MakeMyTrip’s revenue surges, posts loss of $45.3 M
Despite a boost in revenue, the company posted a loss of $45.3 million in the third quarter of FY18. The company had posted a profit of $16.5 million in the same period of last financial year.
Nasdaq-listed MakeMyTrip Ltd, the country’s largest online travel services provider, increased its revenue by 39.9 percent to $172.4 million in the December ending quarter of FY18, compared to its revenue of $123.2 million in the corresponding period of last fiscal, the company disclosed in a filing with the United States Securities and Exchange Commission (SEC).
Despite a boost in revenue, the company posted a loss of $45.3 million in the third quarter of FY18. The company had posted a profit of $16.5 million in the same period of last financial year.
Of the total revenue, the company disclosed that the hotel and packages segment contributed a major chunk of $113.7 million followed by air ticketing vertical that contributed $40 million.
The loss comes on the back of the company going on a spending spree on marketing and promotion. While MakeMyTrip was the main sponsor of the SunRisers Hyderabad team in the last IPL season, it has also roped in Bollywood stars like Alia Bhatt, Ranveer Singh, and Diana Penty for its high-decibel multi-TVC campaign.
The company said in its filings, that its “marketing and sales promotion expenses increased by 144.6 percent to $109.0 million in the quarter ended December 31, 2017 from $44.5 million in the quarter ended December 31, 2016. Primary drivers of this year-on- year increase include significant customer inducement and acquisition programmes expenses incurred to accelerate growth in our standalone hotel booking business and increases in brand advertisement expenses that was incurred in the quarter ended December 31, 2017 and the consolidation of marketing and sales promotion expenses of the ibibo group.”
Though a substantial portion of MakeMyTrip’s revenues comes from its Indian unit MakeMyTrip (India) Private Limited, its other subsidiaries in Singapore and the UAE also contribute a small volume of revenue towards the parent firm’s revenues. Apart from air tickets, hotel packages, rail tickets, bus tickets, car hire and ancillary travel requirements, it also facilitates access to travel insurance.
The online travel agencies (OTAs) space that includes the likes of MakeMyTrip, Ibibo and Yatra, has become commoditised with OTAs indulging in a cash burning spree to lure customers. The sector recently witnessed a big consolidation with the merger of MakeMyTrip and Ibibo.