MakeMyTrip Ltd (MMYT) 2026 Q3 法說會逐字稿

Hello, everyone. I'm Vipul Garg, Senior Vice President, Investor Relations at MakeMyTrip Limited. Welcome to our fiscal '26 third-quarter earnings webinar.

Today's event will be hosted by the company's leadership team, comprising Rajesh Magow, our Co-Founder and Group Chief Executive Officer; Mohit Kabra, our Group Chief Operating Officer; and Dipak Bohra, our Group Chief Financial Officer.

As a reminder, this live event is being recorded by the company and will be made available for replay on our IR website shortly after the conclusion of today's event.

At the end of these prepared remarks, we will also be hosting a Q&A session.

Furthermore, certain statements made during today's event may be considered forward-looking statements within the meaning of Safe Harbor provision of the US Private Securities Litigation Reform Act of 1995. These statements are not guarantees of the future performance; are subject to inherent uncertainties; and actual results may differ materially.

Any forward-looking information relayed during this event speaks only as of this date. The company undertakes no obligation to update the information to reflect changed circumstances.

Additional information concerning statements is 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 June 16, 2025. Copies of these filings are available from the SEC or from the company's Investor Relations department.

I would like to now turn over the call to Rajesh. Over to you, Rajesh.

Thank you, Vipul. Welcome, everyone, to our third-quarter call for fiscal 2026.

At the outset, pleased to share that Q3, which traditionally represents the high season for leisure travel in India, witnessed strong demand recovery, barring temporary disruption in December caused by new and stricter flight duty time limitation rules, FDTL, for pilots.

The festive season and a series of long weekends fueled this demand momentum, reinforcing our belief in the emerging trend of Indian travelers' desire to spend more on travel.

Our diversified product portfolio and market leadership continues to act as mitigating factor in case there is any macro disruption that happens in one of the segments. For instance, while domestic air was impacted in December, we were able to capture some of this demand on other means of transport like bus and cabs. We continue to believe the Indian travel market is poised to expand, driven by a confluence of economic, social, and technological factors.

Our focus remains on delivering superior value and seamless booking experience and support to our customers, with constant product innovations leveraging AI. We see AI as a very welcome and positive tech evolution, opening up many new opportunities in our business. Leveraging AI, we are aiming to improve all aspects of the customer journey, right from inspiration, discovery, search, booking, and post-sales.

One of the most significant impacts of AI is the ability to offer highly personalized experience. We have developed AI models using LLMs and vast amounts of in-house proprietary data to power Myra to help customers interact with it, from planning to eventually booking their trips. We believe, over time, our product will be more relevant and effective because of our own proprietary data for travelers.

Myra has now scaled to over 50,000 conversations daily, with over 72% of conversations being termed as good conversations. Around 15% of the conversations happen during early stage of trip planning, enabling us to influence destination and product choice much earlier in the customer life cycle.

Myra is also helping us drive penetration into smaller cities, with its vernacular voice capabilities. Over 45% of Myra users are coming from Tier 2 cities and beyond, with voice-led interactions being 50% higher in non-metro cities.

AI is also helping us improve post-sales customer experience through virtual assistant, providing instant 24/7 support to travelers. Our AI voice and chatbots are now autonomously resolving about half of the customer queries across flight and hotels, significantly improving service scalability and efficiency in the system.

We are also using AI to augment our data intelligence support to our supply partners. For example, to empower our hotel and host partners, we have introduced a gen AI-powered digital performance analytics summary in audio playbook format in Hindi and English, significantly improving partners' engagement.

Besides, following our one-stop shop strategy, with a view to meet all travel and travel-related needs on our platform, we have now expanded our product offerings with the recent launch of tours and activities, giving Indian travelers access to over 200,000 bookable activities across 1,100 cities in 130 countries worldwide.

Indian outbound tourists often struggle with dispersed information, foreign currency pricing, and disjointed planning tools when booking activities and experiences. Stitching all of it together, we aim to remove friction and make it convenient for travelers to book in-destination experiences also in advance before they start their travel.

Let me now turn to business segments, starting with Air Ticketing business. Air market supply and growth bounced back on the back of robust seasonal demand in October and November, with domestic daily departures growth of 2% and 5% year on year, respectively, from a degrowth of minus 4% in Q2. However, new flight duty rules caused disruption in December, leading to daily departure degrowing in December at minus 5% year on year, as against expected 5% growth year on year.

Despite this disruption in the domestic market, we were able to deliver good performance, aided by robust growth in international travel and our diverse portfolio of all modes of transport, as some of the seasonal demand moved to other modes of transport.

International outbound travel from India presents a significant growth opportunity. We remain focused on growing this segment. We have launched a new feature in the international flights funnel that provides users with end-to-end visa guidance for their destination. It covers visa types, processing timelines, permitted length of stay, required documents, and applicable fees.

Users can also initiate their visa application directly on MakeMyTrip through this feature, as well. Early results show strong engagement on the listing page, along with a positive impact on both conversions and visa attach rates.

