MakeMyTrip Limited (MMYT) Q3 2017 Earnings Report, Transcript and Summary

Welcome to 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 U.S. 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. 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 these filings are available from the SEC or from the Company's Investor Relations department. And with that, I would like to turn the call over to your host, Deep Kalra, Chairman, Group CEO and Founder. Sir, please go ahead.

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 fasting 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 level 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 adaption 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 meet this offline to online shift 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're 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 talent within our combined companies to drive faster innovation and to dramatically improve the researching, booking, and wholesales experience for all our customers. As part of the first step, 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 decision, as well as 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 largest 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 air fares. We are enthused to see a large number of first time customers, mainly 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, while 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.

Thank you 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 continue 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 gain, and the resulting strong reported financial performance. This achievement reflects the ability for our business to outpace market growth fuelled by strong off-to-online booking trend even as we face some consumer demand impact from demonetization. In Q3, we continue to a log [ph] 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 transaction. 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 term 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 e-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 option 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 continue 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 continued their efforts to bring more non-traditional or alternative accommodation 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 onto 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 innovations 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 gadget within the flight search panel. 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 conversion. We have also done a beta launch of highly relevant card on the landing page of our android apps with features such as web check-in for flights, flight status, weather conditions, and destination, travel check leaf and hotel details. At the same time, we are also investing in the dual fund of our chat board, which is an intelligent trip assistance, 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 travelling. Now let me also share some of the innovation and experience enhancements within our air-ticketing business, which continues to outpace market growth rate. During the quarter, we smartly leveraged our electronic wallet and personalized mobile pair alert 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 increase their ancillaries attached to it. Our team also revamped the UI for travel insurance bookings, which has seen a good increase in domestic flights attached to it. During the quarter, we have experimented with zero cancellation program on domestic flights, which was well received and helped to improve NPS score 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 leave the industry in online air bookings growth. Lastly, I would like to share some details of our holiday’s business during the third quarter. As many of you are aware, the fiscal third quarter is typically one that sees more customers travelling 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 the material improvement in transaction growth for our outbound holiday’s 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.

Thank you Rajesh and hello everyone. I am very pleased to say 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 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 on net revenue was $38.2 million aided by the inclusion of incremental revenue of $9.2 million based on quarterly evaluation of clients of different rights exercised by our customers along with change in the estimate for quarterly provisions for cancelled tickets, person to confirmations 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 fuelled by lower air-fares. In Q3, average transaction value of our total air business dropped by 7% on a year-on-year basis. The result on take rates optically expanding about 7.8%, excluding the incremental revenue recognized. With the recent hardening of oil prices, we expect the airfares to stabilize in the near future and accordingly expect our air-ticketing margins to get back to about 6% leveraged 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 fuelled by strong transaction growth of nearly 70% in this segment. The transaction growth was led by 105% growth. In India standalone hotels booked online and by about 150% growth in mobile domestic hotel transactions. During Q3, the takers within our H&P business also expanded to 19.4% and improvements on the previous quarter at 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 these quarters. 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 tax 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 the larger efficiencies in our marketing and sales promotion expense. Accordingly, compared to the previous quarters the expense was down by over 180 basis points to the nearly 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 under penetrated segments of the [indiscernible] market like alternative accommodations, international air, and ground transportation services. We are therefore likely to continue aggressively spending behind marketing and sales promotion 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. 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 in fair valuation of the [indiscernible] convertible notes or derivative financial instrument issued to Ctrip, which have been fully converted to equity during the reported quarter. Our cash position as of 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 and inclusion from Naspers towards the initial closing date payment, towards its proportionate share of net working capital intuition, 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 to 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.

Thank you. [Operator Instructions] And our first question comes from Lloyd Wamsley with Deutsche Bank. Your line is open.

Thanks. Couple if I can. First, just can you 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 in integrating what sort of 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?

