MakeMyTrip Ltd (MMYT) 2017 Q3 法說會逐字稿

Welcome to the MakeMyTrip Fiscal 2017 Third Quarter 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 provisions of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of future performances and by their nature are subject to inherent uncertainties. The discussion of the Company's fiscal 2017 third quarter financial and operating results during this call do not give effect to the acquisition of the ibibo Group by the Company. 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 contained in the Risk Factors and Forward-Looking Statement sections of the Company's Annual Report on Form 20-F filed with the SEC on June 14, 2016. Copies of this filings are available from the SEC or from the Company's Investor Relations department.

And with that, I would now like to turn the call over to your host Deep Kalra, Chairman, Group CEO and Founder. Sir, please go ahead.

Thank you. Thank you and welcome all to our fiscal 2017 third quarter earnings call. Before we get to our quarterly results, I'm delighted to announce that we have officially closed the transaction to combine the ibibo Group with MakeMyTrip today. The team and I are very excited about the value creation opportunity this merger will bring to all stakeholders, including our customers and industry partners. We believe this transaction further solidifies our market leadership in India's fast growing OTA industry.

As per a recent analyst report, India's total travel market is expected to reach $67 billion in bookings by 2021 and the online travel market is forecasted to represent 35% of that total, up from approximately 20% at present. Much of this growth will be led by the adoption of travelers booking hotels online, as the penetration levels for online hotels is fairly low today at less than 15%. The increased usage of e-Commerce and online travel is expected to be led by mobile, as telecom companies like Reliance Jio are offering aggressive data plans that are intended to drive high usage and rapid adoption by the masses. In fact, we are already witnessing the positive contribution to new app downloads and users within our business in just the last few quarters from Jio's entry into the 4G market.

We believe that MakeMytrip, along with the Goibibo and redBus brands are very well-positioned to lead this offline to online shifts in the coming years. As we embark on our new journey, the team is delighted to offer a veritable, one-stop shop to cater to the varied needs of Indians across all modes of transportation and a wide range of accommodations, both domestically and overseas.

We are also excited for our key supply partners who will benefit from the increased business scale and customer reach that all three brands can offer going forward. Today's announcement marks the beginning of the road ahead to successfully integrate both companies and to deliver the value creation that is indeed the hallmark of this transaction.

We are eager to start leveraging the best practices and invaluable human talents within our combined companies to drive faster innovations and to dramatically improve the researching, booking, and post-sales experience for all our customers. As part of the first steps, we have already launched a series of initiatives in this direction and we look forward to sharing progress updates in the coming quarters.

I'd also like to take this opportunity to congratulate and thank everyone who worked diligently to make this transaction a reality. I want to share my enthusiasm of having Naspers and Ctrip representatives on our Board and appreciate their strong commitment and support for our Company as we collectively believe that this market presents a tremendous opportunity for long-term sustainable growth and value creation.

Now, let me share some commentary on our fiscal third quarter's performance. Q3's very strong operational and financial results reflect our successful strategy of rapid market share gains, especially in the hotel segment, leveraging our technology and product capabilities to find innovative ways of delighting and retaining customers. During this period, we used various marketing and advertising programs to reach new customers in an effective manner, who maybe discovering the merits of online bookings for the first time.

Furthermore, our Company's culture of flexibility and nimbleness in making tactical decisions has allowed us to continue delivering on our growth plans, despite the impact to consumer demand caused by the government's demonetization announcement in early November. However, we believe this recent action by the authorities to transition the country towards digital banking and payments will eventually provide an additional tailwind for e-Commerce companies like ourselves as a large portion of overall travel bookings today is currently transacted in cash, notably in the international air ticketing, domestic hotels and holiday packages segments.

We believe the performance during the quarter continues to illustrate the strength of discretionary consumption by the large Indian middle class, driven by continued affordable domestic airfares. We are enthused to see a large number of first time customers, many from semi-urban and rural India embrace the superior experience of making an online or mobile booking with MakeMyTrip.