Our Accommodations business, which includes hotels, home stays, and holiday packages, delivered a strong 20.3% volume growth year on year. Growth was driven by strong demand for leisure travel, with highest ever check-ins recorded on December 25, along with wedding season demand and MICE events.

The reduction of GST on hotel rooms under the INR7,500 category has also been a catalyst for the growth. We have seen a surge in booking volumes in this segment, as customers responded to attractive pricing.

It is important to note that this has led to a divergence between volume growth and gross booking value growth. The gross booking growth is more moderate, as it reflects the lower tax component in the final price paid by the customer. Lower GBV growth is an arithmetic consequence of the tax change and not a sign of any structural weakness in the segment.

We continue to drive deeper penetration into India. We now have 97,000-plus accommodation options available on the platform covering 2,050-plus cities in the country. We are also driving online penetration in this segment, with strong demand coming from Tier 2 cities and beyond. During the quarter, we sold properties in over 1,950-plus cities across the country, with almost 100-plus new cities selling for the first time in last 12 months.

On product side, we have made gen AI-led interventions across top 25 international cities, including prominent international beach destinations, to power beachfront discovery for beach holiday-seeking travelers.

We are also using this knowledge graph information to determine and introduce clear beach proximity tags, like on the beach, beachfront, short walk to beach, on listing pages; thus, improving discovery and conversion.

In addition, for women travelers, we now feature women-specific ratings, AI-generated review summaries, and safety scores derived from female travelers to support deep information-seeking behavior. By adding specific safety indicators (inaudible) top rated by women filters, we are building a confidence-driven ecosystem for a segment that travels 25% more in groups.

These features are already live across 100-plus cities and 33,000-plus properties. This comprehensive approach ensures that the growing number of women travelers can explore with predictability and trust.

Our Holiday Packages business witnessed strong seasonal performance, as well. During the quarter, we successfully operated MakeMyTrip chartered flight packages to Phú Quốc in Vietnam, thereby unlocking the potential in an unexplored destination for our outbound travelers. This reinforces our belief that direct connection, along with simplified visa process, help open new destinations very well. Philippines, for instance, is another such recent example.

Our homestay business continues to scale well. During the quarter, we sold 27,600-plus unique properties, covering over 1,050-plus cities. This business now contributes early double digit to the overall hotels volume.

Our Bus Ticketing business witnessed strong growth in Q3, aided by festive and holiday travel, with all regions growing in double digits. Inventory addition remained buoyant throughout Q3 fiscal year '26, with private inventory crossing 45,000 daily schedules by the end of quarter compared to 40,000 daily schedules during the same quarter last year.

During the quarter, we strengthened cross-sell strategy by introducing unified inventory on rail search page, enabling rail users to discover available buses on their search routes.

In our Southeast Asia redBus platform, we partnered with Grab to integrate intercity bus and ferry bookings into its platform, giving more options and making travel more convenient for users.

Our corporate travel business via both our platforms, myBiz and Quest2Travel, is witnessing strong growth on the back of new customer acquisition. Our active corporate customer count on myBiz is now over 77,500 plus compared to 64,000 customers during the same quarter last year. For Quest2Travel, the active customer count has reached 539 large corporates compared to 493 customers in the same quarter last year.

You would recall that we had acquired travel expense management platform Happay at the start of the year. I'm happy to report that our integration with Happay is now complete with flights and hotels, resulting in Happay becoming a complete travel and expense management solution now.

With this, let me now hand over the call to Mohit for financial highlights of the quarter.

Thanks, Rajesh. Hello, everyone.

The highlight of the quarter was our strong performance in October, November, wherein we capitalized on the improved travel sentiment by launching a first-of-a-kind festival travel sale called Travel Ka Muhurat sale.

It saw the widest travel participation from our suppliers across travel services, as well as our non-trade partners. It helped us engage with over 75 million users during this sale period of about 33 days.

It also helped us build significant advanced purchase behavior, particularly for the upcoming peak holiday travel in December. It also helped us mitigate the impact from the low [light] of the quarter, which was the disruption of flight operations, particularly during the first fortnight of the December month, which significantly impacted travel plans and bookings during that period.

While the situation has now stabilized, complete supply recovery is likely to get pushed out into the next fiscal year. We are pleased to report that despite the disruption in the month of peak seasonality, we are able to drive strong performance, overall, for the quarter.

Moving on to our segment results, our Air Ticketing adjusted margin stood at $107.9 million, registering a year-on-year growth of 20.4% in constant currency. This robust performance was driven by strong growth in International Air Ticketing business, which now accounts for about 43% of the adjusted margin within the Air Ticketing segment.

In the domestic air market, while the industry grew by just 0.9% yearn on year, we were able to deliver 2.2% year-on-year growth. On a flown basis, we saw slight market share gains, with our share now increasing to just over 31% during the quarter.

