MakeMyTrip Limited (MMYT) Q2 2026 Earnings Call Transcript

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Overview

The earnings call highlights strong growth in international air ticketing and hotel revenue, positive cash flow, and a robust cash position. Despite increased marketing expenses, margins are stable, and the company is optimistic about GST benefits boosting demand. Although no stock repurchase occurred, the extended buyback program is positive. Guidance for 20% growth in adjusted margins and expansion in ancillary services are promising. While there are concerns about negative net income due to finance costs and vague management responses, the overall sentiment is positive, supported by optimistic market growth prospects and strategic initiatives.

Key Financial Performance

Adjusted Operating Profit $44.2 million, growth of 18% year-on-year. Reasons: Positive consumer sentiment towards travel, high propensity for experiential getaways, and short breaks.

International Air Ticketing Revenue Grew by over 29.6% year-on-year in constant currency terms. Reasons: Significant growth opportunity in international outbound travel from India, underpenetrated online segment.

International Hotels Revenue Grew by over 42% year-on-year. Reasons: Rising air connectivity and accelerated shift from offline to online travel purchasing behavior.

Hotels and Packages Adjusted Margin Growth of 21.6% year-on-year in constant currency. Reasons: Strong demand for short holidays and weekend getaways, robust growth in corporate hotel segment.

Bus Ticketing Adjusted Margin Growth of 44.1% year-on-year in constant currency. Reasons: Strong inventory addition, festive demand, and onboarding of state transport corporations.

Air Ticketing Adjusted Margin $102.8 million, growth of 10.6% year-on-year in constant currency. Reasons: Maintained 30% market share in domestic air market, faster growth in international air ticketing business.

Others Category Adjusted Margin $20.5 million, growth of 29.7% year-on-year in constant currency. Reasons: Growth in ancillary services such as travel insurance, ForEx, and other transport services like cabs and rails.

Cash and Cash Equivalents $835 million, increase of $31 million over the previous quarter. Reasons: Operational performance and disciplined financial management.

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Operating Highlights

AI-powered conversational travel assistant Myra: Launched in August 2025, available in English and Hindi with plans to expand to more Indian languages. It has scaled to over 25,000 conversations daily and is enhancing user engagement with 35% of travelers engaging up to 90 days before their trip.

GenAI-powered presales chatbot for cabs: Acts as an information provider and recommender, driving high conversion rates compared to traditional agent-led assistance.

GenAI voice agent for flights and hotels: Handles customer queries via calls, offering resolutions in the same call. Integrated with telephony systems to handle complex queries like date changes and cancellations.

International air ticketing revenue: Grew by over 29.6% year-on-year in constant currency terms, outpacing industry growth.

International hotels revenue: Increased by over 42% year-on-year, with international business now contributing 28% to overall revenue, up from 25% last year.

Phu Quoc, Vietnam holiday packages: Launched curated packages with exclusive direct flights starting December 2025, reducing travel time significantly.

Adjusted operating profit: Reached $44.2 million, an 18% year-on-year growth.

Accommodation business: Delivered 18% volume growth year-on-year, with 95,000+ accommodation options across 2,000+ cities in India.

Bus ticketing business: Strong growth with all regions growing 20%+ year-on-year, supported by inventory additions and state transport partnerships.

AI integration: Focused on enhancing customer experience and productivity through AI, including Myra and GenAI-powered tools.

Expansion in Tier 2 and Tier 3 cities: Voice-first engagement strategy with Myra, achieving 50% higher voice adoption in these regions compared to metros.

Corporate travel growth: Active corporate customer count on myBiz and Quest2Travel increased significantly year-on-year.

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Risk or Challenges

Geopolitical tensions and external events: The Pahalgam terrorist attack and Ahmedabad airplane crash negatively impacted consumer sentiment for travel, particularly leisure travel.

Domestic aviation supply constraints: Supply-side constraints in the domestic aviation market led to slow recovery and a 3% year-on-year decline in domestic air passenger growth.

Excessive rainfall in North Indian states: Regions like Jammu & Kashmir, Ladakh, and Himachal Pradesh experienced degrowth in the 20s percentage range due to excessive rainfall, impacting travel demand.

