MakeMyTrip Limited (MMYT) Earnings

Management highlights

### Overall Business Context - The quarter faced macro and geopolitical headwinds from the ongoing West Asia conflict, which disrupted flight operations, raised ATF fuel prices, increased air fares, and led to short-term airline capacity cuts, particularly impacting long-haul westbound international travel. - Despite headwinds, underlying travel demand in India proved resilient: customers shifted travel to domestic destinations, east/far east international routes, short-distance getaways, and ground transport, rather than abandoning leisure travel. Management confirmed the long-term structural trend of travel shifting from an occasional purchase to a recurring consumption category for Indian travelers, driven by a growing aspirational middle class, rising participation from tier 2/3 cities, expanding digital and physical infrastructure. ### AI-First Transformation Progress - Launched Myra 2.0, an upgraded AI-powered travel assistant that enables end-to-end conversational booking via text, voice, or a combination, supporting 8 Indian languages. Myra handled over 8 million conversations in the quarter (over 3 million in June alone), with 45% of usage coming from tier 2 and smaller cities. - AI is integrated across all operational areas: it now generates over 75% of the company's code, and the AI-powered customer support bot independently resolves over 50% of customer calls, improving engineering velocity and service efficiency. - Launched AI-powered smart filters for flight and hotel listings, allowing users to search for specific preferences (e.g., early check-in, exact baggage allowance) in natural language for more intuitive, personalized discovery. ### Hotels, Holidays, and Packages Innovation - Expanded domestic accommodation supply to over 101,000 options across 2,070 Indian cities. Launched new product features including easier discovery of multi-bedroom properties, and paid guaranteed early check-in/late checkout to address a common traveler pain point. - Launched OneCircle, a cross-network hotel rewards program covering over 30,000 domestic and international properties, enabling customers to earn and redeem rewards across hotels, homestays, and villas to drive customer loyalty, while providing hotel partners access to a broader loyal customer base, especially from tier 2/3 markets. - Launched the Star Host program for homestays, awarding badges to high-quality hosts to improve customer trust and discovery. - Holiday packages shifted toward shorter duration nearby getaways, in line with market trends. Outbound growth is driven by Southeast Asia and Far East destinations, with scaled group tours across 15 destinations. - Expanded the tours and attractions business: the international portfolio covers 139 countries with over 250,000 experiences, and a new domestic experiences portfolio launched across 50+ Indian cities with over 3,000 products. 25% of tours/activities are booked while customers are already on trip, demonstrating strong on-the-ground relevance. ### Ground Transport and Distribution Expansion - Re-initiated the strategic partnership with PhonePe to expand distribution reach for new customer acquisition, and reintroduced seamless native flight booking within the PhonePe app powered by the GoIBeaver brand. - Launched Comfort Score, a customer-generated rating for bus seat and sleep quality to help travelers choose premium options, positioning bus travel as a comfort-led experience rather than just basic transportation. - Launched two new air ticketing product features: Price Drop Protection, which reduces customer fare anxiety for early bookings, and a Visa Guide to explain destination-specific visa policies. ### B2B Corporate Travel - Active SME/MSME corporate customer count on the MyBiz platform grew 19% YoY to over 79,000, and large corporate accounts on Quest2Travel increased to over 550, with growth coming from both existing accounts and new acquisitions. ### MMT India IPO Update - MakeMyTrip's wholly owned subsidiary Make My Trip India Limited confidentially filed a draft red herring prospectus for an initial public offering with Indian regulators in July 2026. After the IPO, MMT India will remain a subsidiary of MakeMyTrip. - Net proceeds from the share sale will strengthen the group's cash position, to be used for long-term organic growth, strategic inorganic initiatives, and repurchase of outstanding securities including convertible bonds. The IPO is expected to improve brand visibility and help attract and retain tech talent. - Management expects to evaluate medium-term options to enable fungibility of listed shares across Indian and US markets, subject to regulatory approval.

Guidance

- Management maintains a cautious outlook for the near-term operating environment, while remaining positive on the long-term structural growth drivers of the Indian travel sector. - Directionally, the company intends to maintain its overall targeted growth trajectory, though individual quarterly results may vary based on ongoing geopolitical and macro conditions. - The company will continue to prioritize growth from non-air ticketing segments (hotels, packages, ground transport, experiences) to offset softness in air ticketing, and will calibrate marketing investments in line with current market conditions. - Marketing spend as a percentage of gross booking is expected to remain largely in line with recent trends, with small changes reflecting shifts in business mix toward higher-margin non-air segments, and AI productivity gains offset incremental costs. - Profitability margin is expected to remain around the current 1.8% of gross booking level, with gradual improvement over time as market conditions stabilize.

