MakeMyTrip Ltd (MMYT) 2015 Q4 法說會逐字稿

Welcome to the 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 US 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 statement section of the Company's annual report and Form 20-F 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 hotels 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 seven percentage points driving contribution of non-air businesses to an all-time high of over [48%].

Furthermore, today more than 40% of our Indian online visitors outbound via the mobile platform versus 19% a year ago.

In the strategically important domestic hotel segment, mobile now accounts for over 38% of total online transactions.

For the full fiscal year 2015, we exceeded $1.6 billion in 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 are 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 smart phones is expected to add 300 million new online shoppers in the same time frame.

We also remain confident about India's rising long-term growth prospects.

We are optimistic about domestic and outbound travel demand by the expanding middle-class and begin divisible rise of its net penetration, which continues to drive increased E&M commerce [payments] and adoption in India.

Our commitment to our customers' experience, which we believe is a 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 of our 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 will stir the innate travel bug within the Indian consumer while highlighting the wide breadth of travel options MakeMyTrip offers.

Coupled with the existing excellent booking experience across platforms including the m.site 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 vital campaign.

Uncancel is a first of its kind feature that allows customers to rebook the exact same trip that they had previously canceled while still maintaining the same cost of their initial booking.

By offering for Uncancel, customers who need to reschedule travels do not need to cancel their plans rather they can simply push out their travel to a later date without additional charges.

This is just another example of [the more] focused 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 [new age] 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, booked their experience is right on the smartphone.

We will also be leveraging this outstanding team to work on new product innovations 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 [turn that completely customized] itinerary online.

With these investments, we are looking to drive higher customer engagement during the trip planning stage.

We also hope to enhance our customers' in-destination travel experience through steps consistent with MakeMyTrip's distinct value proposition.

We are well on course to achieving our strategic objective of driving the hotel and packages business to account for over two-thirds 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 value broader reach, scale more vernacular options, particularly on mobile.

Now, let me hand the call over to Rajesh to give you more highlights from the quarter and the past fiscal city 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 faced in the back half of the year.

From our temporary airlines have guided us, more than one of the airlines, and (inaudible) key domestic holiday destinations.

We believe our mobile focus, unrelenting commitment to our customers' experience, and speed to market allowed us to maintain [its firmly based] 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 for a result ahead of both of our guidance and plan.

Let me turn with sharing a little on the mobile trends 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.

There is over 7 million cumulative downloads to date.

We have also been making continuous improvements in our mobile app to enhance customer experience.

Recently, we updated our US app to support the Apple launch, added new cheaper airfare cards to Google now, refreshed the apps on-screen for enhanced usability and added a [third avenue] for even easier flight searches.

Additionally, we introduced enhanced push notifications from the MakeMyTrip app, an improvement that has (inaudible).

In addition, we also added the ability for mobile users to book rail tickets up to 120 days in advance through this updated app.

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

Moving onto the hotel & 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 orders count to over 24,000 developments within India that are bookable online now.

Internationally, we also expanded the property count to over 205,000 available for our customers, a growth of multiple brands in key outbound geographies.

The strong growth performance can be attributed to the strength of the MakeMyTrip brand and mobile platform, especially for stand-alone hotel bookings.

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

We plan on further improving the mix going forward in fiscal year 2015 and beyond as we drive solid growth in the H&P segment driven by our continued push for mobile adoption, tapping into new customer segments, well supported by their increasing shift from off-line channels in the low penetrated domestic hotel market.

Now, let's move on to discuss our air ticketing business where we continue to retain an [investor-leading] domestic market share of over 15% in March.

This was a significant improvement from the 11%-plus share a year ago.

During Q4, overall air ticketing transactions grew by nearly 40% year on year.

The strong transaction growth lead was boosted by rapid growth from our mobile channel, which [was next to] nearly 150% year on year increase for the quarter and represented 19% of the total online transactions.

Going forward, we would expect to see continuing by air 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 margins compressed by 20 basis points to 6.2%, reflecting below average air price.