Foreign exchange losses: A sharp weakness in INR versus USD resulted in a foreign currency loss of $14.3 million during the quarter.

Interest costs from convertible notes: Interest costs of $28.3 million were recognized due to zero-coupon convertible notes, impacting reported profitability despite no actual cash outflow.

Seasonal and macroeconomic challenges: Q2 is a seasonally slow quarter, and weak sentiment from Q1 carried over, further impacted by macroeconomic conditions like excessive rainfall.

Short-term domestic air market challenges: Domestic air market growth is hindered by supply issues, though expected to improve in H2.

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Guidance & Outlook

International Air Travel Growth: The company sees significant growth opportunities in international outbound travel from India, which is underpenetrated from an online perspective. International air ticketing revenue grew by over 29.6% year-on-year in constant currency terms in Q2 fiscal year '26, outpacing industry growth.

International Hotels Revenue: International hotels revenue grew by over 42% year-on-year, with international business now contributing 28% to overall revenue, up from 25% last year.

Macroeconomic Impact on Travel: Recent fiscal and monetary policy measures, including GST rate rationalization, income tax cuts, and interest rate reductions, are expected to boost disposable income and discretionary spending. Analysts estimate these measures could unlock $3 billion to $3.5 billion in additional consumer spending in the latter half of fiscal year '26, supporting travel market growth.

AI-Powered Travel Assistant (Myra): The company launched the beta version of its AI-powered conversational travel assistant, Myra, in August 2025. Plans include expanding Myra to more Indian languages and enhancing its capabilities to transform travel planning and booking experiences.

Domestic Air Market Outlook: The domestic air market is expected to recover in H2 fiscal year '26, with daily departures projected to cross 3,200, similar to Q3 of last year. Long-term outlook for the Indian aviation sector remains robust.

Accommodation Business Growth: The accommodation business, including hotels, homestays, and holiday packages, delivered 18% volume growth year-on-year in Q2 fiscal year '26. The company continues to expand its supply base, now offering 95,000+ accommodation options across 2,000+ cities in India.

International Hotel Inventory Expansion: The company is increasing its hotel inventory across international destinations of interest to Indian travelers, focusing on enhancing relevance for Indian travelers by highlighting food options and other preferences.

New Holiday Packages: The company launched curated holiday packages to Phu Quoc, Vietnam, with exclusive direct flights starting December 9, 2025, reducing travel time and making the destination more accessible for Indian travelers.

Bus Ticketing Growth: The bus ticketing business witnessed strong growth in Q2 fiscal year '26, with all regions growing 20%+ year-on-year. Inventory addition is expected to continue in the upcoming quarter due to increased festive demand and GST reductions for bus procurement.

Corporate Travel Growth: The corporate travel business is witnessing strong growth, with active corporate customer counts increasing significantly year-on-year for both myBiz and Quest2Travel platforms.

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Shareholder Return Plan

Share Repurchase Program: On 2nd July, 2025, the company completed the repurchase and cancellation of 34.4 million Class B shares. This was funded through a capital raise of approximately $3.1 billion, which included a mix of primary offering of ordinary shares and zero coupon convertible senior notes maturing in 2030. The entire net proceeds from the offerings were used for this repurchase.

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Key Q&A

Q:What is the current status of air capacity issues and demand expectations for the December quarter?

A:Domestic air market daily departures are expected to return to 3,200+, similar to last year, despite a 2-3% dip earlier. International air departures have increased, particularly to Thailand and UAE. Domestic constraints remain, but international air is performing well.

Q:Are GST benefits expected to improve travel demand for the December quarter?

A:Management is optimistic about GST reductions boosting travel demand due to increased disposable income. However, advanced bookings are limited, and travel demand typically picks up after Diwali. The GST reduction benefits bookings below INR 7,500, which is significant for the Indian market.

Q:Why have marketing expenses increased to 5.2% of gross bookings?

A:The increase is attributed to improved segment margins and weaker seasonality in Q2. Margins have strengthened year-over-year and quarter-over-quarter, aligning with prior expectations.

Q:Is the improvement in margins seasonal or sustainable?

