Q4, although overall growth is about 19%, I was mentioning that the premium segment continues to grow in the 40s..

Sure. Okay..

And coming to your second question, Manish, and then maybe on just one additional comment on the first question as well, just also see it not necessarily in isolation only the segment’s growth or the room nights growth, just look at the revenue growth.

So if you really look at the revenue growth, at a net revenue level, that even -- that the -- that for Q4 is about 26%.

Like, Mohit, was mentioning, it was a bit of a conscious call to intelligently kind of see which are the segments that you maybe want to rationalize our sales promotion, keeping the stickiness in mind, keeping the price points, et cetera, in mind and kind of drive this strategy, and clearly, historically, the -- as we all know that the promotional expenses have been pretty high as we have kind of rationalized quite a bit as well, so there’s a bit of a lapping effect of kind of coming up as -- when you look at kind of year-on-year growth as well.

So I think, these are the factors, additional factors that you will have to keep in mind, and I guess, just look at the financial performance more overall rather than just looking at just probably one metric in isolation.

But coming to your second point, so we entered into the partnership and looking at the depth of this inventory that we have in OYO, we’ve already given that number out 3,600 hotels and we thought that with OYO and with our initiative on GoStays, which we have highlighted quite a bit in our script as well, which is where we are trying to also go to the market with a value proposition with accreditation of the brand.

We are trying to solve basically the real problem of the consumer from better quality experience in that particular segment, a combination of the two, we thought that we had enough coverage, and therefore, this was more a business call. Whenever, I mean, these are like evolving things. So there’s no real hard stance on a particular thing.

It’s just right now and in the circumstances we saw that the coverage was pretty good and we would be from our -- in terms of just serving the consumer needs in the budget segment, this -- the combination will be sufficient enough..

Our next question is from Shyam Patil with SIG. Your line is now open..

Hey, guys. Thank you. This is Shyam. I had a couple of questions. First question is just on the competitive landscape.

If you could just talk about kind of what you have seen over the past quarter especially in light of the -- positives with partnering OYO?.

Sorry, which was the second question?.

That’s the first question.

The second question is, if you could talk a little bit more about the Flipkart relationship and early -- key early learnings thus far?.

Sure. Sure. Sure. Hi, Shyam. I will just add, this is the -- so the competitive scenario, I think, it will be fair to say that stays fairly, I think, robust, perhaps, a degree under intent, but let’s take the air market first.

On the air market Paytm has been definitely very competitive on Air Ticketing and then we have the other Indian OTAs, Yatra, Cleartrip, et cetera, also fairly active on the ticketing front.

And then we have I think Supplier Direct has been something which is definitely been growing, particularly for the low cost carriers we are seeing a fair degree of growth, as well as even some of the full service carriers have been looking to build the direct programs, their copper programs, et cetera.

So the overall growth is coming naturally like we have shared on the call that there is an overall, I think, this has been the 22nd month straight of double-digit growth.

I should call out that there are now the first signs of aviation fuel getting more expensive, so basically oil price is going up and the dollar strengthening pretty significantly against the rupee, which is going to have obviously some impact on the continued growth going forward.

Coming to the hotel side of the business, on the premium segment we are seeing booking and Expedia, as well as we also tend to see Agoda. All three are fairly active on the premium side. We do have the Indian OTAs who are also there. And then on the budget side, I think, we have various hotel aggregators as mentioned before.

We are partnering with OYO now, but they have a large direct business as well. The previous question we had mentioned Trigo and Fab they have a direct business as well. So there’s a fairly active market on competitive scenario on the hotel side both from international players and domestic players.

Yatra and Cleartrip are also in the market, so that’s broadly what it is. But on the hotel segment I think the excitement really comes from the fact that at best count about 15% of that market is penetrated online.

The Supply Direct business there is still fairly limited to the high-end chains and if you were to include alternate accommodation or homestays, then that penetration level is probably even smaller. It’s hard to estimate that market, but then penetration level we believe actually is closer to 10% to 15%.

So that’s overall the broad competitive scenario. Regarding Flipkart offering, as mentioned on the call again, it’s fairly early.

We have just released this out on the Android platform right now, but this is going to be a travel offering to their customers with branding, so this is not a white cable, this will be a branding with MakeMyTrip in -- again in a partnership format and it’s already out there live.

We will be introducing more products as we go along and also across other platforms as we go along. Servicing of customers post sale service et cetera for travel will be handled by us as well..

Great. Thank you very much..

And our next question is from Viju George with J.P. Morgan. Your line is now open..

Yeah. Hi. Thanks for taking my question. I guess your sales and marketing expenses has come down to about 9 point -- a little over 9% of total gross bookings. If -- correct me if I’m wrong there.