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 regained 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 take rates.

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

Thanks, Rajesh.

In Q4, this metric delivered net revenues of $36.4 million, resulting in total net revenues of $138.9 million which is driven by constant currency growth of 32% exceeding our plan and previously provided guidance.

I will now [break down] the financial performance across our Chief 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 [10% drops in our less transaction revenues] in a low season quarter compared 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 revenues from the air ticketing business grew by 16.7% year on year in constant currency terms.

This was mainly due to strong year-on-year increase and transactions by nearly 36% and we saw [the result] of strong percent of growth in the domestic [air-based] market driven by [special one-time] fares offered by airlines through our deal, and the ongoing shift from off-line to online bookings in the international cargo and air segment as well, brandishing growth of over 44%.

As anticipated, the air ticketing market saw compression of about 50 basis points from 6.6% in fiscal 2014 to 6.1% in fiscal 2015.

We expect to see a similar trend on margin compression in the forthcoming fiscal [update].

And now I would like to present the financial highlights of our hotels & packages business.

In Q4, our revenue less service costs from the H&P business grew to over $16.4 million, which was growing to 15% higher growth in constant currency terms.

The growth was driven by increasing transactions of over 32% and margin expansion from 12.1% in Q4 of the 2014 moved to 15.7% in the fourth quarter.

This margin expansion resulting in quarter of business rate negotiation in the low season quarter coupled with performance new 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 was driven by 57.8% year on year growth in constant currency terms.

This is strong year-on-year growth was driven by more than 59% growth in transactions, revenue primarily driven by transaction growth of over 70% in our stand-alone hotel business.

What is heartening to report is that around robust transaction growth], we were also successful in expanding the base from 12.6% in the previous year to 13.2% in the reported fiscal year.

This was made possible with the (inaudible) to drive online adoption and transaction growth while waging our scale to negotiate better economics from the suppliers, with 2016, being targeted as the year in which we can drive hotels and packages to account for the largest [part of business].

We will preserve our performance of this business segment in that currently reported fiscal.

Users' confidence with growth in this segment can be driven by our scale, network effect, brand strength, and the superior experience on the brand.

For the fiscal fourth quarter, we recorded a small adjusted operating results of $962,000 which reflects the [perennial] seasonality of our business and our commitment in the quarter to invest in marketing activities to drive mobile and online hotel transactions.

For the full fiscal year, we are (inaudible) quarter models (inaudible) operating profit of over $450,000.

This is a material improvement from the $3.5 million recorded in the previous fiscal 2014.

While the strategy being invest higher marketing expense to drive mobile and hotel adoption for the year, we successfully improved our operating margin by optimizing personnel and selling, general, and administrative expenses during the reported full-year fiscal of 2015.

As we get 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 likely to change the way Indians 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 innovating these areas of strategic growth while growing leverage on nonoperating expense like personnel, selling, and general administrative costs.

We also expect further compression on the air ticketing margins in fiscal 2016.

Accordingly, we have pleased to initiate our full year revenue less service costs guidance for fiscal 2016 with a constant currency growth range of 22% to 26%.

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

Operator, please?

(Operator Instructions) Lloyd Walmsley, Deutsche Bank.

Thanks guys.

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 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?

That's a good question.

Let me just say, first, this is Rajesh.

So two points here.

One, of course, is as you look at on a full-year basis the transaction growth is basically [robust] year on year (inaudible), so we should perhaps take a realistic view of the full year on the [attentive] transaction growth.

But most successfully for the quarter, it's a low season quarter.

I think two aspects kind of contributed to this.

One is, in the low-season quarter.

So on the travel basis, we are booking growth are relatively lower and more importantly, the overall leverage transaction value if you would notice when you look at the numbers, discussed this early, within the segment, the mix is moving towards standalone, a la carte [beds].

And you know that has kind of resulted in overall reduction in online (inaudible) some lower growth in bookings on travel business, but global growth on the standalone a la carte hotel bookings, but on a mix basis the overall numbers are relatively lower.

