MakeMyTrip (MMYT) Q2 2027 earnings review
MakeMyTrip bookings grow fast, but customer discounts squeeze profit
MakeMyTrip, India's largest online travel agency, grew bookings rapidly at home while currency translation and customer discounts ate into its dollar revenue. Gross bookings climbed 21% in local currency as domestic travelers booked more hotels and buses, though a weaker Indian rupee trimmed reported revenue growth to under 3%. To win those bookings, the company spent 22% more on customer promotions than a year ago, which held operating profit growth down.
| Gross bookings (constant currency) | +20.9% +11.3% in US dollars ($2.72B) |
|---|---|
| Revenue | $235.2M +2.5% in USD (+11.2% constant currency) |
| Operating profit, excluding one-offs | $46.2M 1.70% of gross bookings (down from 1.80% in Q1) |
| Customer discounts (inducements) | $108.9M +22.3% from a year ago |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because booming domestic travel and heavy discounting offset each other. On the bright side, domestic flights rebounded alongside hotels and buses, lifting customer advances for upcoming trips. One caution: the extra promotional spending pushed operating profit excluding one-offs down to 1.7% of gross bookings by our math, breaking below management's 1.8% floor for the first time in six quarters.
The question now is whether MakeMyTrip can pull its profit rate back to 1.8% of bookings without slowing its volume growth. Either the second-quarter promotional push was a temporary cost during the monsoon low season, or rivals are forcing permanent discounting to defend market share. Operating profit and discount spending in the peak third-quarter holiday season will settle it.
🐂 Bull Case
Hotels and Buses Carry Bookings Past 20% Growth
MakeMyTrip, India's largest online travel agency, relies on hotels, holiday packages, and buses to drive its expansion. Because the company acts as an agent on some bookings and a direct seller on others, it tracks segment performance using adjusted margin, which is revenue before customer discounts minus direct service costs. Domestic travel demand stayed strong this quarter and lifted total gross bookings 20.9% in constant currency.
- Hotels and packages adjusted margin: $116.8 million, up 20.2% in constant currency on 18.5% more room nights
- Bus ticketing adjusted margin: $45.1 million, up 29.0% in constant currency on 24.7% more tickets sold
- Other services adjusted margin (cabs, rail, ancillaries): $24.4 million, up 29.8% in constant currency
- Non-air share of total adjusted margin: 63.2% by our math, up from 61.5% a year ago
This shift matters because hotels earn an 18.2% cut of gross bookings and buses earn 10.4%, while flights earn only 6.9%. Non-flight services expanded their share of the profit pool compared with last year's second quarter, proving that ground transport and lodging demand holds up even when international travel slows.
What to watch: hotel and package gross bookings growth next quarter, when a September 2025 Indian hotel tax cut drops out of the yearly comparison. A faster growth rate in the third quarter would confirm that lower room prices hid stronger underlying hotel spending over the past year.
Domestic Flights Lifted Air Bookings
Air ticketing has been a persistent drag on the travel group across recent quarters because Indian airlines faced engine shortages and cut flights. In the second quarter, air gross bookings rose 19.9% in constant currency (10.6% in US dollars) to $1.58 billion, accelerating from 17.7% constant-currency growth in the first quarter. MakeMyTrip said that "strong domestic travel demand during the quarter partially offset" weak international trips.
Air adjusted margin grew 14.3% in constant currency to $108.6 million, up from 10.8% growth in the prior quarter. However, the company's cut of air gross bookings slipped to 6.9% from 7.2% a year ago, and reported air revenue fell 7.2% because the firm gave $52.0 million in customer discounts on flights, up from $41.8 million last year.
What to watch: the flight segment count in the next quarterly filing or call remarks. Rising flight counts without a deeper drop in the air commission rate would show that domestic airline supply is healing.
🐻 Bear Case
Customer Discounts Pushed Profit Below Its Floor
Management has previously aimed to keep operating profit, excluding one-offs, between 1.8% and 2.0% of gross bookings while spending on market share. For five straight quarters through June 2026, the online travel group held that line, delivering between 1.80% and 1.82% every period. In the second quarter, that ratio broke below the floor to 1.70% by our math ($46.2 million on $2.72 billion of gross bookings).
The margin slipped because MakeMyTrip spent heavily on customer inducements—discounts and loyalty rewards subtracted directly from revenue—and operating overhead. Customer inducements jumped 22.3% in US dollars to $108.9 million, rising from 3.64% of gross bookings a year ago to 4.00% by our math. Meanwhile, other operating expenses rose 1.7 percentage points of revenue to 27.1% on higher "distribution costs, website hosting charges and payment gateway charges".
As a result, operating profit excluding one-offs grew just 4.7% in US dollars to $46.2 million, trailing the 11.3% rise in dollar gross bookings. Buying volume with steeper promotions means strong booking numbers do not turn into matching operating profit.
