Makemytrip Limited ((MMYT)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Makemytrip Limited’s recent earnings call painted a picture of resilience and innovation amidst a challenging domestic market. The company reported strong international growth and successful AI innovations, which have helped offset some of the challenges faced in the domestic air market. Despite increased finance costs affecting financial metrics, the company’s diversified growth strategy shows promise.
Strong International Growth
International air ticketing revenue saw a robust increase of over 29.6% year-on-year in constant currency terms, while international hotels revenue soared by over 42% year-on-year. This growth underscores Makemytrip’s successful expansion in international markets, contributing significantly to its overall revenue.
AI-Powered Innovations
The launch of the AI-powered conversational travel assistant, Myra, marks a significant step in Makemytrip’s innovation strategy. Engaging in 25,000 conversations daily, Myra has achieved a 35% user engagement rate up to 90 days before travel, highlighting the company’s commitment to enhancing customer experience through technology.
Robust Hotel and ACCO Business Growth
Makemytrip’s hotels and ACCO business experienced an 18% volume growth year-on-year, with the international segment now contributing 28% to the overall revenue. This growth reflects the company’s strong foothold in the accommodation sector, both domestically and internationally.
Growth in Bus Ticketing
The bus ticketing segment reported a remarkable 44.1% year-on-year growth in constant currency terms. Regions like North, Gujarat, and Rajasthan showed impressive growth rates of over 40% in Q2, indicating a strong demand for bus travel.
Domestic Air Market Challenges
The domestic air market faced a decline, with passenger growth dropping by 3% year-on-year due to ongoing supply constraints. This challenge highlights the need for strategic adjustments to navigate the domestic market’s complexities.
Impact of External Events
Excessive rainfall in North Indian states adversely affected Q2 performance, leading to a decline in growth in these regions. This external factor underscores the vulnerability of the travel industry to unforeseen natural events.
Increased Finance Costs
Makemytrip recognized a $24.3 million interest cost due to zero coupon convertible notes, which impacted its reported profitability. This increase in finance costs is a critical factor affecting the company’s financial performance.
Forward-Looking Guidance
Looking ahead, Makemytrip remains optimistic about its growth prospects. The company reported an adjusted operating profit of $44.2 million, marking an 18% growth year-on-year. With international business now constituting 28% of overall revenue, Makemytrip aims to maintain its market leadership and enhance customer engagement. The anticipated fiscal and monetary policy measures are expected to boost consumer spending significantly, providing a favorable environment for future growth.
In summary, Makemytrip Limited’s earnings call highlights a company that is navigating challenges with a strategic focus on international growth and technological innovation. While increased finance costs pose a challenge, the company’s forward-looking guidance suggests a positive trajectory, with continued market leadership and customer engagement at the forefront of its strategy.