However, if you really see the revenue side of it and you see the margins side of it, so in essence different expansion on the H&P side both in the quarter as well as on a overall basis.

Specifically, from a competitive landscape standpoint the operations, yes there has been [several models] for competition with the discounting that is going on in the marketplace.

I think (inaudible) across the board.

And the way we have tried to kind of come to that as part of our strategy is to pick up our (inaudible) in terms of doing these dividends kind of push on the mobile front.

If we have to value any kind of margin and (technical difficulty) versus our overall yearly volumes, it's a value to not necessarily have a dilution margin, as you would notice, but very intelligently try and also make sure that the we don't lose the ground on an overall basis, especially on stand-alone, a la carte hotel bookings on the mobile side.

But at the same time not necessarily and of just marching dollar by dollar kind of a [timing] because we don't believe that that's a sustained strategy.

And you know we kind of overall need would be [call] that we took and we look at the year performance and the way we have seen growth on the mobile side as we mentioned on the fiscal year.

And so you know all of these factors contributed to relatively for this quarter low transaction growth and very high on the margin expansion and revenue.

And going forward, we are pretty sure that these downsides [with the overall affecting of growth in the H&P segment] driven both by transaction growth both as well as implementing margin growth.

Can you give us a sense for with the year looked like without EasyToBook or what the contribution was from EasyToBook?

Because now that you are lapping that one would think the growth would be harder to bounce back, as you say, in terms of transaction growth in 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.

EasyToBook actually in all of our metrics, wasn't significant contribution in any case.

So it was actually a small, very small kind of contribution because it wasn't really [significant] revenue by (inaudible) or transaction buyout, if you will.

The EasyToBook was much more similar to leverage the technology [team] and the trends in technology and transcending capabilities that they have.

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

Great, thanks, guys.

Manish Hemrajani, Oppenheimer.

The (inaudible) hotel margins, how does the mix of stand-alone hotels compared to last year?

You talked about that are negotiated rate with suppliers.

Are you seeing that with chains or with independents?

And how seasonal is marginal improvement?

We all know the independent hotel, the natural occupancy rates continue to be challenged.

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

Thanks.

Sorry, let me just start and then Mohit can add.

Especially on the margins given let can give you more color on that, Manish.

So is it going to be a consistent trend to follow.

But it just was in a weak quarter, expansion of margin that you see that we reported out is a factor of two things.

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

And then there's also on an [overall] basis in some cases there are related -- linked to the annual kind of delivery targets intended that are attached.

So therefore, when we look at the market analysis, we should look at full-year margin analysis for H&P rather than looking at specifically for a particular quarter.

And when you do the quarter [split] obviously seasonality and buying.

So if you look at full-year numbers, that is certainly in line with our expectation.

The margin expansion takes over [13%] now and we can continue to hope that, as we've been talking about, there can be [part] long-term.

We do expect that we can potentially take it to [15%].

So incrementally on a full-year (technical difficulty), we should expect as we keep growing our volumes an incremental gain or expansion on the overall margins for the full year.

And yet to your point on the independent properties, just clearly while this would be perhaps true across the board, the revenue will be driving volumes kind of irrespective of the guidance activity.

But most [due to our] independent properties where we are driving more volume than we place -- you know kind of wide open to -- given the performance, our performance with those specific independent properties, wide open to [diverse] performance linked to better margins.

So clearly coming in from that, for the mix, I'm going to hand it over to Mohit and give the [year-on-year] comparisons.

On margins, Manish, as you would recall in Q1, we have recorded slightly lower margins on the hotels and packages segment compared to full-year, previous year.

But we have called out that you know this margin is more like a quarter-to-quarter issue based on seasonality and [order of our] bookings, and it is better to look at it on a full-year basis.

And we want to includes, one, we are confident that on the full-year basis we should be able to bounce back and see some improvement on a year-on-year basis on the [attentive] margins.