Lastly, our adoption of a Mobile First approach is clearly the right strategy for our business. As a Company, we are seeing strong growth of net users coming from smaller cities and towns which are rapidly coming online via mobile. This trend is driven by very attractive data plans offered by telecom companies in the quarter.

During Q3, more than one-third of our new app downloads were acquired via the 4G networks of Reliance Jio, who are focused on driving mobile data usage. We believe the current efforts by the telecom industry will undoubtedly benefit our Company as more cities and towns outside of metro cities in India come online via mobile. Therefore, we have and will continue to invest behind our mobile initiatives to drive adoption by new and existing customers and to position ourselves to participate in the growth of online travel, which will be propelled by the ongoing mobile revolution in India.

Now, I'd like to request Rajesh to share more details on some of the highlights I just shared.

Thanks Deep and Happy New Year everyone. As you just heard from Deep, we are very excited to close the transaction with ibibo and I would like to officially welcome the ibibo team to the MMYT family. I look forward to working closely with the entire team to elevate our Company to the next level and deliver sustainable long-term value.

Let me begin by highlighting some of our Q3's key achievements and performance. During the peak holiday travel quarter, we continued to focus on achieving high growth in our domestic hotel segment and expanding our industry-leading market share in the domestic air segment. I'm pleased to share that we have succeeded in achieving those goals, as demonstrated by the continued quarter-on-quarter market share gains and the resulting strong reported financial performance.

This achievement reflects the ability for our business to outpace market growth, fueled by strong off to online booking trends, even as we face some consumer demand impact from demonetization. In Q3, we continued to log high growth within our India standalone hotels booked online business as transactions grew by more than 105% year-on-year.

Mobile also continued to be a growth leader with nearly 150% growth in India mobile standalone hotel transactions.

Furthermore, this robust growth in domestic online hotels has allowed us to nearly double our overall estimated market share, both offline and online combined to roughly 5%, up from 2.3% a year ago. At the same time, we also achieved growth of 51.6% year-on-year in revenue, less service cost in constant currency terms within our H&P segment. Lastly, our domestic air business continued to outpace overall market growth and attained market share of nearly 17% in Q3.

As a Company, our focus has been to drive mobile adoption in a big way with our Mobile First approach across key business lines. Our development team has continuously worked to make the mobile experience better and better for users and their efforts has resulted in a rapid adoption of mobile by customers booking online with us.

During the quarter, mobile bookings reached nearly 74% for our standalone domestic hotel transactions booked online and 52% for domestic flights booked online. At the same time, we keep seeing an increase in total cumulative apps downloads to date, which has increased by 6 million sequentially since Q2 to reach 33.5 million downloads, and our monthly active mobile app users also continued to increase to over 7 million by the end of Q3.

Now, let me move to discuss the progress we have made to offer more choice for our hotel customers. In Q3, we further expanded our domestic hotel properties to over 34,000 properties available for customers to shop and book across our platform. In addition, our RightStay team continue their efforts to bring more non-traditional or alternative accommodations online across the country, as this large potential market presents another leg of growth within our hotels and packages segments going forward.

The team has done a great job of identifying and signing up more than 12,500 properties on to the platform to-date and we believe there are many more great properties available yet to be brought online by the RightStay brand. Underpinning our continued success to-date is our focus on product innovation and tech enhancements, which has helped improve customers' experience during the quarter.

Our team worked on improving our technology across all lines of business, which has translated into incremental and meaningful improvement in conversions. For example, our Android mobile development team introduced a hotel recommendation widget within the Flight Search funnel.

Another example is the optimization of the application flow within our mobile experience to ensure users are led into the relevant product booking funnel as quick as possible, which improves the search experience and conversions. We have also done a beta launch of highly relevant cards on the landing page of our android app with features such as web check-in for flights, flight status, weather conditions and add destination, travel checklist and hotel details.

