MakeMyTrip Limited 2027 Q1 Earnings Call

Okay. Hello everyone, I'm Vipul Garg, Senior Vice President, Investor Relations at MakeMyTrip Limited, and welcome to our fiscal 2027 first quarter earnings webinar. Today's event will be hosted by 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 U.S. 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, 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 Statements section of the company's annual report on Form 20-F filed with the SEC on July 27, 2026. Copies of these filings are available from the SEC or from the company's Investor Relations Department. I would like to now turn the call over to Rajesh for his remarks. Over to you, Rajesh. Thank you, Vipul.

Welcome everyone to our first quarter call for fiscal 2027. Before we go into the financial and operating details, I would like to put the quarter in context. This was a quarter in which external events continued to influence where and how customers traveled. The quarter began with the continuing impact of the West Asia conflict. In the initial phase, the impact was broad-based. Flight operations were disrupted, and customers became more cautious about international travel, particularly on westbound routes. As flight operations gradually resumed, the nature of the challenge also evolved. Higher fuel cost and ATF prices translated into elevated airfares, affecting westbound international travel, as well as price-sensitive domestic air demand to an extent. Higher ATF cost also affected the profitability of airlines, leading to short-term capacity cuts.

However, as we moved into the peak summer holiday period, we saw seasonality began to support the underlying resilient travel intent for leisure travel. Whereas essential travel and business travel largely continued as uninterrupted, except for long-haul westbound business travel. International leisure travel saw some shift from westbound to east and Far East destinations, and domestic leisure travel was a combination of popular leisure destinations and nearby short distance getaways by road. Thanks to our comprehensive product offerings, we were well-positioned to offer our customers alternative transport and accommodation options per their choice across both established and emerging leisure destinations during the quarter. As a result, we delivered a strong performance during Q1 despite significant macro and geopolitical headwinds, reflecting both the resilience of travel demand and the strength of our diversified platform.

Growth in hotels and packages and ground transport helped offset softness in air ticketing to deliver targeted adjusted margin growth and profitability. Both our bus ticketing and intercity cabs continued to grow at a strong pace, driven by sustained supply additions, wider route coverage, and the continued expansion of India's highway infrastructure. We continue to curate pilgrimage plus leisure itineraries, short duration holidays, and drive down breaks. These formats are increasingly becoming popular for customers looking for convenient, affordable, and experience-led travel closer to home. The broader conclusion from this quarter is consistent with what we have observed post-COVID. Travel in India is gradually moving from an occasional purchase to becoming a recurring consumption category. Customers are taking more frequent trips across leisure, family visits, pilgrimage, short breaks, and extended weekends.

We have seen external events impacting the demand sentiment initially. When macroeconomic or geopolitical environment starts to show some improvement, demand recovers quickly. This quarter was another validation of this behavior among Indian travelers. The long-term structural growth drivers also remain unchanged. Growth in the aspirational middle class, increasing participation from tier 2 and tier 3 cities, expanding physical infrastructure, great digital penetration on the payments ecosystem continue to support the long-term positive outlook of the travel market in India. Let me now give an update on the progress we are making on our AI-first transformation. We view AI as a foundational layer across travel discovery, planning, booking, payments, servicing, and loyalty. During the quarter, we launched Myra 2.0, the next version of our AI-powered travel assistant to enable end-to-end conversational booking within the Myra interface possible now.

Customers can now search, compare, ask contextual questions, upload documents, and complete bookings, including agentic payments through a single conversational interface via text chat, voice only chat, or a combination of voice or text chat across eight Indian languages. In the meantime, customer adoption of Myra being used as assistant in the existing funnel continues to scale well. Myra handled over 8 million conversations during the quarter, including more than 3 million conversations in June alone. Over 45% of usage came from tier 2 and smaller cities. We believe conversational AI feature will continue to simplify and personalize travel planning, improve customer engagement, and serve as a key long-term differentiator for our platform. We are also expanding the use of AI and automation across customer support, content creation, supply onboarding, and operational processes. These investments are intended to reduce friction in the customer journey, improve conversion, and enhance organizational productivity.