That branching should fade out, and the overall seem to have done -- we have well for the year as a whole.

Coming to the mix part, we clearly have made significant upwards in terms of improving the mix of stand-alone hotels (inaudible).

And compared to close to about 50% mix in the last year, stand-alone hotels account for over 60% of the H&P mix currently.

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

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, like hotels have difficulty in filling up their rooms and getting up to capacity level?

(inaudible) a large part of the significantly high [mileage] you've seen comes into -- you know, the [performance in margin] which are kind of, you know, analyst averaging on a full-year performance link.

These are the -- we like Europe.

[As you net out the same] continues to depend upon margin performance goes through over the full-year basis and therefore some of these things start getting factored in an ongoing basis going forward.

What has happened in the year is we significantly increased the number of properties that we listed on the site and therefore the ability to wind up and create that volume commitment over the year and like the achievement over the year (technical difficulty) was difficult during this present year because you're in significant in expansion mode on the supply side.

I think this will be a lot more moderated for first quarter (inaudible).

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 we are 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?

Manish, one-year impacted it.

and this is obviously based on the estimate that this one impact like beginning of the year.

And as you've seen in the past, the markets kind of evolved especially air market has been fairly dynamic in that sense.

And some with some kind of pleasant surprises, but you know what we are obviously looking to account was we are [noting our in information] at this point time at the beginning of the year.

So the bigger impact that we implemented the overall numbers of the guidance and that we given actually on the margin dilution, which we have on the air side not on the hotel and packages side but on the air side, which we've been talking about for some time.

And we've been talking that about (inaudible) this year.

And that needs to be at least out at (inaudible) at this point time is that that will get evaluated probably in about 10% this year.

And that's what that has impacted in.

So absolutely that in terms of just the generally overall capacity improving, the domestic air market generally improving and going in the right direction.

But the 10% value chain in the margin would have a material impact on the revenue side and since we see that this is the guidance around the revenue side, we're doing transactions to grow, but this is one of the (technical difficulty) factors that kind of probably, optically will be reflecting on the overall guidance range.

But as we go along then we will see how the market grows and evolves and you've been giving us, I guess, progress updates and revision of the quarter, we'll keep watching this space and we'll keep updating it as we go along in the year for them.

At this point time, this is what we thought was the good estimate from our point of view.

Thank you.

Gaurav Malhotra, Citigroup.

Thanks, everyone, for the opportunity.

Just coming back to the hotels business.

You know I understand that it's 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.

You know, year-on-year growth of almost 11% or 12%, given where we are in terms of the whole penetration cycle in the hotels business, just wondered your thoughts on that, especially the average is much more mature seems to be growing much faster right now.

So any thoughts on that as to where this number should -- would look like say in a year's time.

Thank you.

A couple of things over there.

We kind of call out that in the low season quarter we could begin again to see the average transactions volume to [mean] much lower compared to high season quarters, but even on a year-over-year basis, a couple of points over there.

If you compare it on the air side as well as I had called out, there has been a significant reduction in the average airfares over the last year and you know over similar quarter, previous year as well.

So if you look overall ATVs coming down particularly on the hotels and packages business.

This particular quarter has seen a lower growth on the overall (inaudible) business.

But (inaudible) overall transaction growth continues to be much better, much higher (inaudible) and we produce and also if you look at it overall, revenue growth continues to be lower.

And as we been calling out, we do see these kind of temporary quarter-upon-quarter kind of changes on this specific business factors in these segments.

Overall the trend, if you look at for the last three or four quarters or for the year as a whole [seems like rising] and both [robust] growth (inaudible) on the transaction side overall while not looking at anything on the margin side and in fact adding to margins on a year on year basis.

So I think given largely related to being ATVs lower and also the fact that there's been a mix shift in developed hotels, where the average transaction tends to be much lower compared to what is impacted.

What Mohit said and just wanted to just give I guess long-term view based on specifically the mix changing in hotels is actually quite healthy.