At the same time, we are also investing in the development of our chatbot which is an intelligent trip assistant where users can also just ask the device about key information relevant to their bookings, making their machine interaction and experience more natural. Our content team has also launched extensive online travel guide, which are intended to help solve common questions and concerns from travelers.

Now, let me also share some of the innovation and experience enhancements within our air ticketing business, which continues to outpace market growth rates. During the quarter, we smartly leveraged our electronic wallets and personalized mobile fare alerts to reach out to the existing customers. In Q3, we launched the feature for customers to book ancillary services for baggage and meal options on their mobile devices and increased the ancillary's attach rate.

Our team also revamped the UI for travel insurance bookings, which has seen a good increase in domestic flights attach rates. During the quarter, we have experimented with zero cancellation program on domestic flights, which was well received and helped improve NPS scores for customers who were offered the option. These are just some of the innovative and smart efforts put in by our products and marketing teams which has allowed us to keep gaining share and reach 17% of all domestic passengers carried in December, and lead the industry in online air bookings growth.

Lastly, I would like to share some details of our holidays business during the third quarter. As many of you are aware, the fiscal third quarter is typically one that sees more customers traveling via packages for their holidays. Therefore, we continued our efforts in driving higher productivity from our offline sales force and gained further efficiencies by standardizing much of the operations and reducing complexity within this business.

As a result of these efforts, we have seen a positive improvement in net contribution from this line of business and a material improvement in transactions growth for our outbound holidays' business. We believe the outbound travel market is a large and fairly untapped opportunity for us and we will continue to invest in participating in the growth of this market, while optimizing the cost of offline distribution channel.

Now, let me hand it over to Mohit, who will provide a financial overview of the quarter.

Thanks Rajesh and hello everyone. I'm very pleased to share that we have achieved another strong quarter of financial results in Q3 fiscal year 2017. Our revenue less service cost or net revenue grew by nearly 81% on a constant currency basis and we reported $76.5 million of net revenue in the third quarter of the fiscal.

This achievement was well above our internal plans, as a result of an incremental revenue recognition to the tune of $9.2 million during the quarter. However, without this, the net revenue for the quarter would have been $67.3 million, representing strong 59% year-on-year growth on constant currency basis.

In the air ticketing business, our revenue less service cost or net revenue was $38.2 million, aided by the inclusion of incremental revenue of $9.2 million, based on quarterly evaluation of trends of refund rights exercised by our customers, along with change in the estimate for quarterly provisions for cancelled tickets pursuant to confirmation from our vendors. As a result of the incremental revenue, while transactions grew at healthy 30.7% on a year-on-year basis, the net revenue growth in constant currency was much stronger at about 120.3%. Excluding the incremental revenue, the growth would have been about 67%.

As market leaders, our air ticketing business on the domestic side has grown at about 34% in Q3 and has continued to outpace the domestic industry growth rate, which stood at about 23% on a year-on-year basis, largely driven by an increase in domestic seat capacity. This also demonstrates that there is a strong demand for air travel within the country, fueled by lower air fares.

In Q3, average transaction value of our total air business dropped by 7% on a year-on-year basis with resultant take rates optically expanding to about 7.8%, excluding the incremental revenue recognized. With recent hardening of oil prices, we expect the air fares to stabilize in the near future and accordingly expect our air ticketing margins to get back to about 6% levels in the coming quarters.

I'm also very happy to report that the year-on-year net revenue growth in our H&P business was about 52% on a constant currency basis in Q3. The growth was fueled by strong transactions growth of nearly 78% in this segment. The transaction growth was led by a 105% growth in India standalone hotels booked online and by about 150% growth in mobile domestic hotel transactions.

During Q3, the take rates within our H&P business also expanded to 19.4%, an improvement from the previous quarter and the same period a year ago. We have been able to achieve better negotiated rates with our suppliers and earn performance-linked and promotional incentives from vendors, given the increased volumes of business during the quarter.

