Good day, ladies and gentlemen, and welcome to the MakeMyTrip Limited Fiscal 2019 First Quarter Earnings Call. [Operator Instructions] As a reminder, this conference call may be recorded. I would now like to turn the conference over to Jonathan Huang, Vice President, Investor Relations. You may begin.

Thank you. Greetings, and welcome to MakeMyTrip Limited's fiscal 2019 first quarter earnings call. We wish to remind everyone that certain statements made on today's call are considered forward-looking statements within the meaning of the safe harbor provision 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 and actual results may differ materially. Any forward-looking information related on this call speaks only as of this date, and the company undertakes no obligation to update information to reflect changed circumstances. Additional information concerning these statements are 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 20, 2018. Copies of these filings are available from the SEC or from the company's Investor Relations department. On our call today are Deep Kalra, our Founder, Chairman and Group CEO; Rajesh Magow, Co-Founder and CEO India; and Mohit Kabra, our Group CFO. And now let me turn the call over to Deep to start the discussion for today.

Thank you, Jon, and welcome everyone to our first quarter earnings call for fiscal 2019. I'd like to begin by sharing my optimism for the long-term growth opportunities ahead of us as India's leading online travel agency. The MakeMyTrip Group is well positioned to ride the multiple growth tailwinds available. This includes operating in the fastest-growing large economy with an attractive and growing leisure travel market overall, with underpenetrated online booking segments like domestic and outbound hotels and accommodations, outbound flights intercity road transport like bus and car. Further fueling our optimism is the 0.5 billion-plus Internet users in India today, most of who are expected to evolve from lookers into bookers over the coming years. Before I get into the quarter, I'd like to share an update on the domestic aviation industries. While on the one hand there is positive news, where some of the key airlines have announced that fleet expansion plans based on robust long-term passenger traffic growth forecast in the short-term the industry could be facing some turbulent times ahead. In the past year, airlines have been dealing with higher fuel cost, a weakened rupee exchange rate and difficulties in raising fares to offset rising cost. The recent strong growth in passenger traffic that we've seen has largely been driven by strong pent-up demand and affordable fares. However, we believe the growth trends seem so far may be challenging to sustain unless yields can match increases in supplier input costs. That said, we continue to believe like some of the leading airlines who have announced expansion plans that India remains an attractive growth market for many years to come. Now let me move on and discuss our latest achievements in Q1. Armed with 3 of the most recognized online travel brands in India, we saw more…

Thanks, Deep, and hello, everyone. I would like to begin by sharing a quick summary of our accomplishments in the first quarter of fiscal 2019. I also want to mention that this quarter, we have made a key reporting change. We are placing revenue less service costs or net revenue with adjusted revenue. This change was necessary, as we have adopted IFRS 15's revenue recognition rules starting this quarter. The definition of adjusted revenue enables us to continue presenting and comparing our -- through top line on a like-to-like basis as we had reported in the past with net revenue or revenue less service costs. I'm delighted to share that the MakeMyTrip Group reported gross bookings of over $1.4 billion and over $170 million in adjusted revenue, which was previously called revenue less service cost or net revenue. Additionally, the contribution of our hotel and packages business to total adjusted revenue stands at over 55%. During the past quarter, we locked our highest ever quarterly room nights, with nearly 6.5 million actual room nights stayed in our standalone hotels business, a growth of over 18% year-over-year. During the quarter, our team continued to focus on expanding our presence in alternative accommodations as well as work to directly contract hotels in key destinations outside of India, as we still see large headroom in the accommodation space due to the low penetration. In our air ticketing business, nearly 9.2 million flight segments were flown by our customers during the past quarter. The number of air ticketing segments grew by over 17% year-on-year, and we have maintained our leading domestic air market share position of over 24%. At the same time, we continue to see healthy online outbound flight growth as we shift customers online for their booking needs. While the domestic air…

