Online travel booking platform MakeMyTrip has turned profitable in the third quarter of financial year 2021.
Despite the ongoing pandemic, the company has been recovering on account of domestic travel bookings and cost optimisation. It has also become cash flow positive in the reported quarter, witnessing $9.5 million in cash reserves.
The company reported adjusted operating profit of $5.2 million in Q3 FY21, up from an adjusted operating loss of $12.9 million in the previous quarter, reflecting a sequential improvement of $18.1 million. In comparison, the company’s adjusted loss in Q3 FY20 stood at $24.4 million.
Deep Kalra, chairman, MakeMyTrip, said, “MakeMyTrip continues to stay focused on business revival led by gradual recovery in India’s domestic travel demand, although revival of international travel demand is likely to take much longer. In addition, our cost optimization initiatives have helped us to deliver on our strategic goal of achieving adjusted operating profitability during the reported quarter.”
Group CEO Rajesh Magow mentioned during the earnings call that the domestic travel bookings for the quarter was driven by premium and ultra premium hotel bookings. Northern and northeastern locations were a favourite among travellers, he said, adding that volumes came on the back of leisure focussed destinations like Goa too. International travel was mainly to Maldives and Dubai, he said.
The revenue for the reported quarter plummeted 61.3% year-on-year to $56.8 million from $146.9 million. However, this is still an improvement from the revenue of $21.2 million in the quarter ended September 2020.
On a quarter-on-quarter basis, gross bookings improved 181.5% in constant currency, touching $598.8 million in Q3 FY21, compared to $213 million in Q2 FY21. Air ticketing revenue stood at $18.2 million in Q3 versus $10.9 million in Q2. Hotels and packages revenue for the reported quarter increased to $24.4 million from $4.4 million in the previous quarter. Adjusted margins for the same period increased to $25.2 million, compared to $5.5 million in Q2 FY21.
Bus ticketing revenue in Q3 surged to $10.1 million versus $2.7 million in Q2, while adjusted margin for bus ticketing in the same period increased to $9 million from $2.5 million.
Other revenue improved to $4.1 million in Q3 FY21 versus $3.1 million in Q2 FY21. Adjusted margin on the same increased to $4.1 million versus $3.1 million in Q2 FY21.
Marketing and sales promotion expenses decreased this quarter by 82.7% to $7.8 million in Q3 FY21, compared to $45 million in Q3 FY20.
“The decrease in marketing and sales promotion expenses was due to the significant curtailment of these variable costs and cancellation of all discretionary marketing and sales promotion spends such as events and brand building due to the impact of the COVID19 pandemic,” the company said.
“Our marketing expenses primarily include online video and display advertising on websites, television and in print, search engine marketing, referrals from meta-search and travel research websites and other media costs such as public relations and sponsorships,” it said.
Additionally, it had incurred customer inducement costs recorded as a reduction of revenue and certain loyalty programme costs of $14.8 million in the quarter ended December 31, 2020 and $105.0 million in the quarter ended December 31, 2019.
This quarter, the company had focussed on outreach campaigns over social media via influencers. It had relaunched membership programmes, including MakeMyTrip Black and GoTribe for GoIbibo. MakeMyTrip Black membership currently has 9,20,000 users and together with GoTribe memberships, account for one-third of the business.
The company also revamped its flight booking section on the platform, giving smoother and faster checkouts. It also launched a price lock feature, which led to improved customer retention and more bookings.
For the international markets, the company has launched the platform in Arabic language, catering to its users in the Middle East.