Welcome to MakeMyTrip’s Fiscal 2016 Fourth Quarter and Full Year Earnings Call. At this time all participants are in a listen-only mode. The company wishes to remind you that certain statements made on this call are considered forward-looking statements within the meaning of the Safe Harbor provision of the US Private Securities Litigation Reform Act of 1995. Forward-looking statements are not guarantees of future performance and by their nature are subject to inherent uncertainties. Actual results may differ materially. Any forward-looking information relayed on this call speaks only as of this date and the company undertakes no obligation to update the information to reflect changed circumstances. Additional information concerning these statements is 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 9, 2015. Copies of this filing 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, Group CEO and Founder. Sir, please go ahead.

Thank you. And welcome everyone to our fiscal 2016 fourth quarter and full year earnings call. It’s been yet another exciting year for us where we witnessed the Indian domestic hotel market opening up with fast-growing mobile-led Internet penetration. This momentum helped us grow our online hotels business significantly and achieve our long-term strategic goal of improving the hotel and packages revenue mix. I am happy to share that we improved our fiscal 2016 full year hotel and packages net revenue mix by about 6 percentage points driving contribution of non-air businesses to an all-time high of 54.4% for the full fiscal and 56.5% during the reported fourth quarter. The vibrant mobile ecosystem was one of the key drivers for the dramatic growth this year. We now have nearly 52% of Indian online visitors, reaching us via the mobile platform versus 21% a year ago. In the strategically important online standalone Indian hotel segment, mobile now accounts for over 70% of the total online transactions. The rapid strides we are making on improving our mobile apps is validated by the fact that the MakeMyTrip Android app was declared the Best Android Travel App of 2015 by Google Play Store India in January 2016. Our app will also be featured in Google I/O, Google’s Annual Developer Conference as a case study later this month. Our objective for the reported fiscal was to leverage the rapid smartphone growth to drive online penetration as well as grow market share in the predominantly offline hotels market in India. Accordingly, from the second quarter of the fiscal 2016, we had initiated transaction growth guidance for our standalone online Indian hotels business. We followed it up by posting significant acceleration from 78% year-on-year growth in Q1 to 168% in Q2 and 326% YonY growth in Q3.…

Thanks, Deep. In the fiscal 2016 fourth quarter and full year, we delivered exceptional transaction growth and increased our market share in domestic hotels in India. As we pursued excessive share gains through transaction growth during the quarter and the fiscal year, we continue to invest in our brand promotions to drive online penetration, mobile technology, hotel supply and product innovation. Deep mentioned our relationship with Ctrip. From the earlier discussions with Ctrip, it got further validated that it is essential to keep investing, particularly in brand, technology, customer service and supply even in the midst of aggressive competition and discounting. I would like to begin with elaborating on the exceptional performance in our hotels and packages business. Transactions growth in standalone hotels and in the hotels and packages business overall was very strong. H&P transactions, excluding ETB grew by over 322% in fiscal 2016 fourth quarter versus the guidance rolled out in the last quarter of 170% to 200%. This was driven by standalone hotel bookings year-on-year growth of nearly 507%. Even more encouraging is the fact that standalone hotels booked on mobile grew over 1000% on a year-on-year basis. During Q4, we also achieved an all-time high share of hotels and packages net revenue at 53.6% of our total net revenue. The growth we delivered in our hotels and packages and air businesses during the year was driven largely by mobile, which remains a key growth driver for e-commerce in India in general, and more so at MakeMyTrip particularly. The standalone hotels growth was largely delivered on account of the following. One, brand investment; apart from the spends on our brand campaigns, we also launched two more additions of the hugely successful app-fest, a promotion that was available only on the mobile app. We leveraged a strong association…

Thanks Rajesh, I’d like to start by talking about the actual growth delivered vis-à-vis the previously issued guidance. During Q4, transaction growth in our hotels and packages business excluding ETB was 322%, which is significantly higher than the guidance of 175% to 200%. Similarly, during Q4, transaction growth for India stand-alone hotels booked online stood at 507%, which is significantly higher from the guidance of 325% to 375%. Additionally, the full-year 2016 transactions in our India stand-alone hotels business booked online grew by almost three times over full-year 2015. The full-year 2016 constant currency revenue less service costs or net revenue growth stands at 29% and adjusted for customer acquisition, inducement spends reclassified and presented under marketing and sales promotion expenses will still be around the top end of the guidance. I'll talk in greater detail on the presentation of marketing and sales promotion expenses as a separate line of expense and the related reclassification in a short while. We are extremely pleased to deliver revenue growth at top end of the guidance, while delivering significantly higher transaction growth in the strategic hotels and packages business and more so in the India stand-alone hotels booked online as driving market share gains in this business continues to be a key strategic objective. We report adjusted operating loss of $29.3 million for Q4 full-year ‘16 and $50.1 million for the fiscal full-year 2016. These losses have been the result of our ongoing customer acquisition and inducement programs to drive market share gains particularly in the strategic business of India stand-alone hotels booked online and are reflected in the significantly higher than expected transaction growth delivered in this business. Fiscal 2016 was a year when MakeMyTrip rolled out various high-impact customer acquisitions and inducement programs to leverage the growing smartphone user base which…

And our first question comes from the line of Lloyd Walmsley with Deutsche Bank. Your line is now open.