Thanks, Rajesh, and hello, everyone. I'd like to begin with 2 important reporting-related callout. First, we have now entered the second full fiscal year following the ibibo Group manager, which was completed at the end of January 2017. As a result, this reported quarter onwards, our results will provide readers a complete like-for-like and fully consolidated comparison on a year-over-year basis. Accordingly, we've removed pro forma disclosures from our earnings release. Second, this is also the first quarter post adoption of the new IFRS 15 revenue recognition standard, under which promotion expenses in the nature of customer discounts, customer inducements, or acquisition cost or royalty program costs, which were incurred previously, were recorded as marketing and sales promotion costs, are now being recorded as a reduction of revenue. As a result, the revenue for Q1 of this fiscal year stands at $137.4 million. Considering that we have adopted the new standard, by using the cumulative asset method, the comparative information has not been restated and the revenue for Q1 of last year stands at $192 million. Beginning this quarter, we've also changed the non-IFRS financial measure, revenue less service cost to adjusted revenue. Accordingly, adjusted revenue will henceforth reflect the true value addition of travel services that we provide to our customers. The adjusted revenue at $170.1 million grew by 25% year-on-year in constant currency terms compared to $141.2 million in the same quarter last year. As this is the first quarter post adoption of the new revenue standard, I'd walk through the computation of adjusted revenue. In the same quarter last year, the IFRS revenue of $192.1 million has $9.3 million of promotional expenses, which were netted off as a contra revenue. This was added back along with a deduction of $60.2 million towards cost of services, where the…

Thank you. [Operator Instructions] Our first question comes from line of Shyam Patil of SIG.

Hi guys, thanks. This is Shyam. I had a couple of questions. The first question is, can you elaborate a little bit more on the competitive landscape, and any changes you've seen over the past few months, in the -- particularly in the hotels business?

Yes, Shyam, right? Okay. Yes, so I think the competitive landscape by line of business, we will start with hotels since you wanted to talk about that. We have seen -- at the premium space we have seen a multinational brand, so we see Booking.com. I think more or less the same level of intensity, if anything, we do know that our focus on the premium space has been paying off good dividends, and we have been actually going ahead nicely and penetrating well in that segment. In the budget space, again, we do see multiple players, as you know that we have been working now and offering OYO on our platform. But OYO is also selling directly on their own platform. OYO has definitely been one of the fastest growing in that segment. Besides that, we do see a few other players like Yatra, like Cleartrip on and off. Paytm has not been in the budget space but we understand that they could be looking at getting into that space now. That's pretty much the landscape on the hotel side. Again, on the premium and on the chain space, we do also see Expedia, as well as their other brands from the Expedia's table, as well as we see Agoda from the Booking.com or Booking Holdings table also complete up the premium end of the high end. Coming to air, it's largely like, Mohit mentioned in his talk, we've managed to maintain our market leadership at about 24% of the entire flying market. If we look at just the online part of the market then we are close to about 2/3 share. The next largest player in the air market would be Yatra, and then Paytm is also one of the players in the domestic air market. On international air, we find again Yatra as well as Paytm and Cleartrip as well. So these are broadly the dynamic we see out there. We see Expedia on international air as well.

Great, thank you. And then as said -- one more follow-up. On the partnerships with OYO and Flipkart, could you just talk a little bit about the progress you've made there? And what some of the key learnings are for you thus far?

So to start with OYO. So OYO who is a clear supply addition partnership, if you will. And since the time that we have kind of have OYO on our platform, clearly we've been able to actually work very closely with them to be able to grow the budget segment in the -- at the right kind of price point as well so not necessarily, just going completely crazy on pricing or discounting, et cetera. And as I highlighted as part of my script that we also have GoStays in our budget kind of supply side as well. So combined with OYO and GoStays, in terms of just a supply expansion breadth and depth of it, we've done quite well. And it's only going to get better from here. Now as far as partnership with Flipkart and PhonePe is concerned, early days, but we have seen some early traction definitely to start with on PhonePe, as well as on the domestic flight segment for MakeMyTrip brand on Flipkart. So the idea there was to kind of just write down the REITs that they have to the Tier 3, Tier 4, given their category that they operate in. The number of products that they have really, really very wide in range. And that was the idea. And the good news is that so far whatever we have seen from the numbers and the traction that we've seen that we're getting new set of customers. So it's not necessarily cannibalizing that's exactly what the hypothesis is. It's kind of working out well and ramping up slowly and gradually, bus segments and the hotel segments on PhonePe are now few months old, and we have seen some traction in the ramp-up happening. And we're just trying to expand and add more products on both the platforms. So as soon as we have some material kind of numbers to report, we will give more color on that. But early signs look quite good.

Great, thank you very much.

Thank you. Our next question comes from line of Kevin Kopelman of Cowen and Company. Your line is now open.

Great, so I just had a couple of questions. First, could you give us an update on the outlook for how you're thinking about the free cash flow, or free cash flow burn for the year? And on that, it looks like working capital was a little bit worse year-over-year. Is that just a timing issue or did that reflect any other developments? And then I have another question. Thanks.