Lastly, our other revenue line also registered strong year-on-year constant currency growth of 79% to reach $2.9 million during the quarter. This strong growth was primarily driven by increased attached rate of travel insurance product, which was powered by the growth in our air ticketing business.

With the reported quarter being a high season travel quarter, we have tactically, for the quarter, driven larger efficiencies in our marketing and sales promotion spends. Accordingly, compared to the previous quarters, these spends were down by over 180 basis points to be nearly at 8% of total gross bookings.

Keeping aside seasonal impacts, our strategy in the near-term remains focused on achieving higher growth particularly in the hotels booking business along with other underpenetrated segments of the travel market like alternative accommodations, International air and ground transportation services. We are, therefore, likely to continue aggressively spending behind marketing and sales promotions in the coming quarters.

In view of the strong growth and improved cost efficiencies and further supported by the incremental revenue recognized, we report adjusted operating profit of $1.3 million or a loss of about $8 million excluding the incremental revenue for the reported high season quarter compared to adjusted operating loss of about $25 million in the previous quarter.

The finance income for the quarter stands at $28.5 million and $44.6 million for the year till date and this is largely on account of gain in fair valuation of the erstwhile convertible notes or derivative financial instrument issued to Ctrip, which had been fully converted to equity during the reported quarter.

Our cash position as at the end of the fiscal third quarter stood at $153.8 million with no debt on the balance sheet. Thereafter, today the Company has received approximately $82.8 million as estimated cash infusion from Naspers towards the initial closing date payment towards this proportionate share of net working capital infusion and approximately $8.75 million towards additional new shares issued to them under the transaction agreement.

With this cash infusion, the Company has the required cash to continue pursuing its aggressive growth strategy in the rest of this fiscal year as well as the upcoming new fiscal year. Having closed the merger of the ibibo Group with MakeMyTrip today, our next quarterly reporting will include consolidated results for the post-closing period. By then, we expect to make significant progress on the integration and will consider initiation of business outlook or guidance as we enter the new fiscal year.

With that, I'd like to pass the call back to the operator for Q&A.

(Operator instructions) Lloyd Walmsley, Deutsche Bank.

Thanks. A couple if I can. First, just can you guys give us an update on the competitive environment in India? How are some of the other players across the OTA space and room aggregator space, how are those guys behaving in terms of discounting and marketing behavior? And how do you see that trend line moving? And then, in terms of the integration, can you give us a bit more color on how you guys plan to proceed going forward on integrating -- what parts of the businesses will be integrated? What will be left separately? And what kind of key milestones should we be looking for on the integration side?

Hi, Lloyd. This is Deep. I'm happy to take that. So, Lloyd, on the competitive scenario, as you are aware, Yatra recently listed on NASDAQ through a Special Purpose Acquisition vehicle, there have been three, I think, and they continue to be fairly active on both air and packages and off late even the hotel business. But from our understanding of the hotel business, what we learn from our suppliers is it's still modest and small and they're not a significant player there. They are more active on air and holiday packages.

Cleartrip is also another player who has a brand and has been around for now over 10 years. Again, focus being now more corporate air, also hotel, so they are definitely a player, but when we do our surveys with customers, go out in the market, we do see even prior to this merger that Goibibo had obviously come up very strongly in terms of hotel transactions and it clearly emerged as a neck-to-neck player with us in the budget segment and just slightly behind in the premium segment, whereas both Yatra and Cleartrip are behind.

The international players, Booking.com and Expedia are both in the market, still largely focused on the higher end of the market and most of their business comes through inbound, but there is a domestic business, which is also growing for them, no doubt. In addition to that, we have hotel aggregators, as you are aware, there's OYO Rooms, they have changed their strategy over the last few quarters -- over the last year and currently they run two or three different kind of propositions for customers. So they take up entire guest houses or homes and then run them -- take them on lease and run them as budget hotel properties.