Right now, in the particular quarter, we've been exchanging and (inaudible) transaction value was something [$342 to $180] per transaction.

So this will have an impact on the booking levels.

But otherwise as the mix as an overall, particularly with the way we want to just kind of move the mix through the business largely online when we shifted [as needs] and slowly and gradually this was valuable for us to improve in terms of changing our customer mix, changing as we go along as well.

So [in factly], we are not particularly concerned about changing the mix per se.

We are actually quite happy as it's something needs to happen because we know that packages -- on a top point of view that (inaudible) segment the customers actually likes the buy that.

But from an operating leverage point of view and more and more we can push back online the benefit of a la carte hotel booking or a combination of a la carte hotel booking or customer and package booking, we will have to do that.

So (technical difficulty) to come back, I just thought I'd mention this point.

We should keep that point in mind and then transition happens, obviously you will see a few metrics going up and down but on the transaction growth per se, compared to the previous quarters, it 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 [moving] basis we don't see any kind of reverse spend in that trend at least at this point in time.

So, I don't think we should read too much into specific quarterly growth numbers or transaction numbers especially from those point of view.

We should see overall full-year number, you know, growth on every aspect on the hotel and packages side.

In fact, we need to be fairly robust.

Arya Sen, Jefferies.

Thanks so much for the opportunity.

Firstly, for this quarter what was the growth in gross bookings for stand-alone hotels?

Was this growth in packages?

Actually, so -- we just reviewed that number.

But given we haven't really been reporting that out in our [split] hotels and packages, so directionally like Mohit was highlighting earlier, the mix on the net revenue side is still more towards hotels.

It is about 50% hotels and 40% packages.

All three segments of the total segment.

And the total transaction value on an overall basis is about $280 a transaction versus $342 [complete this first quarter].

So I guess you can kind of do the math and go backwards to guide that number.

But you know we haven't really been reporting out the exact number just from a reporting standpoint.

(inaudible) the growth in the gross bookings on the hotels side was really far higher than the overall chain mix.

That's why the mix was up.

Right.

And so the 60% stand-alone hotel that you're referring to is just of the fourth quarter or the full year?

This is for the full-year mix.

Okay, and how much was it last year -- if I could just sort of get the comparison?

It was closer to 50%.

50% has gone to 60%, right?

In terms of mix in the stand-alone business.

Okay, okay.

And in terms of how much of your transactions are happening on mobile siting you mentioned 38% of hotels transactions.

So is that the full year average or is that the exit rate for the fourth-quarter numbers?

That's [moderated] rate for the [state] hotels being booked online.

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

It was lower than 20% (multiple speakers).

About 19%.

19%.

And then what is the overall number across or maybe for air ticketing or across all of your businesses, what is the proportion of transactions?

22% overall, Arya.

22% overall.

That again is the exit rate?

Correct.

Okay, okay.

As compared to what was it last year?

In the low teens.

In the low teens, okay.

And I mean sorry to repeat this, but is it possible to give a breakdown of the guidance of 22% to 26% in terms of hotels expectation from hotels and packages?

Was this air ticketing?

(inaudible) explaining particularly on the air business dealing side, it's been a bit up, as you saw, in terms of [volume misses throughout all last one year] and therefore factoring in the expectation 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 on with this overall complete growth guidance in the range of 22% to 26%.

Now, clearly with the airline in combination being factored into, a large part of the growth is coming -- clearly due to the packages business and discounted largely every day, even from the continuing shift that you are seeing in the business mix getting more and more in hotels packages.

So we believe (inaudible) reverse mix shift further in 2016 and develop hotels and packages like we expect, the highest part of the growth guidance to be come in from this particular segment.

Okay.

So you did mention that you are factoring in a compression of margin by about 10% for next year in air ticketing.

What's the sort of expectation in terms of -- I mean do you spend expect a more normalized year in terms of gross bookings growth in air ticketing, or do you expect it to remain on the stronger side?