Sure, from a cash position point of view, we continue to have good cash balances on the balance sheet. The cash and cash equivalents as on end of June, it stood at about $356 million. So coming to the slight deployment in working capital, in the current quarter, typically in the peak season quarter, high-travel season quarter, we would generally see a release in working capital, but this quarter, we've seen a deployment, this is purely coming out of a one-off, wherein due to a change in contracting, that we are kind of putting in place from the beginning of this fiscal, the receivables from one of our GDS partners have kind of accumulated additionally for the quarter. And therefore, we should see that getting reversed in the coming quarter. So I hope that should explain the one-off in the -- in terms of deployment into working capital in the quarter.

Okay, great. And then just a different direction, can you talk more about the bus segments, and how you are viewing that developing with the kind of 45% growth rate that we saw that quarter, do you expect it to keep growing at a rapid rate? And what are the key drivers behind that? Thank you.

Sure. We're very encouraged with the growth on the bus segment and this the first time that we kind of reported as we've mentioned as a new reporting segment, and you'll, obviously, get more and more color every quarter. But we've seen some of this growth continuing actually for last few quarters. And we do see that it's likely to continue going forward as well, going to stay robust. And the reason for that is that, one, we obviously, on redBus, and not only redBus, but MakeMyTrip and Goibibo, also has 2 additional distribution platforms, they are actually selling bus segments and growing as well. So all of this put together, like fee distribution platforms kind of add to the distribution strength to start with. But on the operator side, the headroom that we see is more on the state transport undertakings, which is like largely off-line at this point in time. And we have seen sort of state after state, first of all, there is a national drive of digitization that is happening in general, which is kind of helping all the public sector kind of move online as well. And some of the state transport corporations are also following suit on that. So like we mentioned a couple of the state transport corporations, we kind of added last quarter. And we believe as we move more and more or mode STCs, State Transport Corporations on our platform, we will see this growth continuing. And of course, the private sector is also -- private operators is also expanding on an overall basis as well. So do think that the road transport and road transport, bus segment and potentially, the intercity cab segment is going to, because there is need no matter how much flight -- the domestic flight market is growing and we all know that growth has been fairly robust as well. And then there is a rail sector, where lot of the India travels on rail as well. But there is definitely a big, like we gave the number $3.5 billion total market size of the bus segment as well. So all modes of transports are likely to grow and specifically, bus, which is underpenetrated today.

Thank you. Our next question comes from the line of [indiscernible] of Fosun RZ Capital. Your line is now open. [Operator Instruction] Our next question comes from the line of Shaleen Kumar of UBS. Your line is now open. I apologize our next question comes from the line of [indiscernible] of Fosun RZ Capital. Your line is now open.

Hello. This question is regarding the new reporting standard that has come about. We're just trying to understand how this numbers, say, compares to the chain in the past few quarters, and now that we're seeing $92 million number being adjusted, is this number higher, lower than the previous quarters, and is this expected to keep going up or is this expected to come down? And would this be like a similar composition in terms of marketing spend, where $92 million is contra revenue and $50 million is the other above-the-line ad spend?

Yes, maybe I'll take that. Clearly, as I called out during my part of the callout on the financial highlights. We have adopted the new revenue standard on a cumulative basis and not stand, as you know, done a comparative restatement for the past fiscal. So therefore, the last year's historical numbers have not been restated. And this is largely for the reason that if you really look at it, it is more a presentation issue across lines and at a net level there is no difference to the bottom line. But we've always done historically as well is that we've kind of had a non-IFRS metric revenue less service cost, which used to largely be reflecting the true value addition that we believe we do as a travel service provider by adjusting any promotional expenses, which were netted off from revenue and also kind of importantly deducting cost of services, where we kind of take on a primary oblique or a principal position versus an agency position. The adjusted revenue that we have now started reporting as part of our non-IFRS financial measure continues to be like-to-like with the revenue less service cost. And therefore, we believe that's a good measure to track the growth in revenues for us. As to the composition of this $92 million, and whether this will continue to keep increasing over the coming quarters, difficult to call that out. As you would see, over the last few quarters, we have been optimizing our marketing and promotional expense overall and at least as a percentage of gross bookings, these expense have been coming down on a year-on-year basis. If that continues, we believe these numbers or the adjustments should perhaps start, kind of, getting smaller in size. But also factoring in the rationale that we're kind of continuing to be at a high-growth company will have to kind of [indiscernible] the trends for a couple of quarters before we can give out a longer-term trend over this.

Got it. Thank you so much.

And I'm showing no further questions at this time. I'd like to hand the call back over to management for any closing remarks.

Thank you, everyone for joining our call this morning. We certainly look forward to speaking with each and every one of you very soon. And that concludes our call for today.

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