MakeMyTrip invests in Simplotel from its Innovation Fund; ups revenue guidance for full FY15
NASDAQ-listed online travel services firm MakeMyTrip (MMT) has picked a small minority stake in Bangalore-based travel tech startup Simplotel Technologies Private Limited (Simplotel) for an undisclosed amount. This is its maiden investment from the recently created Innovation Fund.
The firm said it plans to make further investment by June 2015, which will increase its total equity shareholding in Simplotel to approximately 25 per cent. Simplotel aims to provide hotels with responsive and optimised websites along with booking engines.
"We believe our investment in Simplotel will help promote the online distribution of accommodation inventory in India," said MakeMyTrip.
MMT had said in September 2014 that it is creating an internally funded Innovation Fund, through which it will invest up to $3 million in startup or early-stage companies in the travel technology space.
Simplotel was founded in August 2013 by Tarun Goyal (also CEO). Later Savan Bellur joined as a co-founder and CTO.
Before starting Simplotel, Goyal was VP products at lifestyle e-tailer Myntra and prior to that had worked at Expedia and Amazon among others firms. He is an electronics engineer from LD College of Engineering (Ahmedabad) and has an MBA degree from University of Maryland.
Bellur, a computer engineer from Visvesvaraya Technological University with executive MBA degree in marketing from IIM Calcutta, has previously spent around nine years with McAfee.
MMT reported a 22.9 per cent (same in constant currency) rise in revenues less service costs or net revenues to $35.1 million for the third quarter ended December 31, 2014 over the year-ago period.
Overall revenues rose 8.2 per cent (8.7 per cent in constant currency) to $75.6 million in the quarter while gross bookings, which represent the total amount paid by a customer while booking on its platform, rose 34.6 per cent to $419.1 million.
Of the total net revenue, about 45 per cent was contributed by hotels and packages. The net revenue in this category increased by 43.5 per cent to $15.7 million in the quarter ended December 31, 2014 from $10.9 million in the same period last year. This was due to an increase in gross bookings of 34.7 per cent and a 46.5 per cent increase in the number of transactions year over year, driven by strong growth in its standalone hotel booking business, partially aided by its acquisition of Easytobook Group in February 2014.
The net revenue from air ticketing category increased 10.1 per cent to $18.1 million in the quarter ended December 31, 2014 from the same period last year. This was primarily due to an increase in gross bookings of 34.6 per cent. The transaction growth in the fiscal third quarter of fiscal year 2015 was largely driven by special fares offered by Indian domestic carriers and the ongoing shift from offline to online booking channels in both its domestic and international air ticketing business.
Operating loss almost tripled from $1.17 million to $2.9 million while adjusted operating profit (excluding employee share-based compensation costs, merger and acquisitions related expenses and amortization of acquisition related intangibles) inched up to $1.4 million from $1.3 million.
Net loss was $3.6 million as against loss of $1.6 million in Q3 FY14 while adjusted net profit (excluding employee share-based compensation costs, M&A related expenses, amortization of acquisition related intangibles, net change in value of financial liability in business combination, and income tax benefit) declined to $0.3 million as against $1.2 million in the year-ago period.
The firm's net margins from air ticketing and hotels declined while packages business has increased during the period. For air ticketing it fell from 7.3 per cent to 6 per cent while that for hotels & packages it has declined from 12.6 per cent to 13.4 per cent. Overall blended margins has shrunk from 8.8 per cent to 8.1 per cent.
"In the fiscal third quarter of 2015, MakeMyTrip delivered strong operating and financial results despite some limited service disruption in the Indian domestic air industry in December," said Deep Kalra, chairman and group CEO.
Citing fiscal year 2014-15 outlook, the company said that the results achieved in the fiscal first three quarters, within both air ticketing and hotels and packages businesses, increases its confidence. It has revised the range of fiscal year 2015 annual revenue less service cost guidance with a growth of 30-31 per cent, which is in the range of $137 million to $138 million, the company said.
In October it had given net revenue guidance of $136 million to $138 million with growth range of 28-30 per cent, after revising it upwards from the previous net revenue guidance of $133 million to $136 million with growth range of 25-28 per cent.