Earnings Call Transcript - MMYT Q3 2025

Vipul Garg, Vice President, Investor Relations

Good evening everyone. We will just wait for one more minute for everyone to join in and then we start. Hello everyone. I am Vipul Garg, Vice President, Investor Relations at MakeMyTrip Limited and welcome to our Fiscal 2025 Third Quarter Earnings webinar. Today's event will be hosted by the company's leadership team comprising Rajesh Magow, our Co-Founder and Group Chief Executive Officer; and Mohit Kabra, our Group Chief Financial Officer. As a reminder, this live event is being recorded by the company and will be made available for replay on our IR website shortly after the conclusion of today's event. At the end of these prepared remarks, we will also be hosting a Q&A session. Furthermore, certain statements made during today's event may be considered forward-looking statements within the meaning of Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance, are subject to inherent uncertainties, and actual results may differ materially. Any forward-looking information relayed during this event speaks only as of this date and the company undertakes no obligation to update the information to reflect changed circumstances. Additional information concerning these statements is 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 July 2, 2024. Copies of these filings are available from the SEC or from the company's Investor Relations Department. I would like to now turn the call over to Rajesh. Over to you, Rajesh.

Rajesh Magow, Co-Founder and Group CEO

Thank you, Vipul. Welcome everyone to our third quarter call for fiscal 2025. Happy to start the call by sharing that Indian travelers continue to demonstrate their eagerness to travel and experience new horizons in this seasonally strong quarter for leisure travel. A confluence of rising income levels and changing consumer behavior to spend a bigger portion of available discretionary surplus is driving the growth for both domestic and international tourism in India. A recent survey by Visa indicates that 62% of Indian consumers plan to increase their spending on discretionary goods and services. These favorable macro trends combined with our focused executions have enabled us to outpace industry growth consistently. We are pleased to deliver strong performance across all our business segments with an accelerated year-on-year growth rate of 26.8% in gross booking value in constant currency terms during the reported quarter compared to a growth rate of 22.9% during the first half of this fiscal year. Alongside accelerated booking growth, we have also been able to drive operating leverage, and the adjusted operating profit which is at an all-time quarterly high of $46 million has registered a year-on-year growth of about 38%. On the macroeconomic front, India's GDP growth forecast reflects a positive economic outlook driven by strong domestic demand and strategic public investments. The World Bank recently said that India's growth is projected to remain steady at 6.7% a year for the next two fiscal years, beginning April 2025, making it the fastest growing larger economy in the world. India is undertaking significant investments in infrastructure to bolster economic growth and achieve its development objectives. Travel infrastructure, comprising roads, railways, and airport infrastructure, is a pivotal part of these investments, making point-to-point travel seamless, convenient, and reliable. The seamless connectivity has been one of the major reasons for the growth of travel and tourism in India and will continue to drive growth in the future, as more and more domestic and international destinations get connected. Along with domestic Indian travelers, we are seeing an increasing interest in international destinations now. In the first half of 2024, 15 million Indians traveled abroad, marking a 14% year-on-year increase and a 12% rise compared to 2019. Swift projections suggest that by 2027, India will become the world's fifth largest outbound travel market, thus presenting a huge opportunity for us. Our international outbound business continues to grow at a faster pace. For Q3 fiscal year 2025, our international air ticketing revenue grew by over 32% year-on-year, far outpacing industry growth. Similarly, our international hotels revenue grew by over 63% year-on-year, making this one of our fastest growing business segments. Let me now turn to the business segments, starting with our air ticketing business, where near-term supply challenges particularly in the domestic air market remain. Despite the slow growth in domestic air supply, we have been able to maintain our leading market share position while outpacing the overall industry growth rate backed by the under-penetrated international air segment. Our air ticketing revenue grew by 20% year-on-year in constant currency terms. In our endeavor to keep improving consumer experience, we have recently launched a very customer-friendly product feature of part payment on international air tickets, which enables our customers to get a confirmed booking by paying only a certain percentage of total fare upfront. The remaining balance must be paid either before the travel date or within 45 days of booking, whichever comes first. This will help increase affordability and address cash flow issues. We also launched value bundles for international flights including relevant fintech products such as VISA, rejection full refund, cancel for any reason, and free date change. This has provided more flexible add-ons for the customers leading to greater adoption. Our accommodation business, which includes hotels, home stays, and packages, continues to witness strong growth. We recorded 24.9% year-on-year growth in the adjusted margin on a constant currency basis. While October was a little slow due to the festivals, the season picked up significantly in November and December on the back of holiday season and MICE and wedding-related demand. We also witnessed broad-based growth this quarter. There was an uptick in demand across