On the Hotels and Packages segment, we recorded strong volume growth of 20.3% year on year, with standalone Hotels growing even faster at 20.6%. This was largely on the back of strong demand, aided by the recent rationalization of GST rates for hotels priced under INR7,500, where the GST rate has been reduced from 12% to 5%. This has resulted in a strong room night growth of over 23% in the non-premium price segment. As a result of this mix shift, as explained by Rajesh, we saw a slightly muted gross booking growth year on year at about 15.9%.

The adjusted margin in the standalone Hotels business was in line with the GMV growth. It is encouraging that this tax rationalization initiative of the government of India has had a positive impact on driving up volumes in the Hotels segment.

The mix of International Hotels and Packages revenue has also increased to about 24.2% during the quarter compared to about 23% during the same quarter last year.

In our Bus Ticketing business, adjusted margin stood at $42.4 million, registering a strong year-on-year growth of over 26.1% in constant currency.

Our Ancillaries business, which is part of Others segment, is scaling up well. This is helping us get a larger share of wallet of our customers by building the attach of a variety of ancillary services. As a result, adjusted margin from Others segment came in at $27.5 million, witnessing a strong growth of 45.5% year on year in constant currency.

Moving on to the expenses side, most expenses have come in line. Marketing and sales promotion expense for the quarter was at 5.6% of gross bookings; again, in line with high seasonality and improving mix coming in on the back of strong growth in higher-margin businesses like Hotels and Packages, Bus Ticketing, and Ancillaries. This improvement in the mix is also translating into marginally better profitability for us.

Our adjusted operating margin has improved from 1.76% of gross bookings during the same quarter last year to 1.82% of gross bookings during the current reported quarter. We are glad to report our first $50-plus million adjusted operating profits during the quarter, with the actual number standing at $50.7 million.

The non-cash interest cost on our zero-coupon convertible bonds for the quarter was recorded at $28.3 million. The translation-related foreign currency losses, in view of the rupee depreciation, stood at about $5.3 million. As a result, our reported PAT for the quarter was $7.3 million. The adjusted net profit came in at about $51.4 million, with adjusted diluted EPS growing by about 33% year on year.

You will recall that, as part of our capital allocation strategy last quarter, we had increased the size of our buyback plan to $200 million and also included the recently issued 2,030 convertible notes in the repurchase plan. We have repurchased 0.55 million shares for an aggregate amount of approximately $41.5 million during the quarter. We also repurchased 2,030 notes, with a principal amount of $5 million for an aggregate amount of approximately $4.6 million. Accordingly, the total utilization for the buyback program was about $46.1 million, which has been our highest in-market buyback till date.

We ended the quarter with cash and equivalents of over $800 million. We continue to dial up investments in core growth capabilities like AI and other organic initiatives, while scouting for potential strategic investment opportunities.

With that, I'd like to turn the call over to Vipul for Q&A.

(Event Instructions)

Aditya Suresh, Macquarie.

Two questions.

The first is on the standalone Hotels segment. There's [clearly] been a very strong acceleration in your number of hotel room nights booked. Could you further break down that by, maybe, the premium segment, the budget segment, and also international, in terms of the growth you're seeing there?

And then, in relation to that is, are there any changes to the underlying take rate you've seen, as this mix is changing?

Aditya, maybe I can take that.

Like I just called out, the whole GST rationalization, which had come in end of September, was expected to be a fillip for growth in the Hotels segment. We have actually seen this coming through.

While our overall standalone Hotels room nights have grown at about 20.6%, the room night growth in the non-premium segment, which is the budget to mid-pricing, that has been much stronger at about 23% year on year. So we clearly saw that benefit coming through.

In terms of overall margins, I think our margins have largely stayed in line at about 17.7%. There's no real significant change in the margin structure, per se.

Like we've been calling out, we want to keep the margins in the teens category, the high-teens category. We are pretty comfortable in having a stable regime on the margin side.

And then, the second piece is on ancillary services. Here, you're seeing a really strong revenue growth. Is it at all possible for you to quantify the underlying margin you're seeing here? Because I assume that a lot of this is just (inaudible) to EBITDA or EBIT. Can you just talk through and give us any color on the underlying margin for the growth you're seeing in ancillary services?

Sure. Actually, the growth in the Others segment or Ancillaries has been a continuing trend, if you look at it over the last few years. This is also coming in from the fact that we have been adding a lot of new services on the platform, right, over the last few years.

Over a period of time, each one of them is scaling up well. Just to give you an example, a couple of years back -- two years back -- we had added the intercity cab segment. We have dialed up the airport transfers. We have started dialing up rail ticketing, particularly for the high-speed air-conditioned trains. There, also, our market share has now gone up closer to about 4%, 5%.

Apart from this, we've also been adding a lot of non-travel or the non-transport Ancillaries, whether it is [bite-sized] insurance, whether it is ForEx, whether it is sponsorships and ad tech on the platform. Visa services is something that Rajesh had called out.

All of these put together, we believe -- and, this year, we had also added a new segment of tours and activities. Now, again, this is something which is very interesting because, guess what, a lot of these customers -- travel customers -- book their core travel bookings with us but there is a requirement of in-destination services as well, largely on tours and activities. Building that on the platform helps us retain them, even for these services, with us.