What to watch: operating profit excluding one-offs as a percentage of gross bookings in the third quarter, which is India's peak holiday travel season. A reading below 1.8% during peak demand would show that competitive discounting is eroding profitability.
A Weaker Rupee and Fuel Costs Hit Revenue
MakeMyTrip collects most of its money in Indian rupees but reports its financial statements in US dollars. During the second quarter, the rupee fell about 10% against the dollar compared with a year earlier. By our math, currency translation erased $19.8 million from reported revenue, cutting 11.2% constant-currency revenue growth down to just 2.5% in US dollars ($235.2 million).
The weak currency also hurt customer behavior directly. The company said international long-haul trips out of India stayed weak because "elevated fuel prices led to higher airfares and the depreciation of the INR increased the overall cost of international trips for our customers in India." International flights and hotels carry higher ticket prices, so their slowdown drags on total dollar revenue.
What to watch: the gap between constant-currency and dollar revenue growth in the third quarter. Until the rupee stabilizes against the dollar, double-digit local growth will keep translating into single-digit dollar revenue gains.
Convertible Debt Costs Eat Most of Operating Profit
Last year MakeMyTrip issued $1.44 billion of convertible notes due in 2030 to buy back shares from Trip.com. While management highlights profit before tax excluding one-offs of $46.2 million (up 27.0% from a year ago), that figure strips out the accounting interest on those notes. Under standard accounting rules, net finance costs were $29.8 million this quarter, eating up most of the $36.7 million in operating profit and leaving net profit at just $1.8 million.
The travel platform finished September with $1.47 billion in total debt and overdrafts against $816.5 million in cash and bank deposits, leaving net debt of $648.6 million by our math. Total liabilities exceed total assets, leaving shareholders' equity negative at minus $81.1 million.
What to watch: any announcement on the timing of an Indian stock market listing. Management has previously pointed to proceeds from an Indian share sale as a way to pay down the 2030 convertible debt.
Risks This Quarter Didn't Answer
Three standing concerns from prior quarters received no new data in the second-quarter earnings release because management discusses them on the conference call or in full filings.
- AI booking assistant Myra: management previously promised booking and conversion numbers within one to two quarters; the release gave no figures.
- Competition from AI chat tools: no commentary in the release on whether external AI assistants are taking direct travel search traffic.
- India share listing and debt structure: no update in the release on the confidential Indian listing filing or how it will affect the 2030 convertible notes.
👓 Other Themes
Share Buybacks Picked Up Pace
MakeMyTrip bought back 345,158 ordinary shares for $17.2 million during the second quarter, paying an average of $49.83 per share by our math. That stepped up the pace from the first quarter, when the company spent $7.8 million on 200,000 shares. The group did not repurchase any of its 2028 or 2030 convertible notes and has $75.0 million of buyback allowance left for fiscal 2027.
💲 Other KPIs
Contract liabilities—cash advances customers pay for upcoming travel—rose 9.5% from a year ago in US dollars, matching the 9.6% yearly growth recorded in the first quarter. The balance climbed by $49.6 million from June ahead of India's autumn festival and winter travel season, pointing to steady near-term booking demand.
Money owed to MakeMyTrip by customers and corporate accounts rose 42.2% from a year ago by our math, and climbed 31.2% over the six months since March 2026 ($172.2 million). Receivables are growing nearly four times faster than dollar gross bookings (up 11.3%), tying up working capital as the corporate travel business expands.
Second-quarter free cash flow edged up 3.2% from a year ago to $47.1 million, stabilizing after a 47.5% drop in the first quarter. For the first six months of fiscal 2027, however, free cash flow is still down 19.8% to $67.1 million because higher customer receivables absorbed cash.
🔮 Guidance
Unchanged. MakeMyTrip does not publish a formal outlook table in its earnings release, leaving management's standing full-year target of 1.8% to 2.0% of gross bookings in place. Second-quarter delivery slipped to 1.70% by our math, bringing the first-half rate to 1.75% ($97.6 million on $5.58 billion of bookings). Hitting the 1.8% floor for the full year requires a rebound in the second half.
❓ Key Questions
Why did customer discounts jump to 4% of bookings?
Customer inducement costs rose 22.3% in US dollars to $108.9 million, pushing the operating profit rate down to 1.70% of gross bookings. Did competitor discounting force higher promotions in flights and hotels, or was the spend a one-off campaign?
What is driving the 42% jump in customer receivables?
Total trade and other receivables reached $226.0 million, up $53.8 million since March, dragging first-half free cash flow down 19.8%. How much of this build comes from corporate travel accounts, and what are the collection terms?
How many bookings are completed inside the Myra AI assistant?
Last quarter, chief executive Rajesh Magow said the company would share more detail on end-to-end bookings inside its Myra 2.0 AI tool within one or two quarters. What share of searches and completed transactions now run through Myra?
When will international travel from India recover?
The release noted that international long-haul outbound trips remained weak due to high fuel prices and the weaker rupee. How much did international bookings grow or shrink this quarter compared with domestic travel?