Good day ladies and gentlemen and welcome to the MakeMyTrip Limited Fiscal 2019 Q4 and Full Year Earnings Call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] And as a reminder, this conference call is being recorded. I'd now like to turn the conference over to Jonathan Huang, Vice President of Investor Relations. Please go ahead.

Thank you. Greetings and welcome everyone to MakeMyTrip Limited fiscal 2019 fourth quarter and full year earnings call. I would like 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. These statements are not guarantees of future performance and are subject to inherent uncertainties and 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 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 20th, 2018. Copies of these filings are available from the SEC or from the company's Investor Relations department. Today, we are joined by Deep Kalra, MakeMyTrip's Founder Chairman and Group CEO; Rajesh Magow, Co-Founder and CEO, India; and Mohit Kabra, MakeMyTrip's, Group CFO. And now allow me to turn the call over to Deep to begin today's discussion.

Thank you, Jon and welcome everyone to our fiscal 2019 fourth quarter and full year earnings call. I would like to begin by commenting on the recent announcement regarding Ctrip who by virtue of acquiring Naspers' holding in MakeMyTrip will become our single largest shareholder. We believe this transaction which is subject to regulatory approval demonstrates Ctrip's strong conviction of our growth prospects, appreciation of our achievement, and confidence in our team's execution capability. The enhanced partnership has the potential to widen our competitive advantage in outbound travel and scope to foster greater travel and tourism between our two countries. We are excited about opportunities for greater collaboration, especially as we endeavor to provide a best-in-class experience along with an increasing choice of global flights, hotels, and other travel services for our Indian customers. I would also like to reiterate our optimism for MakeMyTrip's long-term growth opportunities. To begin with India is forecasted to enjoy the fastest-growing GDP when compared to other large economies globally for the foreseeable future. The country's much improved digital ecosystem coupled with a very young population is helping quickly change consumers' buying behavior towards convenient online platforms. According to a recent McKinsey report, data costs in the country have fallen by 95% since 2013 and total online users will grow by another 40% to cross 750 million by 2023, driven by the continued adoption of smartphone usage. In terms of travel growth, industry experts have forecasted India to become the third largest aviation market by 2022 and there are plans to double the number of operational airports over the next 20 years. Similarly, the country's accommodation and intercity bus bookings are expected to keep moving online rapidly given the low online booking penetration levels today. While our long-term growth opportunities remain intact, I'd like to…

Thanks, Deep. Thanks, Deep, and hello, everyone. I would like to begin by reviewing our full fiscal year 2019 strategic goals and achievements while later Mohit will share a more detailed update on our fourth quarter financial performance. At the beginning of the last fiscal year, we set out to drive rapid online growth while achieving more efficiencies in marketing and sales promotion spend. This included investing for growth in key segments including domestic hotels outbound flights and hotels and bus ticketing. We also wanted to extend our already strong market share in mature segments like domestic air ticketing by continuing to offer better product experiences with rapid innovations to make travelers' lives easier and frictionless. As you can see from our full year results, we've been successful in achieving our growth objectives, widening our leadership position and also narrowing operating losses meaningfully for the fiscal year, while continuing to invest for the long-term growth. For our full fiscal year 2019, the MakeMyTrip Group achieved gross bookings of over $5.4 billion representing a constant currency growth of over 28%. Our adjusted revenue grew by over 26% on a constant currency basis to more than $673 million. The growth and scale achievements and enhanced marketing efficiencies have allowed us to reduce full year adjusted operating losses from $154.8 million in fiscal year 2018 down to $98.8 million in fiscal 2019, a reduction of over $56 million year-over-year. During the past year, we also logged more than 25.9 million room nights stayed in our stand-alone online hotels business, a growth of over 23%. From a supply standpoint we have expanded the choice and selection for customers to over 61,500 properties bookable within India which includes 16,000 alternative accommodations. During fiscal 2019 alternative accommodations have been a growth focus for us as well…

Thank you, Rajesh. The reported fiscal Q4 marked the completion of our second full fiscal year of operations post the Ibibo merger. Lastly, most would recall, at the beginning of the current fiscal year, we had called out that during the first half of 2019 fiscal year we wanted to focus on driving operating efficiencies and then focus on accelerating growth in the second half of the year. More specifically, we had set out to reaccelerate year-on-year growth within our stand-alone hotel room night business in the second half of the year, while lowering our adjusted operating losses via more efficient marketing and sales promotion spend. I am pleased to report that we have done well on both counts. Stand-alone online hotels business year-on-year room nights growth which stood at 18.1% in Q1 and 21.8% in Q2 has accelerated to 27.1% in Q3 and 27.2% in the reported Q4. At the same time, adjusted operating losses were lower at $18.4 million in Q4 compared to loss of $23.5 million in the same quarter a year ago and a $22.2 million loss reported in the previous quarter. With that, let me now share financial highlights by business segments beginning with the air ticketing business. In the reported quarter, percentage segment growth in the domestic air market had slipped significantly to about 5% level, due to the release in flights being operated by Jet Airways and our growth has been in line with the industry. At the same time, we remain focused on driving up growth in the international segments, where we achieved about 38.8% year-on-year growth, which has helped us post about 9.5% overall growth in the air ticketing business. Our adjusted revenue growth was even better at 16.8% year-on-year in constant currency terms. Next, I would like to discuss the…

Thank you [Operator Instructions] And our first question comes from Sachin Salgaonkar of Bank of America. Your line is now open.