The way to look at this, I’m just thinking how the way to look at this, if you want to get this done over time, do you think that there is a constant fine balance that we must to walk against the room night growth, which is currently at 18%, you are suggesting it’s still not a matter of concern, but as you try and apply deliver further on promotional expenses, do you think 18% can get down to 12%, 13%, whatever? Thank you..

Hi, Viju. No.

The way we are thinking about it is actually as just Deep was mentioning in response to the earlier question as well that and that there is going to be maybe one or two quarters more that there may be overlapping effect there where there was a fairly aggressive promotional activity in the previous period same -- previous year same period.

We are not necessarily from the mid-term to long-term worried frankly on the growth side. So don’t think significantly there is going to be a trade-off that if we continue to keep going down this part of rationalizing promotional expenses that we are going to get trade-off with growth significantly. We don’t believe that would be the case.

The growth is likely to come back soon and it probably will be a matter of one or two and would probably from a mid-term to long-term would be in the range of between 25% to 30% in terms of room nights growth as the -- as we see the market on our dynamics today. And the reason for that is the underpenetrated market.

The reason for that is that there is tremendous amount of work that we are actually doing which will bear fruits in the coming future in terms of just acquiring new segments, targeted approach to acquire new segments whether they are value conscious customers, let’s say, students or pilgrimage or the small traders and the businesses and the -- our corporate business initiative has shown some traction already.

We are already doing about 1,000 room nights, 1,200 room nights on a daily basis, but that’s likely to scale up as well. So there’s lot of the initiative that product side supply side, marketing side just from an expansion of the standpoint product offering overall.

A lot of the work is going live and is in the works, which is going to bear fruits in terms of just helping us grow the room nights growth as we go down the path.

So, frankly, not really concerned about that growth, and this particular quarter doing 19%, but also kind of looking at a higher segment or premium segment growth at 40% and on overall year basis, the growth is pretty robust as well. So I wouldn’t read too much into it.

I would -- you would definitely be -- we are on this path, unless, dramatically the competitive dynamics change, which is not the case. Like Deep was mentioning earlier it’s a degree less intense today. Just in terms of just kind of crazy promotions all around et cetera.

And if that continues, I think we believe that it will be -- this is the right path to go for another quarter or two, or and then, we definitely see, because of the reasons that I mentioned, and also the base effect going that we definitely see growth coming back..

Right. Thanks. And a follow-up from here, you did mention I think in your opening prepared remarks that the penetration, online paid vacation hotels is maybe 15%, you said to 30% over the next maybe three years with just 20%, 25% growth in the space itself.

But my question is that how much of this you think is beneath that revenue growth, because I would think that the premier segment would have already gone online now, right, and the large part of what is the 70% left to go online might be really the -- either the far flung areas or the budget segment.

So, in terms of revenue growth it might be -- it could be lower than the market growth, right?.

So, I would actually rather guessed that it would be probably in line with that, because don’t -- it’s not necessary the growth is going to come from the budget or the ultra-budget or the alternative accommodation -- budgeted alternative accommodation alone. There is lot of the under penetration which is on the mid segment as well.

So just the super-premium maybe the online penetration is higher given that there is inbound and then there is business travelers, et cetera, but that’s very small portion of the overall total inventory depth if you will. So, of the total Five Star category, let’s say, Four Star to Five Star category would be in the range of 20%.

80% of the total inventory is mid-segment and lower, mid end budget and then there is alternative accommodation, which has two categories as well budget -- actually three, budget, mid and totally high end, like luxury -- luxurious villas and stuff like that, and we are kind of getting foraying into that as well.

Just in terms of just curating that inventory and also focusing on luxury and super luxury segments on MakeMyTrip. You would probably notice some of the curated content, curated inventory already on our platform on that segment. So if I look at it overall, I would think that it might be in line or thereabouts.

I don’t think it will be lower than the room nights growth..

Sure.

And the last question from my side is, with OYO now coming onto your platform, does it mean they cease to be an aggregator and they are only a supplier now?.

They are actually, and clearly not only stated, I mean, we have kind of looked at it practically as well.

So, clearly, their vision it seems is to become the hotel chain and completely have moved or shifted their strategy from an aggregator to 100% inventory run, albeit light touch hospitality management, and therefore, that was like one of the fundamental reasons that we entered into this partnership..

Sure. Thank you, Rajesh, and all the best for FY 2019..

Thank you..

Thank you..

Our next question is from Sachin Salgaonkar with Bank of America. Your line is now open..

Hi. Thank you for the opportunity. I have three questions. First question is regarding this entire IFRS reclassification of revenues. Mohit, help me understand why expenses are added on to the revenues and in your opening remarks, you did mention that these are the sales and promotion to acquire customers.

So how should one classify, what are expenses which are meant to be acquired for customers and what are the other expenses? I mean to put it in other words, am I right in terms of looking at it that you are -- if we add that $24 million for this quarter, which you sort of separately show that expenses into your marketing expense of $93 million, your marketing and sales promotion is not below 10%.