Yes, hi Lloyd this is Deep, happy to take that. So, Lloyd on the competitive scenario, as you are aware Yatra recently listed on NASDAQ through special purpose acquisition vehicle Terrapin 3 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 the hotel business, what we learned from our suppliers is still modest and small, and they are 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. And again focusing no 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 transaction, 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 player’s bookings.com and Expedia, are both in the market, still largely focused on the higher end of the market and most of that business comes through in-bound, but there is a domestic business, which is also going for them, no doubt. In addition to that we have hotel aggregators as you are everywhere there is OYO, OYO Rooms, they have changed the 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 guesthouses or homes and then run them - take them on lease and run them as budget hotel properties. They also still - were taking all your part hotels, I think they are not taking partial inventory in hotels, now it’s either the entire hotel or this, OYO as you would recall few quarters ago we had actually taken them of 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 chain, 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 are 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 off late they also do some degree of hotel bookings, more on and off, but they are quite aggressive on the transportation phase. So rail, bus, and air. 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 brand namely redBus, goibibo, and MakeMyTrip, but we will seek synergies wherever possible and we do see tremendous energies on product and tech, technology obviously will take a long time to fully integrate, but there’s a lot of best practice sharing out, but we're 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 that integration programs that we have planned, and then of course over time, time will tell how well this will work, but we're very excited both Rajesh and myself about talent on – that’s coming with the ibibo group, with both brands and ever since we have got our approval from the anti-trust body, which is the CCI in India, we have been actually engaging across all levels starting from the senior leadership team and then on awards and we have various initiatives planned, as well. So, we appreciate fully that it’s not a easy task, not a trivial task, and it will take a lot of doing and 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, returning 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 or focus on return to operating profit? Thanks.

We will take it Lloyd. This was more of a decent quarter and we were also aided by a implement of revenue recognition in the quarter but as we have been calling off, focus continues to be on growth particularly in the underpenetrated segments like hotels, and international air, as well as ground transport, so we continue to invest significantly behind customer acquisition, particularly for these lines of businesses and therefore the focus will not really be on getting back to profitability in the next year, but to be on continuing to drive significant amount of transaction growth and business growth in the coming two quarters.

Thanks guys.

Thanks Lloyd.

Thank you. Our next question comes from Arya Sen with Jefferies. Your line is open.

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

Sure. Arya, 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 is largely kind of got to do with the lower airfares 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 or the industry itself. The industry hasn't seen this kind of a growth in the last so many years as it has been in the last few quarters. This is also resulting clearly in players like us who have kind of been market leaders growing high 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 driven quarter and has continued to be over 30%. Excluding the one-off, the revenue growth is at about 67%, and is 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, you know, optically if you look at it every time there is a fall in the average transaction value. Optically, the margins look much better because the 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 be looking forward to about 6% margin levels plus or minus 0.5%. Keeping in mind fuel prices are already holding or strengthening off late, which also means that for us air fares are unlikely to see as much of a dip on a year-on-year basis as they are seen in the last few quarters. So, this is our 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%, is that a conscious upgrade in that number?

No, long-term, Arya if you would recollect we have said there is a significant amount of payment which we cost, if the segment needs to bear, and therefore in the slightly, in the longer-term scenario we are saying we kind of 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 margins has gone up to 19.5% and this is despite I would think this quarter has quite a bit of packages as well, which are historically have been lower historically have been lower net revenue margins. So if you could explain that part a bit as well?

Sure. The number if you if you really look at it, the mix has been going on, it has been in favor of hotels and as we have been calling out in the last few quarters every change in skew, the margins kind of look better for the segment. So, when they 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 the domestic holidays I have been calling out there is more and more de-bundling of transactions which is happening. So this is largely kind of coming in from the mixed kind of getting more and more excluded towards hotels. Clearly, what it does also, the improvement in the margins is also coming from the fact that I had called out in the script, that we are able to kind of contract much better with the supply as said or particularly the independent properties and the mom and pop properties and the kind of doing reasonable volumes for them, and this was also a high travel season quarter and we've planned it pretty well ahead of time and therefore our ability to kind of cut down promotional expense and kind of improve the overall take rates for the hotel kind of booking business was much better.