A:The improvement is partly seasonal and influenced by a reduced mix of air travel, which has lower margins. If air travel rebounds, blended margins may decrease slightly, but overall margins are expected to remain stable.

Q:Has the company repurchased any stock this quarter?

A:No stock was repurchased this quarter. The buyback program has been extended to March 2030, with an increased limit of $200 million and annual limit raised to $100 million. Convertible notes maturing in 2030 are also included in the program.

Q:Does the buyback program include Class A and Class B shares?

A:The program includes Class A shares and convertible notes but excludes Class B shares held by a strategic investor. Any repurchase of Class B shares will be specifically announced.

Q:Will the company report negative net income due to increased finance costs?

A:Yes, the company expects to report negative net income due to notional interest costs from zero-coupon bonds, but this does not affect free cash flow.

Q:What is the medium to long-term growth outlook for the company?

A:The company aims for 20% growth in adjusted margins, leveraging its diversified travel services. Growth may accelerate if domestic air improves, but the focus remains on maintaining 20% growth despite market challenges.

Q:How does the company view competition and new entrants in the travel industry?

A:Management welcomes increased investment in the travel industry and believes it drives market growth. They emphasize their established brands and consistent investment in online penetration, which positions them well against competition.

Q:What is the guidance for 20% growth based on?

A:The 20% growth guidance is based on adjusted margins, reflecting OTA revenue metrics globally. Adjusted margin growth is expected across all segments.

Q:Why is there a discrepancy in hotel booking metrics?

A:Foreign currency translation impacts reported revenue. Adjusted margin growth for standalone hotels was 23.1%, showing strong performance despite currency effects.

Q:What new revenue streams are being explored in ancillary services?

A:The company is expanding ancillary services, including experiences, visa offerings, and intercity cabs. Ancillary services grew by 29.7% this quarter.

Q:What are the early trends in the AI assistant and its impact on metrics?

A:The AI assistant, Myra, is in beta testing with encouraging insights. It aims to enhance trip planning and customer interaction, with potential to improve new user acquisition and repeat rates. AI is also improving post-sales and conversion rates in hotels.

Q:What is the profitability outlook for the next 1-3 years?

A:The focus is on driving growth, particularly in domestic air travel. Longer-term, profitability may exceed the current 1.8%-2% range if the mix of accommodation increases.

Q:Review of Unclear Management Responses

A:Management avoided providing specific details on future bookings due to the short advanced purchase window in India. They also used vague language when discussing the impact of competition and new entrants, emphasizing historical resilience without concrete data. Additionally, the response on AI assistant metrics lacked detailed quantitative insights, focusing instead on qualitative observations.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

MMYT Transcript

MakeMyTrip Limited (MMYT) Q4 2026 Earnings Call Transcript

Positive5-19

The earnings call highlights strong financial performance with a 20% revenue increase, 50% net profit growth, and improved operating margins. These positive financial metrics, combined with robust travel demand and efficient cost management, suggest a favorable market reaction. The absence of strategic, risk, and return updates in the call does not detract from the strong financial results, leading to a positive sentiment prediction for the stock price.

MakeMyTrip Limited (MMYT) Q3 2026 Earnings Call Transcript

Positive1-21

The earnings call highlights strong growth in international and domestic travel, boosted by macroeconomic measures and strategic product developments like Myra. Despite some challenges like GST impacts, the overall sentiment is positive with growth in key segments such as air ticketing and hotels. The Q&A session provided clarity on risks, with stable margins and no significant financial downturns. Overall, the strategic initiatives and market opportunities suggest a positive outlook for stock movement.

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MakeMyTrip Limited (MMYT) Q1 2026 Earnings Call Transcript

Positive7-22

The earnings call summary indicates strong financial performance with record high adjusted operating profit and significant revenue growth. The Q&A section reveals confidence in achieving growth targets and improving consumer sentiment. Management's optimistic outlook on international growth and ancillary services, along with a focus on AI initiatives, suggests positive future prospects. While there are minor concerns, such as unclear buyback policy and temporary air supply issues, the overall sentiment remains positive, likely leading to a stock price increase in the short term.

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MakeMyTrip Limited (MMYT) Q2 2026 Earnings Call Transcript