Hi. Thank you for the opportunity. I have a couple of questions. Number one, clearly, Deep, you did highlight that given the issue associated with Jet growth might slow a bit in first half. I just wanted to understand from you that would we see a derivative impact on the hotel growth on the back of a slowing air growth? And again, you guys did a great job in terms of marketing spending as a percentage of gross bookings below 10%. The question out there is, is this because the growth was slowing in the sense that there – you always knew that the impact of Jet is coming? And is this sustainable beyond sort of a slower growth in first half i.e. could we see marketing spend as a percentage of gross booking continuing to stay sustainably below 10%? So that's first question. And second question is for Mohit. So Mohit with debt here sort of a one-off in the quarter associated with impairment in respect to an equity account investee, I just wanted to understand what it is and if there are any other one-offs in the quarter?

Sure, sure. Sachin let me take the first part of the first question. So, I think as you know cross sell on the hotels side cross sell of hotels on air funnel is not that high in the entire Indian market and we've been all pushing it for a while. So we don't therefore expect a very high derivative or a consequent effect on the hotel side of the business. The hotel side of the business is largely still low underpenetrated. There are some rationalization of commissions that has been happening, which is also evident. But other than that, we expect only domestic air to be taking the big hit. Our other lines of business accommodations both in the country outside as Mohit called out in his part of his script that international air itself was able to grow handsomely and therefore pick-up the overall booking. And I think as you are aware a lot of the flights launched now already have been taken and the others are also being allocated out. So even that we expect that to come back to normal as soon as possible, but hotel impact we think will be minimal on this due to the season.

Okay. Got it. I just had one small follow-up for Deep, possible to directionally help us with the mix between domestic and international air?

Maybe I can kind of add color over there. So, if you look at it in terms of revenue mix now international here almost account for about a-third of the revenue mix. So it's been kind of growing steadily over the last couple of years as we have been calling out and the growth kind of continues to sustain in the 30s for us. So, therefore, I think really the whole point that Deep was making that while, yes even in the reported quarter and more so in the forthcoming quarter we'll see more and more impact of the capacity being -- capacity getting depleted on the domestic side, but hopefully we can continue to shore up growth with continued high growth in the international segments.

Got it.

Thank you…

I think your second question, if I got it right, Sachin was if we'll be able to sustain the marketing and promotion expenses at least sub-10% level. Again we -- while directionally, yes, but I would bake in a little bit of seasonality. As you know even in the last fiscal like this kind of obviously reported and the year before that, seasonality does tend to make a little bit of difference in terms of overall spend and they're generally higher in Q1 and Q3 and slightly lower in Q2 and Q4. But yes I think we continue to keep the unit level efficiency on marketing and promotional expense going. And if they kind of closing at sub-10% levels by the end of this year, we would expect to close even better by the end of the next fiscal. On the other one, the impairment question that you had asked is what one investment in a company called HolidayIQ that we had invested about four years back. A large part of the investment was more with the perspective of shoring up our entire user generated content linked to growing these hotels business in a big way. I think fully leveraged direct investment doing so in the initial years of building the overall user generated content on our platform. If you would recollect, we used to earlier likely have TripAdvisor ratings and very few reviews and more importantly very few Indian reviews per se or Indianized content per se on the hotels funnel. That changed significantly post the investment. However, considering that over the last year or two, we have been going more and more organic and relying much lesser on this invested company in terms of shoring up the content going forward. I think that we're finding the going a little difficult, and therefore, keeping in their future focused on discounted cash flows, we've decided to take a haircut on the investment.

Okay. Very clear, Mohit. Thank you.

Thank you. [Operator Instructions] And our next question comes from Gaurav Rateria from Morgan Stanley. Your line is now open.

Hey, congrats guys on a good execution in a challenging environment. Two questions. Firstly, we have seen a steady pace of increase in the number of customers every quarter by approximately two million. What really needs to happen for that to really accelerate and go to the next level? What would be that inflection point from your point of view?