So help me understand that? And equivalent if you could get these numbers for last year 2017 that would be helpful? Second question is on hotels.

Now, clearly, Paytm is out of it, are you seeing a possibility of them making a comeback or is that they have given up so easily on this space, and again, if your hotel revenue growth is a bit weak, I mean, in the overall budget segment, do you think you are losing market share out here and someone is gaining at your expense? And third question is, I mean, if we look at the trends for last couple of quarters, we are seeing a bit of a slowdown in revenue versus compared to historical growth, but also we are seeing a sort of decline in EBITDA loss.

So directionally are you comfortable with being EBITDA positive in a year or so while maintaining a constant currency growth of more than 30%? Thanks..

Yeah. Sure, Sachin. Thanks so much. And I will take first of those.

See if you just look at the way we have been kind of guiding on the business performance and even in the past, all our guidance used to be on non-IFRS measure, which is net revenues or revenue that’s service cost, because we feel that’s a much better presentation of the value add that we kind of provide as an intermediary to the travel services booked by the customer.

So let me just explain what the IFRS non-bearing net revenue measure is, it is essentially the IFRS revenue adjusted the IFRS revenue adjusted or after from that we deduct all kinds of cost of services, particularly in case of offering that we avoid on a principle basis, say for instance, cost of service for our Packages business, that is kind of reduced from the IFRS revenue.

And also any promotions which hitherto have been kind of netted off from revenue get added back, okay.

Just to kind of show more the entire margin from the supplier and the customers that we earn, so that the segment wise margins are kind of lot more clearer, because otherwise based on the promotions that you are running or the customer acquisition expense that you are doing on a quarter-to-quarter basis, this could look very different across quarters, whereas, typically, supplier and customer margins tend to remain largely at similar levels across quarters albeit with small differences there to.

So, essentially what we are saying is, now if you look at in terms of the new revenue guidance that’s coming in IFRS 15, a lot of customer acquisition expense, which we used to kind of show as marketing or a sales promotion could perhaps will have to be kind of netted from revenue and therefore the IFRS revenue measure might go down.

However, what we are saying is the non-IFRS measure of revenue less service cost or net revenue will continue to remain largely as is, because anything that kind of gets netted off in computing the IFRS revenue as a deduction on account of promotional expenses, gets added back when we are calculating this non-IFRS measures.

So it will continue to be more relevant to keep evaluating the business performance like in the past, in the future also on the non-IFRS metric. I will just move on to, talking about the couple other questions while Deep….

Sorry. Mohit….

Sure. Sure..

Sorry, a quick follow-up on that.

This end are marketing and sales below 10%, is it IFRS based or non-IFRS based?.

The -- what I’m talking about the less than 10%....

Yeah..

…is all marketing and promotion put together….

All of it..

…irrespective of whether that has been netted off from revenue or not..

Okay. Got it..

Once you kind of gross it up together, the entire expense and that is the whole purpose through that non-IFRS measure, you can show what is the total margin on one side and what is the total expense, marketing and promotions put together in one bucket.

So, when I am talking about the coming down to less than 10%, I am talking of the expenses all put together irrespective of they are presented in IFRS..

Okay. Thanks..

Okay. So, in terms of hotel growth and just in case they kind of tending to lose out on market share over there, this growth still continues to be higher than market growth overall.

So, I don’t think the concern over there is whether we are kind of losing out on market share and that too you know, honestly speaking, a quarter or two of little bit of sustained or even a small loss in market share, I don’t think kind of really makes a big difference.

So long as directionally over a longer term period so if you really look at it over the last three years and our callout that we kind of expect to keep growing at a good pace in the hotel segment even in future, I don’t think there has been on overall cyclical growth in the hotel segment.

I think a very clear of the fact that if you are wanting to drive marketing efficiencies and promotional efficiencies, for few quarters we need to kind of see the impact coming through in terms of softer growth, because as you kind of keep tapering off the bone.

Clearly there is an impact because there’s a large chunk of population, which is still kind of tends to kind of make their final call on a booking or otherwise based on the kind of quantum of promotion which is being rolled out.

So while that number kind of keeps getting lower as you get into a much larger base and more importantly a base, which is repeating more often on you, and that is the whole rationale for kind of doing these large customer acquisition programs that as the customer repeat kind of enhances this dependency or variability linked to quantum of promotional discounts being offered kind of things to keep going down.

However, some part of it will always be there and therefore we are kind of looking at a balanced growth. Again, this would be tactical taking a quarter-on-quarter approach.

So, therefore, you could again just like in the previous year, you could have quarters where perhaps growth will be higher than what would be than normal in some other quarters and there will also be some quarters where perhaps we do much better in terms of spends, and efficiencies, et cetera.