all price points and consumer segments and use cases. As a result, we witnessed record check-ins in the last 10 days of December during the peak holiday season. Spiritual tourism is emerging as one of the other key growth drivers of tourism in India, with new destinations getting added to the existing popular spots like Varanasi, Katra, Tirupati, Shirdi, etc., besides specific events like Mahakumbh-related demand for this segment. To cater to this demand, we have enhanced supply depth in these emerging new cities on our platform and help such travelers easily find suitable properties by highlighting key aspects such as distance from pilgrimage sites, wheelchair accessibility, availability of lifts, and vegetarian food options. These features are now integrated into our product to provide smarter, more personalized property recommendations. As a result, this segment is growing faster for us, reflecting strong customer demand and satisfaction. We are also seeing concert-driven demand across the Tier 1 and metro areas, which is a relatively new phenomenon in India. As per estimates for the recent Coldplay concert in Mumbai, around 25% of the ticket buyers were local Mumbaikers while 75% traveled from other Indian states, thus presenting a new demand use case for travel. We are also seeing good demand not only for domestic but also for international destinations, for examples, Coldplay concert in Abu Dhabi and Taylor Swift in Singapore. Another consumer segment that is showing growth promise for us is inbound, especially from the Indian diaspora. You might recall that last year we made our platform GDPR compliant, making it accessible in 150 countries. Recently, we have also enabled a multi-currency feature allowing payments in 22 major global currencies, solving an important need of these customers. I am happy to report that we have started to witness growth in inbound bookings, albeit from a small base. As part of our overall GenAI strategy, this quarter we expanded Myra our GenAI-powered chatbot for our accommodation product. Myra enhances the booking experience by handling real-time pricing, availability, and specific hotel-related queries. It complements our other generative AI capabilities, including image ordering, filters, and user view analysis helping customers find the best places to stay with ease. Our homestay business continues to scale; during the quarter, we sold over 21,500 unique properties across 920 unique destinations, with strong growth across business and leisure destinations. The demand from pilgrimage cities grew the highest on the back of increased supply in destinations like Varanasi, Ayodhya, Prayagraj, Amritsar, etc. While property ratings and reviews have always been a cornerstone of our platform, we have taken a step further by introducing subcategory ratings and summaries across key elements like amenities, food, and location. This enhancement aims to build deeper trust and transparency, especially in the non-standardized category of alternative accommodation, empowering customers to make more confident and informed choices. Our holiday packages business delivered robust performance, achieving the highest-ever gross booking number driven by strong growth in international outbound packages, with Malaysia and CIS countries witnessing 2x-order growth year-on-year and Vietnam witnessing over 70% year-on-year growth in orders. In our bus business, growth has further improved in Q3 on the back of about 15% year-on-year growth in private bus supply. Demand was buoyant in the quarter due to the festive period in October, travel for weddings, and auspicious occasions in November and the holiday period in December. As a result, market growth has been robust with occupancy rates going up by nearly 5 percentage points year-on-year. As market leader, our growth was ahead of the market resulting in share gain for us. During the quarter, we expanded our language offering in Red Bus and now offer a full-fledged booking and post-sales experience in Hindi, Tamil, Telugu, and Kannada. Our international business continues to grow well in all countries as well with a growing contribution to the overall pie. For our rail business, we continue to bring in new users to the platform besides growth in ancillary revenues primarily from the seat guarantee product. For our cabs business, we continue to scale both airport transfers and intercity cabs. During the peak season, we were able to scale our fulfillment to over 97%, thus catering to the peak demand. On the product front, we scaled the multi-city booking option for outstation cabs, enabling seamless itineraries with multiple stops during this quarter. Our corporate travel business via both platforms, MyBase and Quest to Travel is witnessing strong growth. Our active corporate customer count on MyBase is now over 64,000 compared to 56,000 customers during the same quarter last year. For Q2T, the active customer count has reached 493 large corporates compared to 334 customers in the same quarter last year. Our ancillaries business is scaling up well. We are witnessing healthy attach rates for products like travel insurance, FOREX, etc. We have launched various bite-sized insurance products to address specific customer needs, leading to an uptick in adoption. Growth in the FOREX business was driven by cross-sell campaigns, including reaching out to international flights, hotels, and holiday customers, with multiple customer-impacting funnel persuasions. Lastly, our strong performance this quarter was also supported by our marketing and customer reach strategy, with well thought-through brand campaigns featuring three films based on deep consumer insights for hotels and alternative echo users, combined with wider customer reach via effective and efficient media mix. This campaign reached over 200 million consumers across categories, leading to new user acquisition and helping us achieve our highest top-of-the-mind recall in the travel category. With this, let me now hand over the call to Mohit for the financial highlights of the quarter.