Hi, Gaurav this is Rajesh here. Maybe I can take that. So, I think it's a fair observation. What we've been trying to do as probably we've also spoken and shared in the past is that one focus area is to continuously keep acquiring customers including penetrating deep into India into tier two, tier three cities. And in fact a lot of the users have been of late in the past year or so or two years we've been actually acquiring from -- through various channels. But they've been coming from -- as the smartphone penetration is going deeper and deeper they've been coming from tier two, tier three cities. So that focus is likely to continue. We'll keep getting more and more growth coming from the smaller cities. And some of those drivers for that growth also is our focus on high frequency use cases both in travel as well as some of the non-travel, but complementary areas that we have started focusing on even more. High frequency use cases for travel would be transport use cases effectively whether it is local bus, but was always the focus but even more on MakeMyTrip and Goibibo platform as well as train, which is like a bigger growth driver to acquire new users as well. And the last but not the least, we also launched experiences section as you would have noticed. And there also the idea is to – one, for our existing customers we expand our offerings and get some more stickiness because of that and more frequency of the use of the app. And also given that it also includes local activities, local experiences of different kinds also acquire new users. So, I guess, that has been the focus area just from a growth standpoint and we'll continue to keep moving on that side -- on that front.

Gaurav, just to add, one of the rationale for kind of not purely accelerating new customer acquisition over the last say four to six quarters resulted in the fact that we have been wanting to drive repeats much better on the already largely acquired customer base of about 35 million plus a couple of quarters back. And as we're kind of continuously improving repeat rates over there for what various loyalty program, et cetera, once we believe we have done -- we have pretty their desired escape in terms of driving repeat rates on the existing cohorts that probably will be the time that we kind of again get into like do some more acquisition in a significant manner like we used to do probably about I think two years back. So I just thought I'd call that out.

Sure. Just two more questions. Firstly, if you can give an update on the competitive intensity in the various segments where we stand today, let's say, compared to last time when we spoke. And secondly, the India standalone business for the full year volume growth was pent up quite a bit in the second half. On a steady-state basis, how should we think about growth in volumes in India stand-alone on a sustainable basis given the penetration rates are still very low? Thank you.

Yes. So Gaurav on the competition activity in the marketplace, I think, I would say that it continues to be the same as it was in the past in the last quarter. I mean, there hasn't really been any unusual kind of activity that has happened or that we noticed apart from within the quarter sometimes you would see some kind of aggressive promotional activities and all of that, which I think in the overall scenario almost has become like business as usual now. But nothing out of the routine as compared to the last quarter. So it continues to be like that. Of course, there is new probably set of players who would be wanting to get into travel some will be horizontal, et cetera. But that again it's more focused on transport than anything else at least at this point in time. So that would be the comment on the competition activity. And now as far as the – sorry, what was your second question, second part of this question?

The growth in the India standalone, yes.

Yes. So like you rightly pointed out, I mean there are many segments that are still at early stage of penetration. And so we definitely continue to keep -- we should hope that we will continue to keep seeing the growth come to a segment. I mean, especially outbound segment is growing really fast now definitely beginning to pick up in terms of just very robust rate of growth. Domestic hotels should continue to keep growing. And so whichever is the early-stage penetration, I think we should just continue to keep seeing the growth trends there.

Thank you.

Thank you. And our next question comes from Vijit Jain from Citi. Your line is now open.

Yes. Hi, Mohit. I have just two questions. One is could you in some way quantify the impact that cancellations, et cetera at Jet and Spice in 4Q would have had on your cost revenue? So was that material in any way? And my second question is just like you broke air revenues, would you break hotel revenues into branded and budget?

Hi Vijit, I'll take that. Just -- the first part of the question and then the impact of cancellation?

Yes, so -- yes.

You wanted to add something to it?

No, no, no. That was my question.

Yes. So, Vijit, when it comes to the cancellations being on the higher side in the reported quarter and potentially it will be even higher in the forthcoming quarter. What we're kind of doing more as a customer gesture or customer-friendly gesture is, not to levy any cancellation charges on flights which have kind of been canceled by the airline's fault. So clearly there is some impact in terms of the revenue is kind of going down because we're not kind of picking up cancellation charges on these flights et cetera by default. So much, so that when it comes to the canceled flights on account of Jet Airways pulling down or suspending their operations, there we have also kind of gone ahead and refunded the initial service fee collected at the time of booking from the passengers. So yes, there has been a little bit of softness in the fee revenue because of this impact. But we believe, this is more like a temporal thing perhaps for a quarter or two, but not really very significant to be called out separately. The other question that I probably -- if I got it right was, if we can share some color in terms of room night growth in branded versus unbranded segment. Was that the question, Vijit?

More like revenue growth in the branded versus budget segment?

So we haven't really been calling out CAG kind of because it's a little bit difficult. Even more, it's not very harmonious in terms of being able to call out whether by target degree or by branded unbranded in the way the market is structured on the hotels side. But needless to say, what we called out, if you would recollect last quarter was that on hotel, more from a unit numbers point of view, you kind of turn positive across the hotel segment.

Okay.

And that is one of the two reasons that -- and this is across the board including the unbranded or the budget segment. So that's a -- a healthy indicator and that is what has been driving a large part of the operational improvement as well.

Okay. Thank you.

Thanks.

Thank you. And I'm showing no further questions at this time. I'd like to turn the conference back over to Jonathan Huang for any further remarks.

Thank you everyone for joining our conference call today. We look forward to speaking with all of you soon and hope you have a nice day. Thank you.

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