They also still -- were taking earlier part hotels. I think they're not taking partial inventory in hotels now, it's either the entire hotel [or this]. OYO, as you will recall, few quarters ago, we had actually taken them off our platform, now almost a year ago, three quarters back and there are a few other hotel aggregators, more on the working as low touch budget chains, notable among them are Treebo as well as FabHotels. At present, they are hosted on our platform and doing quite well, and they are actually focused on improving the quality of the customer experience at the hotel space. So that pretty much rounds up.

And off late, there is a horizontal, as you would know, you're probably aware of Paytm. Paytm is essentially a mobile wallet company, but they've also built a marketplace and among other things, they also have a travel offering started with rail and bus bookings, also air bookings, and of late, they also do some degree of hotel bookings more on and off. but they are quite aggressive on the transportation space, so rail, bus and air. So that's pretty much the overall landscape.

Coming to integration, your second question. So Lloyd, the plan is to definitely integrate the companies as tightly as possible and while we will retain and grow all three brands, namely redBus, Goibibo and MakeMyTrip, but we will seek synergies wherever possible and we do see tremendous synergies on product and tech. Technology obviously will take a long time to fully integrate, but there is a lot of best practice sharing out there, but we are going to have combined teams.

We also see tremendous synergies on the hotel side of the business on supply as well as on marketing and definitely on the traditional support functions of finance and HR. So, we are actually looking to integrate as tightly as possible, like I mentioned in my script that we have actually kicked-off a series of initiatives, and we do believe in the next quarter, about 90 days or so, we would have actually achieved most of the integration programs that we have planned.

And then, of course overtime, time will tell how well this will work, but we are very excited, both Rajesh and myself about the talent that's coming with the ibibo group with both brands and ever since we've got our approval from the antitrust body, which is the CCI in India, we have been actually engaging across all levels, starting from the senior leadership team and then downwards and we have various initiatives planned as well. So, we appreciate fully that it's not an easy task, not a trivial task and it will take a lot of doing in bandwidth and planning, and we are also taking some expert help to make sure that we will be able to get the best out of the merger.

And then just a follow-up, I mean, return to adjusted operating profit is kind of a nice surprise, at least to us. Is that something that we should expect over the next year with the integrated entity focus on a return to operating profits? Thanks.

We'll take that Lloyd, this was more a high travel season quarter and we were also aided by incremental revenue recognition this quarter. But as we've been calling out, focus continues to be on growth, particularly in the underpenetrated segments like hotels and international air, as well as ground transport. So we'll continue to invest significantly behind customer acquisitions, particularly for these lines of businesses and therefore the focus will not really be on getting back to profitability in the next year, but be on continuing to drive significant amount of transaction growth and business growth in the coming two quarters.

Arya Sen, Jefferies.

Hi, good evening all of you. Firstly, just if you could explain that $9 million of additional revenue that you've recognized? And also related to that, even if I adjust for that, the revenues in the air ticketing segment seems to have been significantly better, if you could talk about some of the drivers for that?

Sure, Arya and in fact the air ticketing business for the last few quarters has been doing better than what we were expecting, maybe say a year ago and this has largely got to do with the low air fares that have been prevailing over the last few quarters, which has meant that there has been significant amount of demand and also there has been significant enhancement to the capacity in the industry as well, which currently is clocking at about 20%-plus on a year-on-year basis and aided by improved load factors which is resulting in a much higher growth for the industry itself. The industry hasn't seen this kind of a growth in the last so many years as it has seen in the last few quarters. This is also resulting clearly in players like us who are kind of been market leaders, growing way beyond the industry growth rate and therefore, if you look at it, our transaction growth even in this quarter which otherwise is a high travel season quarter has continued to be over 30%.

Excluding the one-off, the revenue growth is at about 67% and has trended higher than the transaction growth, but this is largely on two counts, one on a quarterly basis -- on a seasonal basis, you could have a specific arrangements with the airlines as a result of which, on a quarter-on-quarter basis there could be small changes in the take rates.