Mohit Kabra, Group CFO

Thanks, Rajesh, and hello everyone. We are pleased to report all-time new highs in quarterly gross bookings, revenue, and registered operating profit during the quarter, which was a seasonally better quarter for leisure travel. We saw strong performance across all business segments and, more importantly, from emerging pockets of demand that we have been focusing upon as well as for new services that we have been adding to our platforms in the last few years. As shared by Rajesh, the highlight of the quarter has been acceleration in bookings growth, along with improvement in operating margins in comparison with the previous quarters for the year. Registered operating profit for the quarter came in at $46 million and adjusted operating profit margin as a percentage of gross bookings came in at 1.76%, which is significantly better than 1.6% during the same quarter last year and 1.65% in the first half of this year. Moving on to our segment results, our air ticketing gross bookings for the quarter came in at $1.5 billion, witnessing a year-on-year growth of 23.1% in constant currency. Adjusted margin stood at $93.8 million, registering a year-on-year growth of 20% in constant currency. While Rajesh has updated about the continued hot performance in international ticketing, let me share some more color on domestic air ticketing. In the domestic air market, while daily departures were broadly at similar levels as last quarter, the market growth picked up to almost 9% year-on-year on a flown basis in the seasonally strong quarter. We continue to grow slightly ahead of the market with a continued 30% plus share of the domestic flight ticketing market. Gross bookings for the quarter in hotels and packages segment came in at $681.5 million, registering a growth of 23.4% year-on-year in constant currency. Adjusted margin growth was 24.9% year-on-year in constant currency terms resulting in an adjusted margin of $121.9 million during the quarter. Our continued efforts around adding more properties across the country have resulted in us being able to sell room nights across more than 1850 cities through the country compared to about 1750 cities during the same quarter last year. This spread has more than doubled from pre-pandemic levels. This argues well for us as new supply expansion has been faster in Tier 2 and Tier 3 cities. Almost 120 new hotels have opened in the first 10 months, adding about 8,000 rooms in the branded segment in these tier cities. We have spoken about scaling up direct contracting for international hotels in recent years, and this strategy has helped us get accommodation bookings in over 160 countries during this quarter. Earlier during the fiscal year, we had called out efforts put in to become compliant with GDPR and similar requirements in certain international geographies, which now allows our platforms, including our mobile applications, to be accessed in over 150 countries. As a result, our inbound gross bookings cross the initial thousand-room per day milestone during this quarter. We believe that the combination of inbound and outbound bookings growth will lead to an increase in the portion of international hotels business in the coming years, which currently stands at around 19% compared to 14.8% during the same quarter last year as part of the segment. In our bus ticketing business, gross bookings for the quarter stood at $328.9 million, growing at 23.6% year-on-year in constant currency. Adjusted margin stood at $35 million, registering a strong year-on-year growth of over 31.3% in constant currency, with demand driven by festivals and holiday seasonality. Take rates continue to remain stable and in line across all our business segments. Similarly, our customer acquisition cost, which includes marketing and sales promotion expenses, remains efficient and in line with the same quarter last year at 4.9% of gross bookings. This is slightly higher than the 4.6% reported in the previous quarter linked to changes in seasonality. In addition to driving strong bookings and margin growth, we remain focused on building operating cost efficiencies and driving operating leverage in our fixed costs, including personal selling or general restorative expenses. Our disciplined approach to cost management combined with targeted investments in technology and customer experience has enabled us to capitalize on this growing travel demand and drive profitable growth. For instance, back-end investments in automation and AI, our post-sales costs for the quarter increased by just about 7% year-on-year compared to almost 26% year-on-year increase in bookings and revenue, thus driving cost efficiencies. Technically, this was a seasonally high travel quarter coupled with the fact that the pickup in demand improved during the latter half of the quarter. There has been higher than expected deployment in working capital, which is likely to reverse in the coming quarter. Our cash and cash equivalents stand at over $700 million. Besides maintaining a healthy watch list, we will continue to leverage this strong cash position to invest in potential organic and niche growth opportunities as well as opportunistic stock buyback programs. In line with this strategy, we signed a business transfer agreement to acquire the Happay Expense Management platform from Ingrid. Happay is a leader in expense management with over 900 corporate customers and robust capabilities in product development, data-driven insights, and scalable solutions that consistently drive value and efficiency for corporate clients. Under the agreement, the Happay brand and its expense management business as well as the dedicated team for this business will transition to MakeMyTrip. This acquisition reinforces our commitment to becoming the go-to platform for comprehensive corporate travel and expense management solutions. We expect the transaction to close in the coming quarter. With that, I'd like to turn the call back to Vipul for Q&A.