Thanks. I was wondering if you can give us an update on the competitive environment and how much of your marketing spend plans is a function of the competitive environment and how that's trending. And then when you look at the 25% to 30% revenue growth guidance, it seems like it would suggest actually less spending on marketing and kind of a return to more normalization, but your commentary suggests you are continuing to spend pretty heavily. So, can you just kind of square that slower growth with kind of how you think the competitive environment and marketing spending plans are shaping up?

Yeah, hi, Lloyd, this is Deep. I will take the first part and then either Rajesh or Mohit will talk about the second. So competitively the hotel landscape has been I think fairly intense through year. And there have been at least two competitors who have continued to invest strongly discount pretty heavily through cash backs and other promos. This is both Goibibo as well as OYO. And while that has continued to grow the market and as you know, midway through this last fiscal we also changed that and we’ve also been fairly aggressive in maintaining and then growing market share across the different segments. So I think the maximum competitive intensity is - currently has moved a bit from being only in the budget segment to even moving upwards. As I shared during my talk, we’ve actually managed to increase market share across all segments. And as per the latest third party report by Millward Brown we are clear market leaders across all segments. And overall, we are fairly ahead of the competition by about 6 percentage points or about 29% and growing. The last quarters have consistently grown our share, but intensity continues from these two competitors in the market.

Yes, and I guess on the second part, Lloyd, maybe if I could just add to that, linked to the guidance comment that you made, we - what we’ve just mentioned, we continue to see the momentum, I mean, one is from the competition side large amount of discounting that is happening, but we are also very encouraged with the fundamental momentum in terms of tailwinds that are coming from shift that is happening from offline to online bookings as well. So keeping that in mind, what we have factored in this revenue growth guidance is largely led by the transaction growth, so therefore our investment and both on marketing and the promotional activities would continue and we have factored all of that in.

And our next question comes from the line of Gaurav M. Your line is now open.

Hi, thank you for the opportunity. One question, so you mentioned that the net revenue guidance is for next year 25% and 30% and I believe you did around 22%, so you are actually guiding for higher growth even though you are saying that the competition from Ibibio and OYO remains pretty strong, so where will the - so I would assume you will be going faster than the market, so any sense on whether growth is going to come from given these two guys of late has continued to be aggressive?

Hi, Gaurav, Mohit here and I will take that. So if you really look at now that we have kind of started showing the marketing and sales promotion expenses separately and started reflecting all customer acquisition, promotion related spends under that expense line, the revenue growth kind of remains largely reflective of what the transaction growth is from here on. And therefore, if you really look at it, the reported growth for the full fiscal currently reported is about 29% and what we have guided in line with the [indiscernible] for the coming fiscal is in the range of 25% to 30%. So what we are saying is, we will continue to remain aggressive in the market to kind of keep tweaking our aggression in terms of promotions to ensure the transaction growth remains unhindered and continues to be very, very robust and strong, but we are also confident that with our improved ability to kind of not only just generate lot of first user trials, but also kind of drive repeat users in the coming fiscal, the net revenue growth in terms of our current best estimates right now seems to be in the range of 25% to 30%.

Gaurav, I think you were referring to the dollar growth number, what we are talking about is constant currency growth, so constant growth is 29% versus 25%.

Okay, thank you.

[Operator Instructions] And we do have a follow-up question from Gaurav M with Citigroup. Your line is now open.

Yeah, hi. Just one question on the share-based compensation. I believe that you had set aside a certain number of shares and that was going to get vested over four years. So FY18 will be the year end of that. Is any thought of expanding this further or you will do it as and when the time comes?

So, for us, we’ve typically looked at it in buckets of 4 years. So, the first employee share based program was for the period 2010 to 2014 and the second one which is currently on, continues until about 2018. So as we kind of get closer to the expiration of the program, we will start looking at this and at the renewal around that time, I think for 2017 and 2018, we're kind of well covered.

Okay. Thank you.

And our next question comes from the line of Shaleen Kumar with UBS. Your line is now open.

Yeah. Hi, everyone.

Hi.

Hi. Just one question over here. So, our marketing expense has gone up pretty significantly over here and we’re saying that competition intensity is high. So seeing that and we’re going to continue to burn our whatever spend in marketing, so that means that maybe for the next FY17, our marketing budget would be - could be in 100 million kind of thing and in terms of the cash we right now have, something around $200 million. So, do we see that this can come down or we have to continue with this much and this would - burning 100 million will result in 25%, 30% kind of growth, isn’t it too expensive?