And secondly, even optically if you look at it every time, there is a fall in the average transaction value, optically the margins look much better because a large part of our air ticketing margins are fixed rather than being variable, and therefore, the margins look optically much better. Slightly longer term, we think we'll kind of be looking forward to about a 6% margin levels, plus or minus 0.5%.

Keeping in mind that fuel prices are already holding or strengthening of late, which also means that perhaps airfares are unlikely to see as much of a drip on a year-on-year basis as they have seen in the last few quarters. So, this is our kind of going forward outlook on the air side.

Understood. Just to sort of -- earlier you had talked about sustainable margins of about 5% whereas now you're talking about 6%. So is that a conscious upgrade in that number?

No. So long term, Arya, if you would recollect, we've said, there is a significant amount of payment gateway cost with the segment needs to bear. And therefore, in the longer term scenario, we are saying, we would get to about 5% margin levels, but what I'm talking about 6% levels is more in the next few quarters rather than the next few years.

Okay, understood. Secondly, on the hotel segment as well, your net revenue margin has gone up to 19.5% and this is despite, I would think, this quarter has quite a bit of packages as well, which historically have been lower net revenue margin. So if you could explain that part of it as well?

Sure. If you really look at it, the mix has been going on a swing in favor of hotels, and as we have been calling out in the last few quarters, with every change in [SKU], the margins look better for the segment. So, when you look at it on a year-on-year basis, clearly the mix has moved more and more towards hotels. Even on a quarter-on-quarter basis, if you really look at it, the focus has been on driving more growth in hotel transactions rather than on the holiday side.

Because particularly on domestic holidays, as I've been calling out, there is more and more de-bundling of transactions which is happening. So, this is largely coming in from the mix getting more and more skewed towards hotels. Clearly, what we have said is also the improvement in the margins is also coming from the fact that I called out in the script that we are able to contract much better with the supplier side, or particularly the independent properties and the mom-and-pop properties and we're kind of doing reasonable volumes for them.

And this was also high travel season quarter and we have planned it pretty well ahead of time and therefore our ability to cut down promotional spends and improve the overall take rates for the hotels booking business was much better.

So Rajesh, what would be a sustainable number for this -- long-term sustainable number for the net revenue margin number?

Arya, as we've said, if you really look at it for the shorter term over the next few quarters, considering that we'll continue to be aggressive in terms of taking the market online and online penetration is still pretty low in the teens, we expect the hoteliers to kind of participate with us in building the promotional campaigns. And therefore, we expect the take rates to remain high. But in the slightly longer term, say the next three to five year scenario, we'd be pretty comfortable with this segment reporting anywhere between 15% to 16% margins overall.

(Operator instructions) Ashwin Mehta, Nomura.

Hi, thanks for the opportunity and congrats on good set of numbers. Just wanted to check in terms of our hotels segment, what proportion of our payments would currently be happening on the pay at hotel side versus say digital or -- I don't think there is any cash payment, right?

So, pay at hotel is still pretty low at about -- in the teens, I would say. Anywhere between the 12% to 18%, depending upon the period.

Okay. And there was nothing untoward in terms of this quarter or nothing different in terms of this quarter, given that it was a demonetization quarter?

There was an impact and maybe Rajesh can talk about that. At least in the early part of November, we did see some impact, whether on hotel transactions or air ticketing transactions, but came back because it was also -- fortunately, December was a high travel season and therefore transactions came back much faster. Longer term, we've already been saying this that demonetization should kind of actually help, should be a good tailwind for the online industry, because cash has always been one of the big reasons for people to book offline.

And just secondly, in terms of -- from a combined entity perspective, you've said that near term you'd be aggressive in terms of marketing and sales promotions and possibly even going into the next year. But from a thinking perspective, when are you looking at kind of breakeven or profitability in line with what you have talked about in terms of longer-term targets?