Vipul Garg, Vice President, Investor Relations

Thanks, Mohit. I already have a few participants. The first question is from Sachin Salgaonkar with Bank of America. Sachin, you may proceed with your question now.

Sachin Salgaonkar, Analyst

Thanks, Vipul. Congrats management for another set of fantastic and strong numbers. I have three questions. First question is on air. I remember in the past you guys have said that engine issues in air for the airplane operators might get resolved, but by the looks of it, this gets delayed. So I wanted to get some color on that in terms of how should we look at the growth at air for calendar year 2025? And a related question, of course, is on the take rate; we do see take rate going down in the quarter, presume it's largely seasonality, but also wanted to understand if there's any pressure from Indigo's direct booking out here?

Rajesh Magow, Co-Founder and Group CEO

Thank you, Sachin. You're correct. We previously discussed the supply constraints and short-term challenges in the domestic market, which we anticipated would resolve in the next one or two quarters. Currently, we observe that improvement is taking place on the supply side, albeit at a slow pace as new supply is gradually coming in. It seems that full resolution will be pushed back by another quarter or two. The engine issues remain significant, with grounded planes still not fully addressed. However, we are seeing better progress with new supply compared to the existing grounded supply due to engine problems. Overall, it's important to keep things in perspective. Earlier this year, we projected a specific growth rate for supply on a net basis, but it appears we're currently experiencing a 10% to 15% lag year-to-date. Looking ahead to 2025, we are optimistic that the pace of new supply will increase and this situation will improve in the coming quarters, although there will be some delay. Regarding the take rate, Mohit, could you provide more insights on that?

Mohit Kabra, Group CFO

Yeah, Sachin, I can take that one and this is largely optical. In line with changes in seasonality, as you know, the average selling price during Q3 tends to be much higher than Q2. Therefore, if you look at it from a comparative perspective with Q2, the take rates have come down from about 6.8% to 6.1%, but this is largely close to about 13% overall, with a 12% to 13% kind of increase in ASPs on a blended basis. In fact, if you look at it across the domestic air industry, then the ESP increase was even higher. So this is largely optical resulting from changes in the pricing regime based on seasonality.

