MakeMyTrip(MMYT) - 2022 Q3 - Quarterly Report

Financial and Operating Performance This section details the company's financial and operating performance, including Q3 FY2022 highlights, pandemic impacts, detailed results, and share repurchase program Overview and Financial Highlights MakeMyTrip announced its best Adjusted Operating Profit quarter during the COVID-19 pandemic for Q3 FY2022, driven by significant pent-up travel demand in India. The company saw substantial year-over-year (YoY) and quarter-over-quarter (QoQ) growth across key metrics including Gross Bookings and Revenue. However, the emerging Omicron wave began to impact leisure travel sentiment from January 2022 - The company reported its best Adjusted Operating Profit quarter during the pandemic, supported by pent-up travel demand following the second wave of COVID-19 in India, festive travel, and winter holidays. The Omicron wave has since impacted leisure travel sentiment from January 2022[4] Q3 FY2022 Financial Highlights | Metric | Value (Q3 FY22) | YoY Growth | QoQ Growth | | :--- | :--- | :--- | :--- | | Gross Bookings | $1,155.7 million | 93.0% | 57.4% | | Revenue | $115.0 million | 102.5% | 70.5% | | Adjusted Operating Profit | $13.2 million | 153.8% | 100.0% | Impact of the COVID-19 Pandemic The COVID-19 pandemic severely impacted travel demand and the company's operations throughout 2020 and 2021. However, the third quarter of fiscal 2022 saw a strong recovery driven by the lifting of travel restrictions and increased vaccination rates in India, leading to a 70.5% sequential revenue increase. Despite this recovery, the future impact of the pandemic remains uncertain due to potential new variants - The pandemic severely impacted travel demand, causing airlines and hotels to operate at reduced levels. A second wave in India from April 2021 negatively impacted revenue compared to pre-pandemic levels (Q3 FY20)[5] - A gradual lifting of travel restrictions and increased vaccinations in India led to a strong recovery in domestic travel, resulting in a 70.5% revenue increase in Q3 FY22 compared to the previous quarter (Q2 FY22)[5] - The long-term effects of the pandemic on business operations and cash flows remain uncertain, depending on factors like the severity of new variants and the effectiveness of vaccinations[7] Detailed Financial Results (Q3 FY2022) In Q3 FY2022, the company demonstrated a robust year-over-year recovery, with total revenue increasing 102.5% to $115.0 million, propelled by a resurgence in domestic travel. While operating expenses rose in line with increased business activity, the operating loss narrowed to $6.2 million from $7.3 million YoY, and Adjusted Operating Profit grew significantly to $13.2 million Revenue and Segment Performance Total revenue grew 102.5% YoY to $115.0 million. The Hotels and Packages segment was the largest contributor with $67.2 million in revenue, a 175.6% YoY increase. Air Ticketing, Bus Ticketing, and Other segments also posted strong double-digit growth, reflecting a broad-based recovery in domestic travel demand Q3 FY2022 Revenue and Adjusted Margin by Segment (YoY) | Segment | Revenue (Q3'22, $M) | Revenue Growth (YoY) | Adjusted Margin (Q3'22, $M) | Adjusted Margin Growth (YoY) | | :--- | :--- | :--- | :--- | :--- | | Air Ticketing | $27.4M | 50.6% | $52.9M | 103.6% | | Hotels and Packages | $67.2M | 175.6% | $54.1M | 114.9% | | Bus Ticketing | $14.7M | 45.3% | $14.1M | 56.2% | | Others | $5.7M | 38.6% | $5.9M | 42.4% | | Total | $115.0M | 102.5% | $127.0M | 97.5% | - Air Ticketing growth was driven by a 61.2% year-over-year increase in flight segments[11] - Hotels and Packages growth was driven by a 76.7% year-over-year increase in hotel-room nights[13] - Bus Ticketing growth was driven by a 39.2% year-over-year increase in bus tickets travelled[14] Operating Expenses Operating expenses increased significantly year-over-year due to business recovery. Marketing and sales promotion expenses rose 185.2% to $22.2 million. Other operating expenses grew 119.5% to $33.0 million, which included an $8.4 million provision for litigation related to a prior acquisition. Personnel expenses also increased by 14.3% due to annual wage hikes - Personnel expenses increased by 14.3% to $30.4 million, primarily due to annual wage increases and higher share-based compensation costs[17] - Marketing and sales promotion expenses increased by 185.2% to $22.2 million, reflecting higher variable costs and discretionary spending due to the travel recovery[18] - Other operating expenses increased by 119.5% to $33.0 million, mainly due to an $8.4 million provision for litigation and higher payment gateway charges from increased bookings[19] Profitability