So with this increasing spread of other travel or travel-related services, which we are going on adding, we do believe that the Others segment will keep delivering good growth for us.

At some point in time, maybe five, seven years down the line, some of these segments could become meaningful to be reported on their own basis. But, yeah, there are some segments which are more transport related. There, the margins are largely in line with the industry. For some of the Others, there is a significant fall down to the profitability.

Like I said, when we look at profitability, we largely look at it at a platform level. Therefore, we'll largely report margins at a segment level but report expenses and profitability at a platform level.

Sachin Salgaonkar, Bank of America.

I have three questions.

First question, a follow-up to Aditya's question, Mohit, when we look at a YoY growth in Hotels business, it was 17% last quarter; it's now 9%, which has gone below 10% this quarter. Understand the impact of GST, also understand the impact of rupee depreciation, but how to think about it? Is there some kind of a one-off out here? How should one think about a normalized growth from this business?

This business was growing at 20%-odd-plus in previous quarters. Should we see the growth resuming back to that number?

Should I say all the three questions? Or should I take one back?

Let me just explain this a little better because there's something which is more like a one-off, starting in this particular quarter onwards, right, because the GST rationalization almost happened at the end of the previous quarter. Important to explain this:

At a very high level, if you really look at it, we have reported more than 20% growth on the volume side. Now, if you look at the price segment, which is below INR7,500, there's been a GST reduction of almost 7%. Almost two-thirds or 70%-plus of our volume is coming from this particular price segment.

So roughly a blended impact of about 5%-plus goes through, purely on account of the GST-related impact on the gross booking value. Therefore, like I said, our gross booking growth year on year in constant currency has actually come in at about 15.8%. Therefore, if you factor in this additional 5% impact, which came in on the GST side, then our growth actually pretty much remains in line with the volume growth.

I thought I'll just try and share the overall impact coming in with the GST rationalization. Otherwise, there's no real one-off impact. So it's [just] going to be a -- because we had a different GST rate in the previous year, on a year-on-year basis, this looks slightly different.

(multiple speakers) Sorry, Sachin, if I may just ask you to clarify? I heard you saying 9% number somewhere. Which number are you referring to?

Rajesh, I was reporting to the reported Hotels and Packages revenue, which is $133.2 million. 3Q '24, it was $121.9 million. So it implies a 9% YoY growth.

No. That's true. Therefore, I was just trying to bake in the currency impact, as well, in calling out the constant currency growth.

No. I get it, Mohit, now that we end up seeing numbers on a reported currency basis.

Going ahead, we should look at a similar growth, a slight increase from these levels, right?

Absolutely. Absolutely. At least for the four quarters, now -- beginning this quarter that we have reported -- this GST impact would be there. Constant currency impact would largely be dependent on how the currency plays out in the coming quarters. But the GST impact would largely remain on these lines.

Second question, on IndiGo. We all know they've been asked to cut 10% of capacity. Our general checks in the market indicate that, till date, other airlines are not able to fully offset that capacity impact.

As we head into calendar '26, how should we look at the domestic air traffic growth for industry? Do we see that normalizing? Or do we still have a bit of an impact out there for full-year '26?

Maybe I can take that, Sachin.

This particular disruption was not even factored in. It came from nowhere, to be honest, because these rules were always there. But I don't think anyone anticipated that this would cause this disruption. Therefore, the reduction of supply will happen and largely happened with IndiGo because that's the largest airline in the market.

Now, our sense is that, at least the estimates that we see, based on our conversations, while things might have just, from a disruption standpoint, stabilized, but in this running quarter -- [JFM] quarter -- it should come back to, again, the positive territory.

I'm talking about daily departures getting back to -- because December, it was negative growth of minus 5% on daily departures on an overall basis. The estimates are now suggesting that it should be back to the positive zone but albeit at either a flat or a 1% or 2% year-on-year positive growth.

As things progress and, more, we get out of this particular issue, where the rosters settle down, the pilots come on board, et cetera, slowly and gradually, this will continue to keep improving.

Outside of this, nothing else changes because the new plane schedules, whichever were coming, the supply coming, that will continue to keep coming.

We also learned that even with Air India, the refurbishment of the planes is also happening at an accelerated pace, along with the fact that they're also getting new planes on a regular basis, as well.

So that is likely to continue. I think the overall picture, in all fairness, will be more clearer, I would say, maybe the next seasonal quarter, which is April, May, June quarter, when the summer schedules are filed.

I think we will be in a better position to see, overall, what supply schedules are being filed, factoring in this temporary issue that happened because of the new rules on flight duty travel for pilots and the new infusion or the refurbish planes that are coming in.

So I think we'll have to wait, net-net, one more quarter. I've already given you this quarter estimates that the industry is talking about.

My third question is on agentic AI. Maybe two parts to the question.

One, would love to understand the feedback on Myra since you guys launched.