Sachin Salgaonkar, Analyst

Got it. Thank you. Very clear. Second question wanted to understand how should we think about your steady state adjusted EBIT margin? You guys are already at the 1.7%, 1.8% right now. The question out here is what stops you from going to, let's say, 2.5% to 3% in the medium term? You guys are pretty disciplined in cost control, competition is low, good operational leverage is playing out, and of course, there's the added layer of an efficiency that AI brings in. Any thoughts on that?

Mohit Kabra, Group CFO

Yeah, so this quarter generally is seasonally the best quarter of any year Q3 and therefore probably Q3 by itself is not necessarily indicative of how much the margins would kind of play out. But yes, we have seen consistent growth in kind of operating margin expansion on the bottom line side. As I said, we currently aim to reach the 1.8% to 2%, or close to about 18% to 20% on an adjusted margin basis. So I'm sure as we get closer to the lower range of that, we'll have a better view on how margin expansion can kind of play out in the next few years.

Sachin Salgaonkar, Analyst

Got it. And last question, again wanted to understand if there's anything specific going on with both interest income and interest expense. Your finance income is down materially from a QOQ basis, much lower than the historical trend, and so is the finance cost, which has been much higher than the historical trend?

Mohit Kabra, Group CFO

So this would largely also factor in some amount of FOREX fluctuations, so could be coming from that. Maybe Vipul can share a slightly more detailed kind of note on this with you offline.

Sachin Salgaonkar, Analyst

Okay, thanks.

Vipul Garg, Vice President, Investor Relations

Thank you, Sachin. The next question is from the line of Manish Adukia of Goldman Sachs. Manish, you may please ask your question.

Manish Adukia, Analyst

Thank you, Vipul. Hi, good evening team. Thank you so much for taking my questions and again, echoing what Sachin said, congratulations on all-round performance in the quarter. Really nice to see that. My first question is actually related to that aspect of the business. I mean, growth has been really strong, mid-20s, YoY growth with Rajesh; you have been calling out international remains very strong, north of 13 in air and closer to 60% in hotels. My question here is like, what can cause this number to, let's say, meaningfully come down in the foreseeable future? I mean, in the international travel in particular, which is now sizable for your business, is there like any kind of one-off that is really driving this consistently stronger growth over the last two or three quarters and it could start tapering off and so your overall growth may come down, or do you foresee your overall gross booking or revenue growth sustain at these levels? Just wanted to get your thoughts on the pushes and pulls here and how we should think about that? That's my first question, please.

Rajesh Magow, Co-Founder and Group CEO

Thank you, Manish. That's a great question. Our consistent and strong growth is driven by two main factors: macroeconomic trends and our execution strategy. We've effectively addressed demand from various segments and channels due to our omnichannel approach. Additionally, there is a broader macro trend where consumer behaviors are shifting towards spending more on travel and experiences, influenced by rising incomes and disposable income. It's not just travel; experiences like concerts are also gaining popularity, which brings additional benefits to our travel business. Regarding potential risks to this growth, I would say they largely stem from macroeconomic factors. If there were a decrease in spending or a shift in consumption patterns away from travel and experiences, that could impact our growth. While we have observed a fundamental change in spending towards travel, a slowdown in the economy or other macro events could affect overall demand and slow our growth. However, we are optimistic about outpacing the industry growth rate, regardless of the circumstances. The only significant factor that could alter our growth rate would be a general economic downturn.