We think it will be more like the normalized growth considering the fact that on a year-on-year basis it's going -- and likely that the average airfare would not go anymore southwards.

Last year, fortunately, was a year-over-year sales wherein air fares domestic (inaudible) seeing change in degrees over the previous year, aided by a variety of (inaudible) the benefit on the converting prices side.

This year, we don't see (inaudible) show us kind of a trend a little bit of a trend of softening and depleted sales, and that's should kind of slightly temper growth for the industry, but we're still believing that we begin to see robust growth if you look at it comparably over the last few years.

Okay, sure.

Thanks, that's all from my side.

Shaleen Kumar, UBS.

So I just need to look at your operating cost side now.

Your operating costs of increased ahead of your revenue.

So if I see you know it's more of you have spent money towards advertisements and pushing sales to on this H&P.

So basically it's difficult to gain operating leverage then over here.

So how do you see this thing is going to change going forward?

Do you see that revenue will surpass the operating costs?

Shaleen, as we have called out during the beginning of the year, we are kind of targeting to go in favor of growth instead of more targeting to go in favor profitability over the year.

So you're trying to achieve a breakeven or close to breakeven year and trying to step up the growth as much as possible on the hotels and packages side.

And that is exactly what we have done over the year.

And as for our [reporting details] therefore have grown.

In terms of trying to drive mobile options or growth in the mobile side because that is where we see as part of the you know customers moving from our platform or from a (inaudible) in terms of platform.

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

This something we believe are a significant opportunities that the market is presenting to us.

But it really in terms of mobile adoption by not only existing customer sect, but by if you look at some of the things that's coming on board or coming online or through the mobile platform or particularly through smartphones.

So you know that and trying to so you know really -- that customer base to drive more and more online hotel bookings to something that we can (inaudible) behind at least for the immediate short-term.

You know it I mean, near short-term I just that the next year or two.

So while we are planning to drive a lot of operating leverage on other expenses, whether it's personnel costs, whether it is selling or general administrative expenses, we'll [can review flow but flow back are affected more softly in terms of driving growth in these key areas].

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 that -- is there any cost in the Q4 also with respect to Mygola (inaudible)?

And what kind of impact can we see on the cost side because of these two acquisitions in the coming year?

In terms of Mygola, actually, you know again that we -- out of the innovation fund and just [ordering] small investment, essentially in the gain, it's just about a (inaudible) number gain including [two founders].

So from that point of view, it's a very niche kind of inter-team acquisition that we have done, so unlikely to (inaudible) significant direct expansion on the cost side.

Similarly, (inaudible) obviously other acquisition that we announced today -- that isn't really an increase accretion positive but more like an investment because we kind of invested in that particular campaign and we 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.

Okay, great, thanks.

That's it for my side.

Pinku Pappan, Nomura.

Thanks for taking my question.

So I would like to know how to think about ATVs on a year-over-year basis.

So as your mix continues to shift more towards the stand-alone hotels (technical difficulty) should we think therefore that your ATVs will reduce, so the sales level with decline of around 6% in your hotel and packages ATV basis.

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

[Mid-single digits is the kind of growth] -- shares are kind of building from a margin point of view.

Because what we've been calling out and, as Rajesh was mentioning as well, we continue to drive the mix more and more in favor of hotels in packages and within the air ticketing segment are continuing to see it drive in favor of stand-alone hotels.

So therefore some margin compression in line with what we've seen over the year is that it will 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 FY16 level?

So you know, wide marketing initiative reported in operating costs.

I'll kind of give you some flavor in terms of how the market expensive moved over the year.

So comes -- it improves to about an overall spend of 2.2% [annualized] booking level.

The marketing costs have gone up to about 2.6% of gross bookings over the current fiscal year.

And the last quarter, as you can kind of (inaudible) assume, was higher than 2.6 percentage rate.

So as I was just kind of calling it out, marketing on a growth (inaudible) favorably contribute (inaudible) and continue to be addressed behind particularly to the address the opportunity in terms of the getting customers to move online to the mobile platform and also to drive more and more online shifting (inaudible) segment.