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

Earlier I've just said, I'll be kind of, if you look at it for the shorter term over the next few quarters, considering that will 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 drilling the promotional campaign. And therefore, we expect the take rates to remain high, but in the slightly longer term, say the next 3 to 5 year scenario, we will be pretty comfortable with this segments reporting anywhere between 15% to 16% margins overall.

Okay. That's all from my side. Thank you so much.

Thank you. [Operator Instructions] And our next question comes from Ashwin Mehta with Nomura. Your line is open.

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?

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 any impact and maybe Rajesh can talk about that, you know at least in the early part of November we did kind of see some impact whether on hotel transactions or air-ticketing transaction, but kind of came back because it was also, you know fortunately December was a high travel season and therefore transactions came back much faster. Longer term we have already been saying that this 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 able to book off-line.

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 breakevens or profitability, in line with what you have talked about in terms of longer-term targets?

Hi, this is Rajesh here. Let me take this. So actually the thinking is not very different from what we have articulated before. What we are trying to say is, I mean the approach really now with the combining forces is to see which are the segments, rather 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, you don't know, the penetration continues to be low, projected numbers and the penetration is going to be high in the next four years, taking it from 15% to let's say 30% or 35%. 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 in 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, where 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 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 will 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 will 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 decide to take a long-term outlook of let's say 4 or 5 years, then the kind of numbers or the operating profit numbers that we've been talking about, margins of around let's 15% and 20% or more, depending up on 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 two properties where effectively the inventory kind of gets shared?

I know it is a great question and I think we are still kind of in term midst of even understanding better both brand different 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 the aspirations of either brand by trade jacketing it or kind of containing it in one particular area. We think that the branch 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 is what we believe.

Thanks and all the best.

Thank you.

Thank you. And our next question comes from Viju George with J.P. Morgan. Your line is open.

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, sort of 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 RJio having pushed your - the engagement levels, the downloads and the transactions. Would it be possible for us to have some numbers on how transactions for that looked at with the RJio push? How much RJio itself has contributed to it? And, thirdly, your margin, particularly H&P side, I think is touching 20%, what has led to this? And why do you think, why do you sort of still guiding down to 15% 20%? I understand the under penetration story and they need to make investments, but the fact that you've touched very high margins right now and with the merger still ahead of you, well, presumably can work on costs a little bit better, why shouldn't be closer to 20%? Thank you.

Viju all three questions are good questions, so let me take the first two and then I’ll let Mohit take the margin question. So and 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 and 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. So, it's kind of lead 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 have extended that offer until 31 March, but knowing them you know they have kind of triggered the prize for and everyone is kind of going after the data plans in terms of just getting and acquiring all those data customers now, more and more or too long on the voice 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. On the first one, the demonetization, the way we kind of saw the demonetization impact on our business, when the announcement happened on 8 November, there was obviously a knee-jerk and then the numbers dropped across the board, just for a few days. So, in a couple of weeks time the daily run rates kind of came back to us. In our business, particularly when you go little bit more deeper than you realize that they impact was relatively more on a high transaction value or items like say outbound packages for that matter, or international flight, but not necessarily and again international flights they are 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 advanced purchase relatively much before, I mean 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 helped mitigate that overall impact and also the knew-jerk of the action that happen when people where just generally grappling with this overall situation or feeling poorer that kind of the staid only for two weeks and then it came back. So - and there was obviously plenty of other areas, goodness that came in this quarter. So, it doesn't, 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, 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 other aspect is, the second aspect of that is the digitalization push, so long term actually it should only help our cause because more and more people would transact online. So that’s how we're 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.

Sure, thank you.

Thank you. Our next question comes from Kevil Kopelman with Cowen & Company. Your line is open.

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 and the overall India travel industry over the past months. Thanks.

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 actually announced the merger and so we do think it's going to take this quarter even to start consolidating accounts and reporting out next quarter, which is also a 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 have 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 this 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. Yes, it's a strong growth. The other one I would like to just highlight is that all impact of demonetization is completely now gone, the industry is back, consumer growth is back in the key sectors for us, whereas some other sectors, which are 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 are who would not perhaps - earlier buying online have moved their buying preference from offline to online.

Thanks so much and congrats on the closing.

Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone have a great day.

Thank you.