Second, in a market like US, we're actually seeing Google and ChatGPT launch their agentic AI on travel. Now, hopefully and subsequently -- perhaps, at some point -- it might come into India. As and when that comes, how should we think (inaudible) that, from a MakeMyTrip perspective?

Is it a new competition for MakeMyTrip, where consumers now have an option to go towards these LLMs and book their ticket despite the fact that the back-end fulfillment, perhaps, could be done by, let's say, MakeMyTrip only?

Yeah. Let's talk about that.

Firstly, progress on Myra, very encouraging, I must say. In fact, some of that, I was mentioning that in the script, as well. But I'll give you more color.

There are a few metrics that we've been tracking. The first one is how is the interactions? The number of interactions are growing. From, let's say, a couple of months ago, about 20,000, 25,000 interactions a day, we have now touched about 50,000 transactions -- interactions a day; not transactions a day but interactions a day -- on Myra, which is 2x growth in two months. We are seeing pretty much day-on-day, week-on-week growth on that. Clearly, good traction coming up.

And then, on the quality metric side, we also measure what we call as good conversation and, also, the quality score of the interaction. That is also progressively improving. We now have a quality score of about 3.9 on a scale of 1 to 5; and about 72% of the conversations are good quality conversations.

So it's not like -- just to give you a sense of what the good quality conversation is, the interaction is happening with more and more back-and-forth question-answers, rather than just asking a 30,000-feet-level query and then, just going off the interface. That number is about 72%. The other two very important and encouraging metrics that we are tracking, one is -- and that was one of our hypothesis, as well -- about the new users. We are seeing, out of these 50,000 interactions, about 20% interactions are happening from the new users, never transacted before.

That is largely coming from Tier 3, Tier 4 cities, which is exactly what we were aiming to get, where the voice bot is being largely used in vernacular language or the spoken language that consumers prefer coming in from whichever city; whichever state that they are coming from.

And then, last but not the least, I would say, which will be a perfect segue to your second part of the question, the trip-planning part -- because that was another thing that the OTAs had not really been globally focusing on the top end of the funnel, which is the trip-planning piece. On Myra, we have seen at least about 23% or 24% of the interactions are related to more trip planning and not necessarily media travel.

So all these metrics are pointing towards quite promising, encouraging trends. We will continue to keep monitoring. In parallel, obviously, we are working very hard to further improve the product, as well. That journey is also in progress.

Now, coming to your point on what Google might have launched in North America and when it comes to India, et cetera, our take is as follows:

What is happening is, like I just mentioned earlier, as far as transactions and fulfillment and the traveler who's made up his mind or her mind and coming to just book the transaction and get done with it, I don't think that is going to get, any way, potentially disrupted.

Trip planning was the piece which was not being done by OTAs in any case, right? Then, it remains to be seen that if they launch, let's say, their own gen AI tool for trip planning, whether they will attract more traction. I think in all probability, there is a possibility that they will attract traction and that the customers from conventional search will move to using AI tools for doing trip planning.

To my mind, large part of that is going to be share shift happening from a conventional search to AI tools. But our counter to that, to an extent, will also be our own gen AI tool for trip planning, as well.

But the thing to watch out for will be how do we continue to keep protecting our direct traffic, which is -- majority of that is on our app, as you know -- that they continue to keep coming to us directly or we end up keep growing that direct traffic as a percentage of the overall traffic.

The share of the paid traffic from any of these new avatars of the search engines, we don't end up increasing the share of the paid traffic from that. I don't really see, at least at this point in time -- basis: our conversation; and basis: the development that has happened, including the development that is in progress -- that there is anyone who is trying to talk about getting too really deep in the funnel and also looking at even the fulfillment, post-sales activities, et cetera, because those are the moats that will continue to stay with the OTAs.

I think trip planning is the only piece where there is definitely potential possibility, given the richness of the data that they will have, based on the LLMs, that they might get more traction.

But the counter for that will be our life-to-date customer base; the direct traffic contribution that we already have; how powerful and popular is the brand that MakeMyTrip, Goibibo, and redBus are; and are we able to protect that progressively or not.

Our energies, investments, resources, et cetera, would be channelized towards that, as we continue to watch this space and then, accordingly, if we need to tweak our strategies, as we go along.

We are seeing this as more the overall gen AI -- I called that out, as well -- specifically, as more opportunity than threat. I don't think -- and even historically, even in the conventional search space, this debate was always there, whether Google is our competition or Google is the competition for OTAs or not. I don't think and that debate might still come back.

But the reality is that, like in the past, I think there are clear distinct moats and the advantages that the OTAs bring to the table. I think there are very clear and distinct objective in the business model that the horizontals or the generic search engines have.

I'm not sure that even with this evolution of this new technology there's going to be a significant overlap going forward, either.

Very small clarification, Mohit.: We saw the NCLT approval for MakeMyTrip and the redBus merger, which, in a way, removes any legal or regulatory overhang from a potential India IPO point of view. Any revised timelines we should look from an IPO point of view?

That's it for me. Thanks.

No, not really. I think, should we think of that, we'll come back separately.

