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MakeMyTrip profits plunges 68%, Covid-19 second wave threatens further damage

MakeMyTrip reported a net loss of $9.2 million in the fiscal year ended March 2021, compared to a net loss of $86.5 million in the previous year. In line with the results of other travel ticketing platforms, the Gurgaon-based firm suffered a loss primarily due to the continued impact of the COVID-19 pandemic which led to travel restrictions and nationwide lockdown.

The platform’s revenues slipped to $163.4 million as of FY21, from $511.5 million as of the end of FY20, the company’ financial results said. Overall, the company’s operating loss was $18 million for FY21 versus a loss of $69.9 million for FY20. With the second wave of COVID-19 going on, the company said that it is unsure of the extent of the effects of its effects in terms of the result of operations, cash flows and growth prospects.

Business Vertical Results

Air ticketing: Revenue from MakeMyTrip’s air ticketing business decreased by 67.3% to $57.0 million in the year ended March 31, 2021 from $174.4 million in the year ended March 31, 2020. The decrease in the number of air ticketing flight segments year over year was primarily due to the continued impact of the COVID-19 pandemic, including lower travel demand beginning in March 2020 and travel restrictions and nationwide lockdown orders implemented in India in March 2020

Hotels and Packages: Profits from the hotels and packages business decreased by 71.2% to $68.0 million in the year ended March 31, 2021, from $235.8 million in the year ended March 31, 2020. Here too, Covid-19 was cited as the main reason behind the plummeting profits.

Bus Ticketing: Revenue from the ticketing business decreased by 61.7% to $24.9 million in the year ended March 31, 2021, from $65.0 million in the year ended March 31, 2020

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Key Takeaways

To combat the effect of Covid-19, MakeMyTrip reduced outsourced teams: Due to Covid-19, MakeMyTrip recorded a significant decrease in operating expenses due to a decrease in payment gateway charges and outsourcing fees as a result of fewer bookings. “We have also significantly reduced our outsourced teams at our call centres and various other general and administrative expenses in response to market conditions, which led to further decrease in our operating expenses,” the results said.

Salaries were reduced for managing personnel expenses: In the results, MakeMyTrip informed that personnel expenses decreased by 18.6% to $105.7 million in FY21, from $129.8 million in FY20, due to cost-saving measures including salary reductions.

Witnessed recovery with vaccine rollout: With the commencement of a phased rollout of vaccines in India from January 16, MakeMyTrip witnessed significant recovery in domestic travel demand, with significant sequential quarter on quarter improvements across all lines of business. During the earnings call with investors CEO Deep Kalra said that post the lockdowns and COVID restrictions, demand for leisure destinations such as Goa and Dehradun increased.

Expecting modest results for Q1 of fiscal 2022: With the second wave of COVID-19 pandemic, MakeMyTrip expects a greater effect on their finances in the Q1 of FY22 year as several state governments in India have imposed lockdowns and travel demand has been significantly impacted during April and May 2021. The company is optimistic about an improvement in the second quarter of FY22.

Efforts to expand into the Middle East market: CEO Deep Kalra informed that MakeMyTrip is now live with Arabic language for its flights and hotel products on both desktop and mobile web. “The multi-lingual content has helped us build vernacular SEO pages and acquire more Arabic-speaking travellers. Soon, we plan on expanding our Arabic offerings to our mobile apps and other channels. Our app downloads and new users are increasing gradually in the region. We believe our investment in this region today will help us capitalize the demand pick up as the market picks up post-COVID,” he added.

State Road Transport Corporations have increased bus seat inventory: With Covid-19 and the push for digitisation and contactless ticketing, CEO Deep Kalra said that State Road Transport Corporations or SRTCs have increased seat inventory on its distribution platform. “In fact, SRTC inventory available for distribution is now 35% greater than pre-pandemic days, giving us sizable long-term headroom for growth as this bus segment is still largely underpenetrated online,” he had said.

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Financial highlights for Fiscal 2021

  • Revenue was $79.2 million for Q4 FY21 and $163.4 million for FY21
  • Gross bookings reached $759.2 million in Q4 FY21 and $1,635.4 million in FY21
  • Air ticketing revenue improved to $24.2 million in Q4 FY21 versus $18.2 million in Q3 FY21
  • Hotels and packages revenue improved to $38.1 million in Q4 FY21versus $24.4 million in Q3 FY21
  • Bus ticketing revenue improved to $11.8 million in Q4 FY21versus $10.1 million in Q3 FY21
  • Results from operating activities were a loss of $67.7 million for FY21 versus a loss of $429.4 million for FY20

Earnings | Investor’s call

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