Manish Adukia, Analyst

Thank you, Rajesh. Extremely helpful. And my second question is regarding competition, with two subparts. One from the airline direct side and second on the OTA side. Now on the airline direct, we've all seen in the last few months, just Indigo being slightly more competitive than what they used to be historically. But despite that, it seems to have had no impact on your numbers, your market share is up, your growth looks phenomenal, right. So I would love to get your thoughts as to why Indigo, which is the largest airline in the country, despite being relatively more competitive, has had no impact on your business if you can just help us understand the nuances of why you're still able to maintain or grow your market share? And second, on the OTA side, we have now been in a phase for almost two years or more where we haven't seen any meaningful competition, definitely not in hotels and maybe even reducing competition on the airline side. Again, your thoughts as to why that's the case, and if you foresee that changing in the foreseeable future? Thank you.

Rajesh Magow, Co-Founder and Group CEO

Yes, Manish. On the first one, and I think I was sharing my thoughts even on the last quarter call. From our point of view, Manish, the way we see it is our focus is, and it goes hand in hand, right. So it's not necessarily we have to take supply direct as a direct competition. If we focus more on the larger pie of the market that is sort of available for the intermediaries as well, right? So and if we focus on whatever might be the supplier direct share today, even if that is growing incrementally, the rest of the pie is very large. If we are able to stay focused on that and able to get the lion's share of that pie, I think that has been our strategy, that has been our focus, and we've been able to execute our strategy as well to ensure that continues to happen. That consistently reflects our overall market share, let's say, on the domestic market holding on or incrementally improving on the under-penetrated market on the International side, where there is relatively more competition in the supplier ecosystem. From an internet penetration standpoint, it is under-penetrated. We have doubled down on improving the customer experience or attacking that particular segment 360 degrees and tapping into that potential. So that has been our strategy and we will continue to keep doing that. It might happen that more players go online and overall online penetration continues to grow because there is still a lot of headroom left for a lot of businesses that could potentially move online. That is how we see it and it has worked out well for us. Now as far as the second part is concerned, again, I would link it back to the answer I just gave to your first question. One of the factors that has worked in our favor is besides our B2C very strong retail segment that we've been consistent with from a growth perspective, retention perspective on the back of the experience and the innovation that we keep doing on our product side. We've also been able to execute our reach to the other customer segments successfully. The corporate business, for example, has been relatively young for us, 4 to 5 years old, but we have significantly scaled that business already in a short time. Similarly, our travel agent MyPartner channel, as well as our affiliate strategy with other partners, have helped us get the long tail demand and penetrate deep into the market to get new users consistently every quarter. So every quarter, if you really see the customers transacted on us, with a combination of a very high repeat rate and healthy new user acquisition every quarter because of this multiple channel strategy and reach to new consumer segments, has helped us grow our pie and gain better share from the market. I think that is perhaps the single largest reason for it, and besides the relentless execution across the board, is helping us stay ahead in the curve and in the market.

Manish Adukia, Analyst

Fantastic to see. Thank you so much, Rajesh, and all the best.

Rajesh Magow, Co-Founder and Group CEO

Thank you, Manish.

Vipul Garg, Vice President, Investor Relations

Thanks, Manish. The next question is from the line of Vijit Jain of Citi. Vijit, you may please ask your question.

Vijit Jain, Analyst

Thanks, Vipul and congratulations team. Hi, to everyone else. Great set of results. My first question is, typically, this current quarter is somewhat seasonally weaker, right, coming off after Q3. But as you called out earlier, both these events, Coldplay and Mahakumbh, will lead to multiple day events in January. Indian hotels have also called out a spillover of some New Year end demand into the first week of Jan as well. So do you think generally speaking, Q4, at least from your vantage point right now in January, seems like it's going to be less seasonal versus previous years?

Rajesh Magow, Co-Founder and Group CEO

Well, Vijit, I don't think it's going to be any different from the previous years. We don't really anticipate that. Just from a seasonality standpoint, and we should keep that point in mind when we call that October, November, December is a seasonal quarter for us and favorable for leisure use case. Now in our business, we've addressed and reached out to the consumers for all kinds of use cases, including a lot of non-leisure use cases. For example, pilgrimage tourism is emerging as a new growth segment in India, particularly, and that has no season. So our business is a combination of all these use cases from a consumer demand standpoint. Therefore, when we look at the seasonality aspect of it, we should keep that in mind and look at the pattern for the last few historical years and quarters for us to draw some conclusions. But specifically, this quarter, will it be significantly different from seasonality as we see coming out of October and November, December as a relatively low season quarter for leisure use cases? We don't see any different pattern at least as of now.