Just as you know, we have been in this restructuring process. A couple of years back, we had done a legal entity restructuring wherein when got the OTA businesses to come together. Now, all the key operating businesses have been brought under a single legal entity.

But, yeah, it does facilitate an eventual IPO at some point in time, to that extent. But no real change in thought process over there.

Manish Adukia, Goldman.

I wanted to just go back to the growth discussion we were having in the earlier part of the call. I understand, Mohit, what you explained, in terms of volume being extremely strong, 20%-plus; and GBV, 15%, because of GST.

But why should revenue growth get impacted? Do you get paid, from the Hotels basis, the GBV or the actual revenue that they recognize?

I would have imagined that if growth is faster in mid- to premium -- sorry, mid- to budget hotels -- technically, your take rate should expand because you typically would have higher take rates in mid- to budget compared to premium hotels.

So I'm unable to reconcile the revenue slowdown. I understand GBV slowdown there. But I'm unable to understand the revenue bit.

If you can just explain that, that will be great. That's my first question.

Yeah. No. Just to repeat it, Manish, if you really look at our margin, it largely comes in on the booking value, right? Therefore, the impact, in a manner of sort, flows both into the booking value, as well as into the overall absolute margin that we get. So the percentage doesn't change. But the absolute margin that we get gets impacted, as well.

But I think, like, we have been calling this out, even last quarter. When this change had come in, we were calling it out as a significant positive because, see, this just helps unlock volumes or demand, particularly at the price point, which is very sensitive, right?

Customers are pretty price-sensitive in the mid- to budget segment. Therefore, this is an important unlock. Therefore, if you really look at it, the growth has actually accelerated very nicely through this quarter; in fact, not just only in hotels but across segments.

Despite domestic air being at a very marginal growth for us and for the industry, our overall segment growth across all segments that we report also stood at about 22%. So I think I'm more taking encouragement from the fact that the segment growth or the volume-led growth continues to be strong.

The rest is largely a play out of the changes in the landscape. They will get normalized over a four-quarter period.

Your air growth, of course, in the quarter was impacted by what happened with IndiGo. Hotels were extremely strong, partly driven by the GST cut on volume.

But would the Hotels volume growth, in your opinion, have been even faster without the IndiGo disruption? Like, I'm just trying to think that, from here on, even on volume, is there room to accelerate in the foreseeable future?

Needless to mention, Manish, actually, flights is a lead indicator, right? If you look at the entire travel plans, for most Indians, they start with a flight booking and then, everything else follows, right?

So I think what we are trying to do is that whatever is the significant adverse impact coming in from the disruption on the flight side, to large extent, we are trying to mitigate it through other modes of transport. Therefore, if you see, we have been dialing up or seeing good growth on the Bus Ticketing side; also on intercity cabs, et cetera. I think the -- clearly could have benefited with -- without the disruption on the flight side.

If I really look at it very briefly, in terms of how the growth has panned out between the months during the quarter, clearly, December was a month of much slower growth for us; therefore, again, indicates the same.

So would have helped. But I think given the circumstances, the Hotels growth was very, very encouraging.

No. Absolutely. Just a couple of other follow-up questions from earlier:

On the overall spend on marketing and promotion at 5.6% -- one of the highest we've seen in recent periods -- again, is there, like, some bit of, like, one-off there? Should it go back to the sub-5% number you've, in the past, indicated?

Again, is part of that a function of the fact that, again, when budget or mid-hotels grow faster and they probably have a higher component of marketing promotion, that impacted. So I just want to understand the outlook also on that number.

And then, I just have one last follow-up question after that.

Yeah. Absolutely. No one-offs. In fact, two parts to it:

One, I would say, is the very fact that low-margin businesses like Air Ticketing have seen an adverse impact on growth, right? Therefore, the growth has come in predominantly from higher-margin businesses.

Now, what that means is, clearly, you're getting a much better improvement in the blended margin for the business, as a whole. So if you were to look at adjusted margins across segments and then, look at it probably as a percentage of gross bookings, then it would look much more healthier.

(inaudible - microphone inaccessible) the customer acquisition cost, also. So it's completely linked to the mix shift.

And then, within that mix shift, (inaudible) also the fact that there is slightly more accentuation towards the budget to mid-segment of hotels, where, again, the customer action cost tends to be slightly higher. So I think purely reflective of the mix.

Therefore, if you really see, despite the 5.6%, it has had no impact, in terms of the adjusted operating number. That continues to be 1.8%-plus as a percentage of gross bookings.

Just wanted to call that out.

It's very difficult. Like I said, the mix and the blended margins were very different, say, until about a year back and are very different in this one-year period due to these one-offs that have got played out.

Then, maybe just my last question: Taking a step back and looking at the overall business, 20% constant currency revenue growth in the quarter, which was a fairly noisy quarter, which, in my opinion, is a very good outcome.

But when we think about, let's say, over a one- to three-year outlook, is it fair to say that to deliver 20% growth, you have to continue to reinvest in business and margins don't expand, which means, over a period of time, your EBITDA growth broadly tracks revenue growth because I would have thought that in a country like India, if revenues are growing at 20%, operating costs probably grow at a lower pace? Is that something that may not play out?

