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MakeMyTrip Q3 Profit Plunges But Revenue Growth Robust, Trims FY12 Revenue Outlook Marginally

MakeMyTrip Ltd's net profit for the quarter ended December 31, 2011 dropped nearly 44 per cent sequentially and 97 per cent over the same quarter the previous year to $0.04 million. The NASDAQ-listed online travel services firm 22.8 per cent rise in sequential revenues to $53.8 million even as it grew 53 per cent over the year ago period.

Revenue (less service costs) grew 36.9 per cent over the year ago period to $23.65 million.

Adjusted net income (profit for the period excluding employee share-based compensation costs, cost related to follow-on public offering, interest expense on the liability portion of preference shares, interest accretion on financial liability related to business combination, changes in the fair market value of embedded derivatives in the preference shares and income tax benefit (expense)) rose 69.7 per cent to $3 million compared to $1.7 million in the corresponding quarter last fiscal.

"In the fiscal third quarter we witnessed a rapid weakening of the Indian Rupee as well as volatility in the Indian aviation industry. However demand for our services remained strong during the past holiday travel season as more customers chose to use MakeMyTrip for the superior user experience we offer,"said Deep Kalra, chairman and CEO of MakeMyTrip Ltd.

MakeMyTrip competes with companies like Yatra.com and Cleartrip.com in India.

The company has also marginally cut its outlook for revenue (less service costs) to $86 to $88 million from $88 to 89 million previously forecasted for the year ending March 2012. This was attributed to weaker Indian rupee compared to the US dollar, as against its estimated rate at the time previous guidance was issued last May.

Operational Performance:

The combined gross bookings for air ticketing and hotels and packages rose 12.7 per cent over the year ago period to $237 million even as this fell sequentially compared to $245.0 million for the three months ended September 30, 2011. The number of transactions for air ticketing rose 16.2 per cent Y-o-Y to 882,400 while that for hotels and packages more than doubled to 110,900.

Air Ticketing: Revenue from MMT's air ticketing business increased 59.9 per cent to $21.6 million in the quarter ended December 31, 2011 from $13.5 million in the quarter ended December 31, 2010. Revenue (less service costs) increased at a slower pace of 28.8 per cent to $17.4 million in the quarter ended December 31, 2011 from $13.5 million in the quarter ended December 31, 2010. The company attributed this to an increase in net revenue margin from 7.4 per cent in the quarter ended December 31, 2010 to 9.0 per cent in the quarter ended December 31, 2011. The margin improvement in the last quarter came from specially negotiated rates and favorable incentive deals, according to the firm.

Hotels and Packages: Revenue from MMT's hotels and packages business increased 45.8 per cent to $31.3 million in the quarter ended December 31, 2011 from $21.5 million in the quarter ended December 31, 2010. The revenue (less service costs) rose much faster by 81.1 per cent to $5.3 million in the quarter ended December 31, 2011 from $2.9 million in the quarter ended December 31, 2010. This was due to an increase in gross bookings by 61.7 per cent as well as an expansion of net revenue margin from 10.8 per cent in the quarter ended December 31, 2010 to 12.1 per cent in the quarter ended December 31, 2011.

Personnel Expenses: Personnel expenses continued to hog on its bottom-line as it more than doubled to $8 million in the quarter ended December 31, 2011 from $3.9 million in the quarter ended December 31, 2010, mainly as a result of employee share-based compensation costs of $2.9 million last quarter as also the increase in annual wages and average employee headcount year over year in the quarter ended December 31, 2011.

Other Revenue: MMT's other revenue increased to $0.9 million in the quarter ended December 31, 2011 from $0.8 million in the quarter ended December 31, 2010, primarily due to increased sale of rail tickets and bus tickets and other miscellaneous income. This was flat compared to the previous quarter ended September 2011, which means that business is not gaining as much traction as the core business.

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