and Earnings Per Share The company's IFRS operating loss narrowed to $6.2 million from $7.3 million YoY. However, the net loss widened to $9.0 million from $3.5 million, impacted by higher net finance costs. On a non-IFRS basis, performance was strong, with Adjusted Operating Profit improving to $13.2 million and Adjusted Diluted EPS reaching $0.12, up from $0.07 in the prior year Q3 FY2022 Profitability Metrics (vs. Q3 FY2021) | Metric | Q3 FY2022 | Q3 FY2021 | | :--- | :--- | :--- | | Results from Operating Activities | ($6.2M) | ($7.3M) | | Adjusted Operating Profit | $13.2M | $5.2M | | Loss for the period | ($9.0M) | ($3.5M) | | Adjusted Net Profit | $13.5M | $7.7M | Q3 FY2022 Earnings Per Share (vs. Q3 FY2021) | Metric | Q3 FY2022 | Q3 FY2021 | | :--- | :--- | :--- | | Diluted Loss per share | ($0.08) | ($0.03) | | Adjusted Diluted Earnings per share | $0.12 | $0.07 | Liquidity As of December 31, 2021, MakeMyTrip maintained a robust liquidity position. The company held $486.1 million in cash, cash equivalents, and term deposits, and had access to approximately $133.7 million in undrawn credit facilities - The balance of cash, cash equivalents, and term deposits was $486.1 million as of December 31, 2021[25] - The company has undrawn credit facilities of approximately $133.7 million[25] Share Repurchase Program The company's Board of Directors has authorized a share repurchase plan of up to $150 million, which has been extended until November 30, 2023. No shares were repurchased during the third quarter of fiscal 2022. As of December 31, 2021, approximately $136.0 million remained available under this authorization - The share repurchase plan term was extended to November 30, 2023[27] - No shares were repurchased during Q3 FY2022[27] - As of December 31, 2021, the remaining authority for repurchase was approximately $136.0 million[27] Financial Statements (Unaudited) This section presents the unaudited condensed consolidated interim financial statements, including the statement of financial position, profit or loss, changes in equity, and cash flows Condensed Consolidated Interim Statement of Financial Position As of December 31, 2021, total assets stood at $1.335 billion, with total liabilities at $433.5 million. Total equity attributable to owners of the company was $899.6 million. The company's liquidity remained strong, with cash and cash equivalents of $178.4 million and term deposits of $307.8 million Statement of Financial Position Highlights (As of Dec 31, 2021) | Account | Value (USD thousands) | | :--- | :--- | | Total Assets | 1,335,461 | | Total Current Assets | 563,312 | | Total Non-Current Assets | 772,149 | | Total Liabilities | 433,508 | | Total Current Liabilities | 207,235 | | Total Non-Current Liabilities | 226,273 | | Total Equity | 901,953 | Condensed Consolidated Interim Statement of Profit or Loss For the three months ended December 31, 2021, the company reported total revenue of $115.0 million, an increase from $56.8 million in the prior-year period. The result from operating activities was a loss of $6.2 million, an improvement from a $7.3 million loss YoY. The net loss for the period was $9.0 million, resulting in a diluted loss per share of $0.08 Income Statement Summary (For the three months ended Dec 31) | Account | 2021 (USD thousands) | 2020 (USD thousands) | | :--- | :--- | :--- | | Total Revenue | 115,023 | 56,806 | | Result from operating activities | (6,212) | (7,343) | | Loss for the period | (9,035) | (3,496) | | Loss per share (Diluted) | (0.08) | (0.03) | Condensed Consolidated Interim Statement of Changes in Equity Total equity increased from $891.2 million on April 1, 2021, to $902.0 million on December 31, 2021. The increase was driven by transactions with owners, including share-based payments, which offset the comprehensive loss for the period - Total equity increased from $891.1 million at the beginning of the period to $901.9 million as of December 31, 2021[46] - The change in equity was impacted by a total comprehensive loss of $17.0 million for the nine-month period, offset by $27.8 million in net contributions from owners, primarily related to share-based payments[46] Condensed Consolidated Interim Statement of Cash Flows For the nine months ended December 31, 2021, net cash generated from operating activities was $7.7 million. The company used $115.7 million in investing activities, primarily for term deposits, and $8.8 million in financing activities. This resulted in a net decrease in cash and cash equivalents of $116.8 million during the period Cash Flow Summary (For the nine months ended Dec 31, 2021) | Activity | Value (USD thousands) | | :--- | :--- | | Net cash generated from operating