Vijit Jain, Analyst

Got it, thanks, Rajesh. My second question is, your customer inducement spends, the way you split your A&P spending rate, has been fairly stable at around 3% of GBV number. The brand marketing expenses or the other marketing and sales promotion expenses are now in the upper $40 million range per quarter, right? So I guess my question is, how much of those expenses are directly attributable to bookings? If you can give a broad sense of how much you're spending on top-of-the-funnel type of activities, what would be called pure brand marketing, so to say? Just trying to get a sense of what percentage of marketing spend is not directly attributable to any bookings.

Mohit Kabra, Group CFO

So Vijit, maybe I can take that. I would say, another way to look at the overall customer action costs or marketing and sales promotion, we look at the trends by seasonality. So over this year, largely, these spends have trended at around 4.6% to 4.7% in the seasonally lower leisure travel kind of quarters and have trended at closer to about 4.9% to 5%, in the seasonally better off quarters from a leisure travel demand point of view. As you can imagine, we tend to tweak these in line with seasonality because it makes much more sense to respond slightly more in a better seasonality. The other reason I'm saying is if you look at it even from an absolute dollar spend on direct brand marketing, the size and scale of these campaigns would keep evolving in line with the changing size of the business and the emergence of brands. And that has a slightly longer life cycle. So I think just looking at the trends over respective seasonalities by quarter would give you a good indication.

Vijit Jain, Analyst

Okay. Great. Sure. My next question is just the last bit of question. You did mention on the GenAI side, you talked about Myra. A lot of discussions that I see on GenAI seem to suggest that one of the first things it will be able to do end-to-end is travel bookings. Your thoughts on that? I guess they call it Agentic AI first use case will be in holiday bookings and travel bookings and stuff. Your thoughts on that, and is that something that you guys are experimenting with?

Rajesh Magow, Co-Founder and Group CEO

Very much, Vijit. As part of our GenAI strategy for the last several quarters now, our focus has been picking up any potential application of this in the context of our business. We've been deploying our engineering bandwidth on that and implementing it, going live with it. That includes what you just mentioned, using the Agentic AI. If you look at some of our chatbots that are already live, we went live with our accommodation and ACO funnel. That is a completely new, interactive user interface for hotel booking addressing all kinds of queries related to the hotel booking and then eventually sort of helping to do the booking as well. My take on this is that this is a journey. While on the face of it, everyone is excited and passionate about GenAI, it will be a journey on two counts. One, from our point of view, this is a core strategic item for us as far as overall business strategy is concerned for the last several quarters. We will continue to keep marching ahead to ensure we lead this at least from a travel use case standpoint or whatever promise this technology has to offer. The other aspect is which is equally important is also going to be adoption. Some of these new GenAI-based interactive front ends must also be adopted by the consumers. This is always a journey. Our endeavor is to make it more intuitive, accurate, relevant, and personalized so that adoption is faster, but it's also a question of, I'm very used to the existing interface, and the other one has to be a compelling alternative for me to make the shift. It's always a journey because you have all kinds of consumer cohorts in our country. But from our point of view, this is a core part of the strategy. We will definitely be working closely in terms of partnering with the right partners from content and technology to make sure we not only develop and go live, but also learn from it and keep making improvements because there are still a lot of open-ended problems that need to be solved, whether it's vacancy, accuracy, etc., which are getting resolved every alternative sort of new model that comes into the picture. We are deep into it, and every quarter you will see something or the other on GenAI coming from MakeMyTrip.

Vijit Jain, Analyst

Thanks, Rajesh, those are my questions. Thank you so much.

Vipul Garg, Vice President, Investor Relations

Thanks, Vijit. The next question is from the line of Gaurav Rateria of Morgan Stanley. Gaurav, you may please ask your question now.