Segment performance

1. Air Ticketing: Adjusted margin was $98.5 million, representing 10.8% year-over-year (YoY) growth in constant currency terms. Volume declined marginally due to macro and geopolitical headwinds, but strong ancillary attachment and improved unit economics drove margin growth. MakeMyTrip maintains a 30% market share of the domestic air ticketing industry. This segment accounts for approximately 31.8% of total adjusted segment margin. 2. Hotels and Packages: Adjusted margin was $134.5 million, with 21.3% YoY constant currency adjusted margin growth. Gross booking grew 19.6% YoY, with standard hotel booking volumes growing 20.2% YoY driven by strong domestic leisure travel demand, which offset weakness in international hotel demand. This segment accounts for approximately 43.4% of total adjusted segment margin. 3. Ground Transport (Bus Ticketing): Adjusted margin was $51.8 million, registering 32.4% YoY constant currency growth, supported by 23.9% volume growth. Intercity cabs grew volume in the 40% range on a smaller base. Elevated air fares supported demand for more affordable ground transport options, while expanded supply, wider route coverage, and India's growing highway network drove structural growth. This segment accounts for approximately 16.7% of total adjusted segment margin. 4. Other (Ancillaries): Adjusted margin was $24.9 million, with 27.2% YoY constant currency growth, as the ancillary business scales to capture a larger share of customer wallet share. This segment accounts for approximately 8.0% of total adjusted segment margin.

Risks & headwinds

- Ongoing geopolitical instability related to the West Asia conflict continues to disrupt international flight operations, push up ATF fuel prices and air fares, and lead to airline capacity cuts, particularly impacting long-haul westbound travel and creating near-term demand uncertainty. - Higher oil prices and rupee depreciation risk keeping travel inflation elevated, which could pressure price-sensitive travel demand across segments. - Slower-than-expected recovery in air travel could moderate overall industry growth, even with growth in non-air segments. - Regulatory uncertainty remains around medium-term corporate structure changes and share fungibility between the Indian and US listed entities, as changes require regulatory approvals that may take time to materialize. - The company is prioritizing market share gains and new growth segment/AI investment over near-term operating leverage, which could limit near-term bottom-line growth.

Analyst Q&A

• Q: Given ongoing West Asia conflict, higher fuel prices, and constrained domestic air supply, can 20%+ constant currency growth continue, or will supply headwinds impact growth? /

  A: Domestic airline capacity has seen some near-term compression, and it is too early to predict exact quarterly growth given ongoing uncertainty. However, underlying travel intent remains strong, with customers increasingly shifting to alternative options (domestic destinations, short-haul routes, ground transport) instead of cancelling travel entirely. The platform's diversified product portfolio allows it to navigate these shifts, and management expects to remain on its overall long-term growth trajectory, with a continued focus on driving growth from non-air segments. (349 chars)

• Q: Why is there no meaningful operating leverage visible in the quarter, even with underlying constant currency growth of ~20%? Would the company prioritize profitability over market share gains? /

  A: In the current muted growth environment, with the air ticketing segment experiencing market degrowth, the company's clear strategic choice is to prioritize gaining market share across segments rather than maximizing near-term profitability. The company is also investing in AI capabilities and new high-potential segments (like tours and attractions) for long-term growth. Profitability remains healthy at 1.8% of gross bookings, and operating leverage will flow to the bottom line as market conditions stabilize and penetration of newer segments matures. (427 chars)

• Q: What is the timeline and plan for share fungibility between the listed parent and new MMT India IPO, and what impact would structural changes have on outstanding convertible bonds? /

  A: The fungibility process can only begin after the MMT India IPO is completed and the regulatory environment is clear; the timeline depends on regulatory changes, so no specific timeline can be given currently. The overall goal is to enable seamless investor participation across both listed entities. The IPO proceeds will significantly strengthen the group's balance sheet, leaving it well prepared to handle any redemption or conversion of outstanding convertible bonds, and the company currently already has a strong cash position of over $800 million. (435 chars)

• Q: How are AI initiatives translating to business outcomes, and are AI investments eroding near-term operating leverage? /

  A: AI is already driving measurable benefits: AI-powered customer service resolves 50% of calls independently, significantly reducing outsourcing costs and holding SG&A costs flat amid business growth. Myra AI assistant is already improving conversion rates for customers using it in the existing booking funnel, with strong adoption especially from tier 2/3 cities. Incremental AI investment costs are already largely offset by AI-driven productivity gains, so AI is not meaningfully eroding operating leverage at this stage. End-to-end conversational booking via Myra 2.0 is very new, and more data on its impact will be available in coming quarters. (481 chars)