So I think we will have to take a balanced approach and look at it quarter-by-quarter, while keeping the overall annual objective in mind.

On the declining trend in adjusted operating losses, clearly, that’s a direction that we want to kind of move on and I think we have made significant progress over there compared to where we started the year in Q1 and where we have kind of ended in Q4.

And all things put together, unless there is a dramatic shift in the competitive dynamics, I guess, we would want to kind of have a repeat of the improving trend as we start or get into the new fiscal and by the time we kind of exit out of it over the next four quarters.

Are we comfortable with getting into breakeven or EBITDA positive, of course, why not, I think, we will have to largely kind of keep it in mind that I don’t think that’s the sole objective -- the twin objective over there is to continue keeping driving growth in line with what the competitive situation is while trying to pursue cutting down our process..

Okay. Got it.

Paytm question?.

Yeah. So, Sachin on Paytm, I mean, as you rightly pointed out that they are not right now focusing on hotels. They continue to focus on flights and bus, and of course, rail. So, it seems like more a ticketing kind of space rather than just getting into the accommodation.

So, to the best of our knowledge at least at this point in time because the team was also dismantled and all, we don’t know frankly, but at this point in time they are not and doesn’t look like in the near future that they would want to get into, because it’s a harder kind of space more involved experience and so on.

But at some time in future would they want to just come back and do one more attempt to that that time will only tell. But -- and we would obviously keep watching this space. But right now it doesn’t look like..

Okay. Perfect. Thank you and all the best guys..

Thank you..

Our next question is from Shaleen Kumar with UBS. Your line is now open..

Yeah. Hi, guys. Thank you so much for the opportunity. I think there’s a good control on the cost, which I am liking over here. Just want to understand from you guys on the competition bit and are you guys seeing a bit of increase activity from Expedia over here, because we are sensing some bit.

And just one more question on, in terms of you talked about like 40% growth in our non-budget kind of category.

What proportion does that contribute in terms of the revenue or transaction whatever you like to give a broad range of our total hotel segment revenue contribution, transaction contribution?.

Okay. On Expedia, it’s kind of nothing unusual that we have seen. I mean, no -- nothing -- no serious aggression, no massive campaigns and all. Although, on the international hotels and international flights, we do see them coming up, I mean, in their participation on Metas and stuff.

So I would say, kind of same intensity, nothing unusual as far as Expedia is concerned. But, we definitely keep them -- we keep watching them very, very closely as one of our key competition whether it is Expedia or Booking.com. Clearly, incredible global company, so we keep watching them for sure very closely.

And the player that is kind of more aggressive maybe just from -- just going on the air in a regular campaign et cetera is more trivago and trivago is more metasearch and we have been also participating on -- for certain lines of businesses both on trivago and TripAdvisor just to get the traffic acquisition there and you would see some of these international players participating in both the meta channels as well.

So, I guess, that’s as far as, let’s say, the competition from the multinational companies whether it is Expedia or trivago or TripAdvisor or for that matter Booking.com. So, yes, they are very much part of the competitive set.

Have we seen anything different, any more aggression or anything different, any more aggression or anything unusual, perhaps not. Do we watch them closely and -- and keep looking at them every now and then, the answer is, yes. Second question..

And Shaleen while we haven’t kind of given any segment wise color, ballpark if you would recollect, we have generally being saying that our skew is towards mid-to-premium.

Ballpark each of the segment whether it is budget and ultra-budget or whether it is mid, or whether it is the premium segment, we generally tend to kind of have an equal share between these segments on a ballpark basis averaged out. So, I think, that should give you enough color of the weightage of the premium segment..

Got you. Thank you..

Our next question is from Ranjeet Jaiswal with Jefferies. Your line is now open..

Hi, everyone. Thank you for taking my question. So I would like to understand how the gross booking has performed in terms of pro forma basis compared to last year.

So if you can give that number?.

So we haven’t kind of reported gross bookings on a pro forma basis last year. So I have kind of already shared color on net revenue basis compared to the pro forma for last year. I mean, I guess, that that’s about all that we can provide..

So, can you please repeat that number from net revenue on a pro forma basis last year?.

Compared to last year. Yeah. Sure..

Yeah..

I think, I just called it out. I will just give you that in terms of overall net revenue growth we saw 39.5% year-on-year growth, including about 42.7% in Air Ticketing and about 41% from Hotels and Packages, wherein Standalone India Hotel was about 55.6%..

Okay. Thanks a lot..

Thank you..

Most welcome..

And I’m showing no further questions, I would now like to turn the conference over to Jonathan Huang for any further remarks..

Thank you everyone for joining our earnings call today and we look forward to speaking with you very soon. That concludes our call for today..

Ladies and gentlemen, thank you for participating in today’s conference. You may now disconnect. Everyone have a great day..