Is it not an operating leverage story anymore and margins will largely be in line to where they are? How should we think about the growth outlook versus the EBITDA growth outlook -- revenue growth versus EBITDA growth?

That's my last question.

Sure. If you look at it over the last 5, 10 years, we've clearly called out that a substantial portion of the margin improvement that was supposed to come in -- leveraging volumes, leveraging penetration, and building market leadership in each of the segments of the business -- that's largely played out between, I would say, by 2024, right?

Thereafter, we have been calling out that our customer acquisition costs are actually inefficient, right now. We don't really look at dialing them down. We'd rather keep focusing on dialing up growth and looking at growing in the [20%s].

That opportunity is getting delivered despite the market growth coming down very significantly, at least in this year, right, across quarters. So I think the -- I would say a large part of our objectives: considering the mix where we are.

For instance, where the accommodation mix is still in the [40%s], right? So till the time we remain in the 40%s and, say, closer or the sub-50% mark, we do believe our adjusted operating margins are pretty healthy.

I've always given the example of the global players and how their the best-in-class margins play out. If we just superimpose our mix over there, this margin percentage looks very healthy.

So I think we will really need now the mix going beyond the 50% mark for any significant improvement on the adjusted operating margins to play out. Until then, I think the operating leverage will likely come in more from the more fixed and variable costs, which, again, is very small.

In our case, the fixed costs are just probably, like, about 20%, 25% of the overall expenses. Therefore, the improvements are going to be much smaller in nature, in line with what we have seen in the last two years or so compared to what we have seen in the five years before that.

Vijit Jain, Citi.

My question: In the Hotels segment, with the GST cut, did demand somewhat shift also from higher ticket size to sub-INR7,500 category? Within that, given that you even called out that growth did accelerate here, is that because, in general, you have better selection in that category and, therefore, some market share shift might have happened from others or from offline or other channels to you?

Is that something that happened here?

Vijit, as you know, on the premium side, we pretty much have all the hotels that are available in the country on the platform. Most of our expansion actually keeps happening more in the mid- to premium or more in the mid- to budget or more in the budget segment, right, from a price point of view, where we keep adding more and more hotels on the platform because there's a much larger number of hotels in that particular price point, which still need to be contracted and put on the platform, except for maybe new hotels, which come across all price points.

That improvement in the bouquet of offerings in the budget segment will keep increasing. No doubt about that.

But this is more, I think -- what we saw during the quarter was more on account of the significant price differential, which has now emerged in the sub-INR7,500 versus, say, for instance, the INR7,500 to INR9,000 or INR10,000 price range because there, you now suddenly get a significant impact coming in from the steep change in the GST rates. So that's seeing a lot more of the volume coming through in the sub- INR7,500 price range.

In fact, a lot of the hotels who were on the marginal side, just above the INR7,500 price, would have also wanted to bring their prices in line for the overall customer benefit to play out.

So that's what's playing out. That's what we have seen, largely on expected lines.

Like I said, there has been a little bit of a share shift. From a volume point of view, we have seen roughly about -- close to about 3% shift happening from premium, super premium, to maybe more like the mid- to budget segment.

Again, on the overall mix, also roughly about 4% to 5%, whether in terms of gross booking value or in terms of adjusted margins.

So yes but this is very much on expected lines. Like I was saying, the real underneath benefit of it is it's really helped unlock demand in the overall Hotels segment.

My second question, just riffing on your comments earlier, Rajesh, on agentic AI and LLMs and those things, I'm just wondering if trip planning is what moves to LLM. Trip planning is arguably on search versus LLM. LLM offers much better experience.

Does that mean that it could accelerate further your online shift in categories like international or other packages and stuff where, traditionally, people have used agents because it's complex and LLMs make it easier? Could that conversely actually help online shift in India?

No. I think it's an interesting take, Vijit, I must say. Yeah, quite possible.

See, listen, in any case, overall, across the categories, not necessarily on travel and within travel also, all segments directionally going in that direction only, from offline to online.

Can we say that the digital agents tomorrow or even on the trip planning, when it is becoming more popular? I don't know whether the trip planning, per se, because I could also argue that even, historically, the people were going to Google and searching and doing some bit of trip planning there, right, or going to TripAdvisor to do some trip planning, specifically, or coming to OTAs to do some part of trip planning, et cetera.

So I don't know whether that, per se, will trigger this shift. But I think what can potentially trigger is, actually, what we have built, which is -- Myra is a digital agent because it is interactive; because you can ask the question in your own language that you are comfortable; you can look for complex itineraries; ask as many questions as you want and you will get accurate answers.

And then, along with that, the booking will also be stitched in a very smooth manner. That might actually help because the hypothesis is that you're going to a travel agent or human travel agent to ask for help, specifically for customization, right?