So, I think we’ve been calling out right through the reported fiscal as well that this is - this for us is kind of long-term investment in to the market. This is a market, particularly the hotels market which is currently also predominantly offline, has just about started getting all line and if you really look at it over the last few quarters, the market movement in terms of online penetration has almost doubled over the last 3 to 5 quarters. That’s our momentum that you would want to kind of leverage upon and keep investing, because this is a very crucial segment for the OTA companies. Therefore, even in the current fiscal, as we had called out last year also, at least we’ve taken a two year view that we would want to continue investing behind the market opportunity and keep growing our market share in this particular segment and once we kind of - once the segment goes online, beyond say 25%, 30%, we believe a lot more rationale pricing and accretion and promotion will continue to come in gradually, but for at least the forthcoming full fiscal year, we feel we are well funded, the balance sheet is strong and the commitment to kind of invest behind this market remains.

And Shaleen, just to add in line with what Mohit said, a lot of first time users being acquired currently and really spreading the word and as you might have seen, you might have picked up from Rajesh’s speech earlier where he mentioned that a number of unique cities and towns that we are now actually getting the hotel sides coming from has also grown. So fundamentally, the idea is to acquire new users and then to track repeat very carefully and we’re very encouraged by the repeat numbers, which have been actually improving, so the overall cohorts of customers acquired for hotel business, particularly through mobile and even in specifically through app are showing very positive signs of good repeat. So therefore, there is a clear argument for lifetime value analysis here and keeping that in mind, we think again this is a long-term investment at a very critical phase of the market, we had probably reacted a quarter or two late, but when we did, I think we’ve managed to clearly catch up and then increase the lead and we’re going to - we’re committed to continue to do that and we think the investment will pay off in years to come.

Right. Thanks. Just to follow up on that, clearly, this is again my observation that I could see MakeMyTrip much ahead in terms of at least brand building exercise and the advertisement, whatever visible, on various channels compared, and I do not see much of other competition, actually they’ve completely dried up if I’m not wrong. So, but then if those guys are not spending, are they also growing in the same leg and you’re facing the complement density?

So, I think it’s fair to say that we’ve been growing faster and I think that crossover has definitely happened in the last two quarters. A lot of money has been spent by competition and promos, and discounts, but we think the brand building is important again to increase the overall customer reach. Again, the same point, you can be same set of customers or you can actually increase the reach fundamentally. So 18.5 million downloads is very healthy and way ahead and then growth in new users, first time users will be attracting is very relevant and this burst that you’re seeing currently has obviously worked very well, we’re seeing a very good, healthy increase which is coming. And like I’d explained, touched upon, there was clear rational behind what we chose on our hotel campaign, these were user insights, which we had got through research, the biggest blockers that we were hearing were being answered, these were blockers around fears of cancellation being too high, these were blockers around that, hey, I can show up and negotiate and get the best deal that being answered through a pretty creative, which is hard hitting as well as lot of people showing up at destination using cab drivers, et cetera as their guides. And so those myths being exploded really, which is what I had alluded to while talking about the campaign, but we’ve seen that resonate very well with our customers and the response has been actually fantastic.

Also, Shaleen actually, you made that comment and I think it’s a very important and I just wanted to add an additional comment on that, it is actually with respect to competition, very well thought through differentiated strategy from our side, while everybody is busy on doing discounting and sales promotions and all and spending millions of dollars there. We wanted to make sure that we have a differentiated strategy, not only kind of just go exactly one customer acquisition side, but also make sure that where we are very, very strong, I mean our brand recall has always been very, very strong, we further continue to strengthen our brand. And like Deep mentioned, the whole idea was to actually attack the use cases where market could potentially move from offline to online. So we do believe that this differentiated strategy actually will give us long term edge, when market kind of overall slows down on discounting and promotions, it would - our brand could have been much more stronger than ever before and therefore, it would be lot more beneficial to us at that point in time.

Great. So Mohit, just last question, so our margins in both the categories have improved significantly, so is it because of this strategy, but we’ve followed more of an advertisement and less of a promotion and second is are these margins sustainable?

So, honestly, the key reason for the margins improving, particularly in the hotel and packages segment is and I was carrying that out in my section is that the mix of hotels has been increasing significantly right through the year. Hotels now kind of account for almost 45% of the revenue mix in the hotels and packages segment, compared to hardly about 15% in the previous fiscal and as we’ve been calling out, hotels do have much better margins compared to packages and that’s been - that’s also been one of the core reasons for this significant push behind improving the mix from hotels. So that’s where I would kind of place the large part of margin accretion coming in, particularly in the hotels and packages segment. The small increase or the small change in the margins that you see as reported for full fiscal compared to the earlier quarter is for the fact that all the sales promotion expenses are kind of now being filled under the sales - under the marketing and sales promotion line and not being deducted from the margins and therefore, the dilution from the comparable margin of last year is only about 10 bps, but we believe it’s a tough time that over the next year or two, we should gradually be looking at margins which are kind of lower than these - more in the 5% to 5.5% range.

Okay. Great. Thank you so much.

And I’m showing no further questions at this time. I would now like to turn the call back over to management for closing remarks.

I would like to thank everyone for joining and we look forward to speaking to you in a quarter’s time. Thank you.