We're already seeing the productivity benefits of AI translate into our operations. AI now generates more than 75% of our code, and our AI-powered customer support bot independently resolves over 50% of customer calls, meaningfully improving both engineering velocity and customer service efficiency. During the quarter, we launched AI-powered smart filters on the flights and hotels listing page to enhance discovery, enabling users to express preferences in natural language and instantly refine results using natural language instead of relying only on predefined filters. Travelers can now search for highly specific preferences such as micro-locations, early check-in, premium room amenities for hotels, or exact baggage allowance, cancellation penalties, seat inclusions, layover preferences, et cetera, in case of flights, thus making discovery more intuitive and personalized for the customers. Looking ahead, higher oil prices and weakening of rupee remain important variables to keep overall travel inflation in control.

We remain cautious about the near-term environment while staying positive about structural drivers for long-term growth in the sector. We will continue to navigate the near-term challenging environment by tapping into growth opportunities in our non-air ticketing segments while calibrating our marketing investments in line with market conditions. With this, let me now hand over the call to Mohit for business highlights of the quarter.

Thanks, Rajesh, and hello, everyone. As explained by Rajesh, this was a quarter in which the external environment remained challenging, which impacted our outbound and air ticketing businesses. We leveraged the resilient travel sentiment by focusing on domestic travel, thrived on our short-duration holidays, and pilgrimage-led travel, supported by our widespread offering across hotels and ground transport. This has helped us deliver strong growth in our hotels and packages business, with adjusted margin growth of 21.3% year-on-year in constant currency terms. This was led by standalone hotel booking volumes growing just over 20%, or 20.2% year-on-year, despite the weakness on the international demand side. This was coupled with strong growth in our ground transport business. Our bus ticketing business delivered strong registered margin growth of 32.4% year-on-year in constant currency, supported by strong volume growth of 23.9%.

Similarly, our intercity cabs business grew in the 40s, albeit on a smaller base. This strong performance in an impacted quarter demonstrates the strength of our diversified and comprehensive book new travel services, which is helping drive growth much ahead of the industry and also driving increased customer engagement. Our ability to serve multiple accommodation and transport options across price points allows us to ensure that we curate travel experiences customized to the budget options of our customers. As customers book multiple travel segments on our platforms, we also gain better understanding of their travel preferences, and this helps us get better and better at offering more relevant, connected, and personalized travel solutions. Let me share some more details on the holidays and packages segment.

To drive the growth in hotels, we have significantly scaled up the breadth of stay options we offer in India to improve the coverage across destinations, price points, and travel needs. We now have over 101,000 accommodation options available on the platform, covering over 2,070 cities in the country. We continue to innovate and solve for unique requirements of the Indian traveling customer. To better serve families and group travelers, we have made it easier to discover multi-bedroom properties along with better understanding of room layout, which is resulting in higher booking confidence with more relevant room combinations being showcased during the booking process. We also launched probably an industry-first feature around guaranteed early check-in or guaranteed late check-out, a facility which is a paid feature enabling travelers to have assured room access aligned with their travel schedules right at the time of booking.

This feature is helping address one of the most common pain points for travelers. This is even more relevant for Indians traveling overseas, as the landing or takeoff times for most of our international connections have a significant gap with the usual check-in or check-out times offered by hotels in those destinations. One of the long-standing pain points in the accommodation segment has been inability to optimize hotel reward programs, both for travelers as well as for accommodation service providers. As we entered the new fiscal year 2027, we're trying to address this with the launch of One Circle. One Circle is our cross-network hotel rewards program. Initially spanning over 13,000 properties across Indian international destinations, One Circle will enable travelers to earn and redeem rewards seamlessly across a large network of hotels, homestays, and villas.

This will help them access wider array of properties on a single reward program, driving loyalty and repeat of stays across our accommodations ecosystem. Equally importantly, for our hotel partners One Circle provides access to a broader base of loyal travelers, which can help drive both new as well as repeat demand to their properties. We believe this will allow our domestic hotel partners to showcase their properties as well as drive demand, particularly from India's fast-growing tier 2 and tier 3 markets. For our international hotel partners, this will be of great relevance in cities which see high travel demand from India. In homestays, we continue to invest and build the category and are enhancing our product proposition to improve customer experience as well as drive the appeal of such properties. We launched our Star Host program to recognize and reward hosts who consistently deliver outstanding guest experiences.