Now, you can achieve that customization on the digital agent as well, almost as effectively, if not better, as you would do it with the other alternative, right, so that you were doing it or you were using it earlier. I think that might actually help do the shift or accelerate the shift better.

I'm not sure only trip planning. The only trip planning -- where trip planning could help is where overall inspiration for travel goes because that, in any case, is happening. The consumer behavior is changing in spending more and more on travel, in any case.

So you go on your preferred -- either the social media channel for inspiration and then, come to, let's say, horizontal search or an OTA like MakeMyTrip to do trip planning and you find it easier and smoother; and inspiring you to travel more and more, whether it is domestic or an easy travel use case or a complex travel use case. That, potentially, can definitely help.

But specific to international travel, I think unlock might be the digital agent more, which is answering all the questions; and, also, stitching the booking experience together; and, also, post-sales and in-trip in a single interface. That might actually help trigger that shift.

My last question: On the total marketing spend, which, I think, to Manish's question earlier, you mentioned how mix shift has contributed to it rising to 5.6%. As air recovers maybe from the summer season onwards or maybe even marginal recovery QoQ in the March quarter, does your total spend trend back towards what you've previously said, 5% to 5.5%?

Most likely, Vijit. It should start reflecting the mix because, like I said, there's nothing in terms of a one-off over here. Therefore, it should start reflecting the mix, depending upon what kind of changes we see over there.

Gaurav Singhal, WFM Asia.

Just a couple of questions:

One is, the net take rate on Air is about 7% this quarter; 7.2% last quarter. Is that a normal number? Or is it running higher than a normal range of, like, 6.5% or so?

Yeah. I think it generally trends to range around this mark. It can be about 0.5 percentage point lower or higher, depending upon what kind of fares are prevailing; depending upon the lag between booking versus flown, et cetera.

So nothing exceptional out over here, Gaurav.

And then, the second question is going back to the Hotels and Packages business. When we think of the constant currency bookings growth of 15%, I think you explained it as volume growth of 20% and then, 5 points of impact from GST.

But then, apart from volume and GST impact, there is also pricing, where all these hotel companies report, like, pretty decent ADR growth.

So for you, net pricing growth is, like, zero, almost, right? There is some price growth and then, negative mix impact, which is canceling each other?

But if I just think about going forward, let's say, next one year, where you mentioned for the next four quarters, this GST impact will hit you. Are we thinking of, broadly, an algorithm where your constant currency GBV growth will be, like, 5 percentage points below your volume growth like it was this quarter? Or does that gap sequentially keep reducing?

Maybe if you can share a one-year view, as well as a two-, three-year view, that will be helpful.

Directionally. See, directionally, it is only just a one-year impact because the comparable number for the previous year is at a different GST rate. Therefore, it's just more an optical thing than anything, which is actually impacting the business.

So this is more optical and don't see any real impact, as such, over here.

Sorry, I missed the first part of your second question. What was that?

I got that, Mohit. Maybe I'll just quickly address that.

In terms of -- Gaurav, to your point on hotel companies reporting higher price rise and all, you should just be mindful on one thing. See, what you are looking at it is only a few data points. Like, let's say, listed companies reporting some. Again, their ADRs have also not significantly gone high.

On our platform across the segments, we are selling hotels, right? On a blended basis, where there is a possibility in one particular segment in certain cities, some -- because of the demand-supply gap, et cetera -- price movement would have happened.

But as a general trend, on a blended basis across the segments, if we do -- and even if we look at different, different segment hotels, whether it's a budget hotel segment or a mid-segment or a premium and then, super premium segment, we haven't really seen any price increase, which is extraordinary or out of the ordinary, now happening.

So it's actually -- that era is over. It is actually pretty stable now. You would only see either because of seasonality, there will be some movement or there will be an inflationary increase year on year, right?

So I don't think we should jump to conclusion that the average selling price for a particular room night across the board the rates have only gone up in pretty much every segment.

I thought I'll just clarify that because on our platform, we also have out of our Hotels and Packages business about 10% home stays.

Now, home stays pricing -- year on year and across segments. Therefore, on a blended basis across the board and pan-India basis, if you would see, there is no significant price increase on the -- except for the seasonality impact that we've seen.

Maybe just one last follow-up on Domestic Hotels business.

At least, among the listed OTA players, we don't see anyone else having any meaningful Hotels business, right now - at least in the domestic segment. Is that a fair conclusion that there is not really much competition?

When we look at like the broader industry data, Hotels, -- domestic plus international -- there, we see -- you have competition from these global players. But, let's say, at least on the domestic segment, would it be fair to conclude that you would be the one dominating and then not the competition?

Reasonably fair to say. But just keep in mind that in the -- overall online penetration in the segment is still in the early stages. So there's a long headroom over there.

But fairly in the right direction.

Thank you.

Thank you.

Thank you, Gaurav.

In the interest of time, this was our last question.

We'll now hand over to Rajesh for his closing comments.

Thank you, Vipul. Thank you, everyone, for your patience.

We look forward to seeing you, all, next quarter.

Thank you.

Thank you, everyone. You may now disconnect the call.