Yes hi, this is Rajesh here. Let me take this. So actually, the thinking is not very different from what we had articulated before. What we are trying to say is, I mean the approach really now with combining forces is to see which are the segments that are underpenetrated and that would logically mean that we should continue to focus on growth and those segments are -- domestic hotel is definitely one of them. Even though the penetration continues to be low, projected numbers in the penetration is going to be high in the next four years, taking it from 15% to let's say 30% or 35-odd-percent.

And similarly, international hotel is even more underpenetrated and similarly, international air is underpenetrated. So there are, in our overall business now, when you look at it, just all three brands put together, there are business which is like domestic air, which is relatively more matured and therefore there could be a completely different strategy there in terms of just going aggressive or less aggressive as compared to the other segments, which has far more headroom.

And similarly, on the holiday side of business and packages business, given the different cost structure of the distribution channels as we've been calling out, we've been rationalizing that and we'll continue to keep optimizing on that front.

But that would not mean that we would not grow aggressively and keep our focus on growth where the one; the underneath momentum is there in terms of shift from offline to online, thanks to smartphone penetration and now Jio actually has also contributed in terms of increase in downloads and deeper penetration, et cetera in the segments that I called out. In fact, even the bus segment, we believe that there is more opportunity there of growth as well.

So, these are the four segments which we will focus and we'll go after them in terms of just building market share gains et cetera. But then there will be other lines of businesses where we will be having a relatively different strategy in terms of how aggressively we will go out and acquire customers. So, that's how we are looking at it. Now the blended situation then you would look at it, the way it would play out in the next few quarters, definitely or maybe year or year-and-half or two, the focus will continue on growth and overall on a blended basis, you would not see profits coming up.

But as you go close to, I mean you decided to take a long-term outlook of let's say four or five years, then the kind of numbers or the operating profit numbers that we've been talking about, margins of around let's say 15%, 20% or more, depending upon how it kind of plays out, would continue to be our long-term outlook and that's how we should look at it. So, I would not say actually we are thinking any differently from what we've been talking about in the past.

Okay, fair enough. And just one last question, in terms of -- from a Goibibo versus MakeMyTrip perspective, any early thoughts in terms of how these two brands would be different or it is more two properties where effectively the inventory gets shared?

I know it's a great question and I think we are still kind of in the midst of even understanding better both brands, different target segments. But one thing is very clear, we do believe that both brands have very loyal target segments of their own and we definitely don't want to limit aspirations of either brands by straitjacketing it or kind of containing it in one particular area.

We think that brand should be able to grow and to acquire customers across spectrum and very often, what we as marketers or as business people decide for brands is not what the consumer sees them as. So, we will be giving all brands, especially these two, all the latitude in terms of acquiring customers from across spectra and not necessarily again bottling them into a particular silo, because that's what we believe.

Viju George, JPMorgan.

Hi, thanks for the opportunity. Great results. I think, you had mentioned in one of the questions raised by Ashwin that demo has had a very very limited impact, but it was there. Is it possible for you to quantify what your growth might have been, had it been pretty much normal right for the quarter? That's one. Secondly, you've also made an interesting comment about R-Jio having pushed your -- the engagement levels, the downloads and the transactions. Would it be possible for us to have some numbers on how transactions when I looked at with the R-Jio push, how much R-Jio itself has contributed to it?

And, thirdly, your margins, particularly the H&P side, I think is touching 20%. What has led to this? And why are you still guiding down to 15%, 20%? I understand the under-penetration story and they need to make investments, but with the fact that you've touched very high margins right now and with the merger still ahead of you, well, presumably you can work on costs a little bit better, why shouldn't it be closer to 20%? Thank you.

So, Viju, all three questions are good questions. So let me take the first two and I'll let Mohit take the margin question. So, out of the two, let's talk about Jio first. Just to give you a little bit more color on that, so Reliance Jio and we saw in this particular quarter, in the reported quarter, the downloads that we got, the incremental downloads that we got quarter-on-quarter, one-third of those downloads actually came from people who were using Jio.