activities | 7,709 | | Net cash used in investing activities | (115,749) | | Net cash used in financing activities | (8,805) | | Net decrease in cash and cash equivalents | (116,845) | | Cash and cash equivalents at end of the period | 178,368 | Supplementary Information and Non-IFRS Measures This section provides supplementary information, including definitions of key performance indicators, reconciliation of IFRS to non-IFRS measures, reportable segment data, and selected operating and financial metrics About Key Performance Indicators and Non-IFRS Measures The company utilizes non-IFRS measures such as Adjusted Margin, Adjusted Operating Profit, and Adjusted Net Profit to assess its performance. Adjusted Margin, a key segment profitability indicator, is calculated by taking IFRS revenue, adding back customer inducement costs, and deducting service costs. These measures are intended to provide investors with a clearer view of ongoing business performance by excluding items like share-based compensation and amortization of acquired intangibles - The company's key performance indicator is Adjusted Margin, which represents IFRS revenue adjusted for customer inducement costs and the cost of services where the company acts as a principal[30] - Adjusted Margin is used because some revenues are recognized on a 'net' basis (as an agent) and others on a 'gross' basis (as a principal), and management believes this metric reflects the value addition of its services[31] - Non-IFRS measures like Adjusted Operating Profit exclude expenses such as share-based compensation, amortization of acquired intangibles, and provision for litigations to facilitate comparison with competitors and for internal decision-making[33] Reconciliation of IFRS to Non-IFRS Measures This section provides detailed reconciliations of standard IFRS financial measures to the company's non-IFRS metrics. For Q3 FY2022, an IFRS operating loss of $6.2 million was reconciled to an Adjusted Operating Profit of $13.2 million. Similarly, an IFRS net loss of $9.0 million was reconciled to an Adjusted Net Profit of $13.5 million, primarily by adding back non-cash expenses like amortization and share-based compensation, as well as a provision for litigation Reconciliation of Operating Loss to Adjusted Operating Profit (Q3 FY22) | Item | Value (USD thousands) | | :--- | :--- | | Results from operating activities (IFRS) | (6,212) | | Add: Acquisition related intangibles amortization | 3,436 | | Add: Employee share-based compensation costs | 9,859 | | Less: Gain on discontinuation of an equity-accounted investment | (2,251) | | Add: Provision for litigations | 8,404 | | Adjusted Operating Profit (Non-IFRS) | 13,236 | Reconciliation of Net Loss to Adjusted Net Profit (Q3 FY22) | Item | Value (USD thousands) | | :--- | :--- | | Loss for the period (IFRS) | (9,035) | | Add: Total Adjustments (Amortization, Share Comp, etc.) | 23,099 | | Less: Income tax benefit | (553) | | Adjusted Net Profit (Non-IFRS) | 13,511 | Information About Reportable Segments In Q3 FY2022, the Hotels and Packages segment generated the highest consolidated revenue at $67.2 million, while the Air Ticketing segment produced the highest Adjusted Margin before unallocated expenses at $52.9 million. All segments showed significant year-over-year growth in both revenue and Adjusted Margin, reflecting the broad recovery in travel Q3 FY2022 Segment Performance (USD thousands) | Segment | Consolidated Revenue (USD thousands) | Adjusted Margin (USD thousands) | | :--- | :--- | :--- | | Air ticketing | 27,369 | 52,941 | | Hotels and packages | 67,248 | 54,064 | | Bus ticketing | 14,673 | 14,106 | | All other segments | 5,733 | 5,870 | | Total | 115,023 | 126,981 | Selected Operating and Financial Data Key operating metrics for Q3 FY2022 demonstrated strong year-over-year growth. Air ticketing segments sold increased by 61.2% to 8.6 million, and hotel room nights grew by 76.7% to 5.5 million. Gross bookings surged to $1.16 billion, up from $598.8 million in the prior-year quarter, with Adjusted Margin as a percentage of gross bookings remaining stable or improving across most segments Key Operating Metrics (Q3 FY2022 vs Q3 FY2021) | Unit Metric (in thousands) | Q3 FY2022 | Q3 FY2021 | | :--- | :--- | :--- | | Air Ticketing – Flight segments | 8,604 | 5,337 | | Hotels and Packages – Room nights | 5,517 | 3,123 | | Bus Ticketing – Travelled tickets | 14,378 | 10,328 | Gross Bookings by Segment (Q3 FY2022 vs Q3 FY2021) | Segment (USD thousands) | Q3 FY2022 | Q3 FY2021 | | :--- | :--- | :--- | | Air Ticketing | 679,530 | 348,636 | | Hotels and Packages | 312,595 | 140,386 | | Bus Ticketing | 163,615 | 109,743 | | Total | 1,155,740 | 598,765 |