Gaurav Rateria, Analyst

Hi, hope I'm audible now?

Rajesh Magow, Co-Founder and Group CEO

Yes.

Gaurav Rateria, Analyst

Happy New Year and congratulations on a great set of numbers. I have a few questions. I want to understand what's the pace of new customer addition per quarter that we are seeing now, let's say versus what you were seeing last year?

Rajesh Magow, Co-Founder and Group CEO

Actually, pretty robust Gaurav there as well, and Happy New Year to you, too. Just to give you one data point and you can calculate that. Our repeat rate has been pretty robust. It used to be about 70%, 71%. Last quarter it was about 73%. Life-to-date, this is like 73% of the transactions coming from the life-to-date customers. Our overall customer base now, life-to-date, across all three brands put together has touched about 80 million, up from 77 million, and typical contributions from new users has been in the range of 25% to 30%. So effectively, it just continues at the same scale. Every quarter, we are obviously adding more, and the scale is only going up in one direction. But with the ratio of new users and repeat hasn't changed a lot, so the 70:30 going to, say, 73:27, 72:28 kind of remains the same.

Mohit Kabra, Group CFO

Also in absolute terms, Gaurav, the net new addition to the platforms generally ranges anywhere between 1.5 million to 2.5 million customers during any quarter. That is a typical kind of new addition we see.

Gaurav Rateria, Analyst

Got it. So keeping this in mind and the comment you explained about your focus on how you look at the market, beyond near-term competition issues, etc., why does the ad spend as a percentage of gross booking in this nine months of fiscal year appear higher than last year? What explains this increase? Is it more investment led? Is it more defending any new competition? Just trying to understand that.

Mohit Kabra, Group CFO

You are talking about the marketing spends only versus, say, marketing and sales proportions put together?

Gaurav Rateria, Analyst

Yes, like put together. I'm looking at the combined number.

Mohit Kabra, Group CFO

The combined number has largely trended in line with, I would say, last year. We would want to keep this at below 5% levels. This number has trended at about 4.6% of gross bookings during seasonally weaker quarters, like Q2, Q4, and generally trended at around 4.9% to 5% in seasonally stronger quarters like Q1 and Q3, so there hasn't been any substantial change or increase per se.

Gaurav Rateria, Analyst

Okay. Got it. Lastly, it would be great to get some color on competition in the Hotel segment. If you could layer it for different segments, whether it's for premium or for budget, and what would be your rough market share within the overall online market in these segments? Thank you.

Mohit Kabra, Group CFO

Gaurav, it's a little difficult to call out market shares in the Hotel segment, as you know, because there's no industry report unlike we get from DCCI in case of domestic flight ticketing. Our high-level estimate would be that ballpark about 18% to 20% of the market has moved online and might be closer to about half of that. That is a very high-level broad estimate in terms of the size of the market. Again, if you look at competitive dynamics comparatively, it's better in hotels or in accommodation space versus ticketing space because all OTAs have a larger skew towards ticketing compared to accommodation. Therefore, to some extent, competition on the Hotel side is also with the global OTAs because they tend to be more focused on accommodation, particularly in the mid to premium segment. Their larger share of volumes will be more inbound, whereas we focus much more on domestic and outbound.

Gaurav Rateria, Analyst

Mohit, thank you, and all the very best.

Mohit Kabra, Group CFO

Thank you, Gaurav.

Vipul Garg, Vice President, Investor Relations

Thank you, Gaurav. This was our last question. Over to you, Rajesh, for your closing comments.

Rajesh Magow, Co-Founder and Group CEO

Thank you, Vipul, and thank you, everyone. A great set of questions from everyone and thank you for appreciating. Thank you for your patience, and we'll see you again next quarter.

Mohit Kabra, Group CFO

Thanks, bye.

Vipul Garg, Vice President, Investor Relations

Thank you, everyone. You may now disconnect the call.

Rajesh Magow, Co-Founder and Group CEO

Thank you.