MakeMyTrip uses ₹542 cr to retain users in Q3

livemint.com:

₹542 crore, or $66 million, in the third quarter ended December 2023. During the same period last year, the expenses incurred by the company to attract or retain customers, such as discounts, promotions, signing bonuses, or other incentives, stood at $60.7 million. Similarly, marketing and sales promotion expenses for the travel operator also shot up 25% in the third quarter of FY24 ended 31 December to $36.1 million from $28.9 million in the corresponding quarter ended a year prior.

Overall, the company’s profit increased in the latest quarter, going from a meagre $0.2 million in December 2022 to $24.2 million in December 2023. The company, in its SEC filings, said the increase in its marketing expense was primarily due to an increase in its variable costs and other discretionary expenditure. These include expenses on events and brand building initiatives.

Its other operating expenses also shot up considerably by 43.0% to $50.9 million in the quarter from $35.6 million last year. These included payment gateway charges, outsourcing fees and website hosting charges linked to an increase in bookings. Other operating expenses are costs a company incurs while running its business, but they’re not directly related to the production or sale of their main products or services.

The company said it moved some of the costs related to delivering their product or service from a different category called “service cost" to this “other operating expenses" category. This means the category itself grew because some costs were shifted, not just because new expenses were added. Sustained high travel demand in India and increased air traffic volume led to an increase in revenue from its air ticketing business, the company said.