So going by your previous statement, you do expect for the next year or two that this marketing spend that are in 2.6% of DB, that kind of arrange will continue?

So why you cannot kind of see another increase as you have seen in the last fiscal but expected to end up in a range towards about by maybe 10 or 20 basis points and becoming (inaudible).

And lastly, can you give us some sense of what your market share in hoteliers in the hotel booking space.

So we don't really have a [solid finding] report.

(inaudible) industry report on the hotel side per se.

But momentarily we had kind of come out recently with a report on the hotel sector, and that will benefiting in terms of market share being held by the industry hoteliers.

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

You know it's very difficult to call out a specific percentage -- in specifics percentage terms.

But we're beginning to have a leading market share from among the hoteliers pie on the hotel side as well.

Just to add and maybe to give you a little bit more color.

You know, our focus on [support] has put us overall more than (technical difficulty) percent for us and that's an overall hotelier market share.

And I guess that's one 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 business as a go to market share in the hotelier market would have only improved.

And secondarily for the hotels also, given our growth rate and basis that kind of triangulation of various data points, (inaudible) to suppliers, etc.

We believe these continue to have (technical difficulty) shares there as well.

In a similar vein, [40%] of the overall hotelier for the domestic hotel market.

And you know unfortunately there's no real third-party (technical difficulty) in the market.

What Mohit was referring to was the overall market kind of ideal report, if you will.

But specifically (technical difficulty) hotelier perspective, on the [focus] side has reported out overall data but not necessarily the open ended segment.

(inaudible) we would kind of put our market share of the online hotel market a close to 22.6%.

So you know if you kind of accelerate that looks like we have as good market leadership position on the hotel side as we have any overall travel segment.

And that includes the suppliers.

And that's the total online market including top-line revenue, not necessarily the OTO (multiple speakers).

[48%].

Including the supplier, sorry?

Including the supplier, correct.

(multiple speakers)

Got it, got it.

And thanks for that color.

And if I could squeeze (technical difficulty).

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?

I think the year has been more competitive than the previous one, and we intend to continue (inaudible) open comments.

I think in the domestic spheres we have seen quite clearly a couple of players from time to time being fairly aggressive and discounting through different ways.

So couponing or discount independent hotels we are seeing aggressive discounts.

And therefore just to kind of connect the dots, therefore our strategy not to just match dollar for dollar to keep share but actually to do different stuff like Uncancel or mobile on mobile, one step ahead.

So the launch of Hotel Right Now, which is kind of an win-win strategy with last minute perishable inventory with hotels and offering that to customers at good margins.

So you know where trying to play the game on different dimensions.

We don't think this matching dollar for dollar is the way to go; we've seen that kind of more we play out in a couple of markets most recently in China.

And we think that (technical difficulty) in this market we have to do this to get value for the brand as well.

So as standard, those global hotels 24,000 (inaudible) different hotels and (inaudible) those in perhaps more hotels the needed in chain or the non-large hotels where we are typically very good margin and (inaudible) our own.

And again on mobile, now that there is this 7 million [days], a very large number of active we are now doing very interesting push notifications trying to stimulate people more based on where they are.

More interesting deals, including weekend deals because there you're getting (inaudible).

And at the backend, going ahead and contracting these.

So we are seeing good traction there.

And next year we should be able see growth come back for sure.

But I think we're going to see an intensity of kind in the same through the year.

It's the most important space, a couple of new players as well focus exclusively on hotels and everyone is throwing their hat in.

You are obviously aware there's a lot of financing going on, on the various sales.

So the early-stage players are also getting some.

I think what will help the fact that we are seeing more organized inventory happen in the budget level as well.

Same budget level, independent hotels getting more organized, and therefore presenting more options for customers to see.

And of course a big shift of move to online, move to mobile where I think we will be able to maintain our position sure.

Sure, thanks a lot.

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(technical difficulty).