MakeMyTrip Limited — Form 20-F Summary
Reporting period: Fiscal year ended March 31, 2018; the filing also presents unaudited fourth-quarter results for the three months ended March 31, 2018. Financial statements are prepared under IFRS and reported in U.S. dollars. FY2017 included ibibo Group results only from its January 31, 2017 acquisition date; FY2018 includes the full year.
Business context
MakeMyTrip operates online travel platforms under the MakeMyTrip, goibibo and redBus brands. Its offerings include air tickets, hotels and packages, bus and rail tickets, car hire and ancillary services. India generated 95.8% of FY2018 revenue. The company completed a $330 million private placement in May 2017.
Financial and operating metrics
| Metric (USD millions, except per-share data) | FY2017 | FY2018 |
|---|---|---|
| Revenue | 447.6 | 675.3 |
| Revenue less Service Cost (non-IFRS) | 273.7 | 577.1 |
| Operating loss | 135.4 | 219.4 |
| Net loss | 110.3 | 220.2 |
| Diluted loss per share | $2.09 | $2.18 |
| Operating cash flow | (108.5) | (125.5) |
- FY2018 revenue rose 50.9%; excluding $9.2 million of incremental air-ticket revenue recognized in FY2017, management reported 54.0% growth.
- Air ticketing revenue was $167.4 million; hotels and packages revenue was $440.0 million; other revenue was $67.9 million. Other revenue growth was substantially driven by bus ticketing following the ibibo acquisition.
- Gross bookings increased to $4.09 billion from $2.29 billion. Air-ticketing transactions rose to 15.2 million from 9.4 million; hotels-and-packages transactions rose to 13.2 million from 6.9 million.
- Net revenue margins were 7.5% for air ticketing, 22.6% for hotels and packages, and 12.6% combined. Hotels and packages represented 54.4% of Revenue less Service Cost, versus 51.3% in FY2017.
- Marketing and sales promotion expense was $451.8 million in the IFRS income statement. An additional $77.7 million of customer promotions was recorded as a reduction of revenue; the filing’s segment presentation adds it back, producing a $529.6 million promotional expense measure. These promotions were a principal reason for the larger net loss.
- FY2018 fourth-quarter revenue was $157.8 million and net loss was $44.1 million, compared with $120.0 million and $73.1 million, respectively, in the prior-year quarter. The filing does not provide a clear comparable quarterly cash-flow figure.
Liquidity, debt and cash flow
- At March 31, 2018, cash and cash equivalents were $187.6 million and term deposits were $202.3 million; net current assets were $340.6 million.
- Cash used in operating activities was $125.5 million. Investing activities used $115.1 million, including net investment in term deposits; financing activities generated $327.9 million, primarily from the May 2017 share placement. Ending cash was $187.6 million.
- Loans and borrowings totaled $0.652 million; no overdraft balance was outstanding. Bank guarantees utilized were approximately $27.7 million, with no demand reported against them.
- Management believed cash, cash equivalents and operating cash flows would meet regular working-capital and capital-expenditure needs for the next 12 months. It expected FY2019 capital expenditure of approximately $12–15 million.
Changes, outlook and risks
- The ibibo acquisition materially affects year-over-year comparability: FY2017 included only two months of ibibo, while FY2018 included twelve months. FY2018 marketing and promotion expense more than doubled versus FY2017, and operating and net losses widened.
- Management’s strategy is to grow hotels and packages, mobile transactions, cross-selling and technology investment. The filing gives no quantified revenue, margin or profitability guidance.
- IFRS 15 adoption from April 1, 2018 will reclassify certain customer inducement and loyalty costs from marketing expense to a reduction in revenue. Management expected no material impact on consolidated results or financial position, but could not estimate the presentation impact.
- Key risks include intense discounting and competition, dependence on airline and other suppliers, continuing customer-acquisition spending, technology and cybersecurity disruptions, foreign-exchange exposure without hedging, and regulatory uncertainty in India. A 10% U.S.-dollar appreciation against the rupee was estimated to increase FY2018 loss by $8.3 million.
- Contingencies include Indian service-tax disputes and investigations, with substantial disputed claims and deposits made under protest; a pending arbitration related to the Hotel Travel Group with approximately $35 million in dispute; and proceedings concerning whether redBus requires licensing under India’s Motor Vehicles Act. Management considered its positions strong and generally did not record provisions for these matters.
- The company reported effective disclosure controls and internal control over financial reporting; KPMG issued unqualified opinions on the financial statements and internal controls.
Investor verification priorities
- Reconcile IFRS revenue, the $77.7 million promotional reduction and the non-IFRS Revenue less Service Cost measure; assess the effect of IFRS 15 on reported growth and margins.
- Separate organic growth from the full-year contribution of ibibo, especially in bus, hotel and air transactions and other revenue.
- Evaluate whether customer incentives can be reduced while sustaining booking growth, margins and cash generation; the company remained loss-making and used operating cash.
- Review cash and term-deposit availability, operating cash burn, bank guarantees, lease commitments and projected FY2019 capital expenditure.
- Track outcomes and potential exposure from tax disputes, service-tax investigations, the Hotel Travel Group arbitration and redBus regulatory proceedings.