So, that's like a fairly material number, which kind of led us to believe that if this momentum continue, obviously part of this is a function of their free data plans and so on, which they've extended that offer until March 31. And knowing them, they've triggered the price war and everyone is going after the data plans in terms of just getting and acquiring all those data customers now more are more ARPU on the voice side as that is going down. So amidst all this price war or aggressive positioning and investment strategy by Jio, is definitely only going to help the penetration as we go forward. So that's on Jio.

As on the first one, the demonetization. See the way we saw the demonetization impact on our business, when the announcement happened on November 8, there was obviously a kneejerk and then the numbers dropped across the board just for a few days. So in couple of weeks' time, the daily run rates came back to us. In our business particularly, when you go a little bit more deeper, then you realize that the impact was relatively more on high transaction value items like say outbound packages for that matter or International flights, but not necessarily.

And again, International flights, [not only] long haul segments, not necessarily short haul, and the advantage that we had was that this was a high holiday travel season quarter which also means that there is advance which is relatively much before -- I mean the people plan their holidays much before and they do all their booking and they were all settled and they were all paid bookings et cetera. So, they had to eventually travel. So, it's not that they had to actually book and travel. So, that kind of help mitigate that overall impact.

And also, the kneejerk reaction that happened when people were just generally grappling with this overall situation or feeling poorer, that stayed only for two weeks and then it came back and there was obviously plenty of other areas of goodness that came in in this quarter. So, it did not really, on an overall basis, kind of had any material impact. More importantly -- so therefore. I mean net-net, what I'm trying to say is, there is the -- if you look at the overall quarterly results, there was no real material impact that I would like to call out either way. I mean, I don't think the growth would have been substantially higher because the impact was only for couple of weeks as we saw and the numbers kind of came back.

And the second aspect of that is the digitization push. So long term actually, it should only help our cause because more and more people would transact online. So that's how we are looking at it, no real impact and when we also heard the announcement, we also thought that discretionary spend will go down, et cetera. It happened for a little while, but not for a long while, fortunately for us.

Kevin Kopelman, Cowen & Company.

Hi, thanks for taking my question. I just have a quick follow-up, really, on the previous questions. Given you're not giving guidance for [FQ4] with the transaction closing, can you just give us any color on what you saw in January at a high level in air and hotel and how the growth trends have held up for you in the overall India travel industry over the past months? Thanks.

Yes, I think, Kevin, we can share macro. Yes, we're not giving guidance, just to reiterate what Mohit had shared and the reason is simply because today we have virtually announced the merger and so we do think that it's going to take this quarter even to start consolidating accounts and reporting out next quarter, which is also our full fiscal, we'll report consolidated accounts and we hope we'll be in position.

We do expect to come back in a position to be giving some level of guidance like we've done in the past. But in terms of what we've seen in Jan, I think what we can share is the macro trends, not Company trends, for obvious reason. But macro, actually strong growth continues both on air side and customers coming online, transacting online and overall hotel robustness, although December, as you would imagine, is peak season for many many countries, including India.

So, there's a seasonal drop-off in Jan, which we've seen, but we did have one long weekend, which is the last weekend of the month, is around Indian Republic Day. So that was a long weekend with good short-term and short-haul travel. But air demand continues to be strong and now actually we have yet another carrier which has announced aggressive plans to buy a large number of planes over the next few years, so yes, it's strong growth.

The other one I would like to just highlight is that all impact of demonetization is completely now gone; industry is back, consumer growth is back in the key sectors for us. Whereas some other sectors, which were more dependent on cash have been hit. Discretionary spend, no doubt, at the top end, has come down, but I think we are able to make that up, because A) We play across the spectrum; B) Since we are digital, so a lot of people who were not perhaps earlier buying online have moved their buying preference from offline to online.

Thank so much and congrats on the closing.

Thank you.

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