Ladies and gentlemen, good day and welcome to Le Travenues Technology, also known as ixigo Earnings Call Q2 FY2025 and 2026, hosted by DAM Capital Advisors. As a reminder, all participants will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touch-tone phone. I now hand the conference over to Mr. Anmol Garg from DAM Capital Advisors. Thank you and over to you, sir.
Thanks, Danish. Good evening, everyone. On behalf of DAM Capital Advisors, I welcome you all to ixigo's Q2 FY2026 earnings call. We have with us Mr. Aloke Bajpai, Chairman, MD and Group CEO of the company, Mr. Rajnish Kumar, Director and the Group Co-CEO of the company, and Mr. Saurabh Devendra Singh, Group CFO of the company. Before I hand over the call to Aloke and Saurabh and Rajnish, I would like to highlight the safe harbor statement on the second side of the earnings presentation, and it is aimed to be read and understood. Thank you and over to you guys.
Thank you, Anmol. Good evening to everyone on the call. Hope everyone had a fabulous Diwali break. Before we begin with our regular quarterly updates, I wanted to touch upon the fundraiser of around INR 1,296 crore through preferential issuance that we are undertaking at ixigo. This fundraiser will strengthen our balance sheet, accelerate AI-led growth, fuel our investments in the hotel OTA segment, and allow us more flexibility in pursuing inorganic opportunities. You may be wondering why we are raising money at this time when we are cash-flow positive and growing quite decently. Let me tell you why we think it is time to double down on our conviction. Over the last 18 years, we have patiently built travel technology building blocks across utility and transactional use cases for the next billion users.
Our early years, marked by limited capital and the multiple crises we had to overcome along the journey, have given us the muscle and resilience to do more with less. Even though we had raised very little capital throughout our journey, when compared to most of our peers, we ended up innovating and solving deeper problems for Bharat, giving us a solid foundation and the largest organic base of travel and tourism users in India. In the recent five years, we've evolved further into a company that not just sells tickets but also offers peace of mind with our AI-powered value-added products and AI customer support. In the last 16 months, as a public company, we've established our track record of driving rapid growth and operating revenues through thoughtful investments in technology development, marketing, and building AI-first experiences, all while generating free cash flow from our core business.
Given the world is at an AI-inflection point and our hotel OTA segment is nascent, this investment comes at an opportune time for us to take advantage and double down on these. A little bit about our incoming investor, MIH Investments One B.V., or Prosus as the world knows them. Prosus is a leading global tech company that invests in high-growth markets with a significant focus on India, Latin America, and Europe. Prosus is well known as a patient, long-term investor, bringing deep domain expertise in e-commerce marketplaces, a global perspective, and an AI-first mindset to its portfolio. Its portfolio spans sectors such as e-commerce, food delivery, travel, payments, and fintech and classified. A long-term investor in India with over $8.6 billion capital deployed to date, Prosus' investment portfolio includes Swiggy, Meesho, Urban Company, and Rapido.
Its global portfolio includes Tencent, Latin American OTA, Despegar, OLX, iFood, Just Eat, Takeaway, among others. We wish to clarify upfront that we have no intention to start any price war or discounting war, nor get into any sort of projects involving major cash burn just because we have the capital. Our track record demonstrates our discipline and capital efficiency quite well. We have never believed in the capital as a mode playbook, and hence, we have never been the biggest aggressor on discounts or marketing spends. Our competition has historically been better capitalized than us and invested a higher percentage of GTV back into marketing. Despite that, we have managed to continue going faster by deploying our capital toward long-term product, tech, AI, and growth investments, along with some smart acquisitions along the way.
This capital allows us to solve customer problems that need deeper, longer-term investment horizons with long-term returns. We will soon arrive at a point where accelerating our investments in hotel product enhancements and supply creation will bring sustainable long-term gains. In terms of brand recall and marketing spends, we'll continue investing given the critical mass of organic users we have. Judicious investments every year can help us build top-of-mind brand recall in categories such as flights and buses over time. As far as optionality on acquisitions is concerned, our playbook for acquisitions remains exactly the same as when we acquired Confirm Ticket in February 2021 and AbhiBus Bus Business in August 2021, both of which are not just successfully integrated but yielding synergies for our core business.
Our balance sheet will broaden our canvas for both organically seeding new opportunities and judiciously pursuing investments and acquisitions, allowing us to take bolder long-term bets when we have strong conviction in any team, technology, market, or vertical. Moving to this quarter, to use a cricket analogy, we learned this quarter that one has to adapt to the pitch conditions when we come out to bat. Despite some market-led headwinds in the flight and train business lines, the teams found areas of opportunity where our agility, diversification, and resilience led to continued growth. Our leadership demonstrated that it could take calls on where to go more aggressive and where to defend. On the bus side, this quarter further reinforces the long-term runway that exists for growth in online bus bookings.
At an overall level, I'm pretty happy with what we've achieved both this quarter and in the first half of the year. We have delivered strong cash flows of INR 91.5 crore and a GTV growth of nearly 38% for H1 FY2026, and a revenue from operations growth of nearly 54% for H1 versus H1 of last year. In the second quarter, our revenue from operations was INR 282.7 crore for the quarter, up 37% YOY, and a GTV growth of 23% for the quarter, coming in at INR 4,347.5 crore. Our adjusted EBITDA was INR 28.5 crore, maintaining 10% adjusted EBITDA margin for the quarter. In fact, our adjusted EBITDA for H1 has grown at nearly 45% YOY versus last year, surpassing our own expectations on balancing profitability and growth.
We do understand that optically, the path may look negative, but that is largely due to a non-cash, non-recurring ESOP one-off that Saurabh will provide more color on in a bit. For flights, the overall domestic market had actually contracted by about 2% YOY, at least a decline of 2% in Q2 due to capacity constraints and impact of stronger monsoons and delayed runway closure during the quarter. However, at ixigo, we still grew our GTV by 29% YOY, and our flight revenue grew by 60% in Q2. This was despite some moderation in our discounting, and hence, our contribution margin percentage came out even better than Q1. Our growth headroom lies in our scale of users, though we are still relatively small on flights as compared to our true potential, and our strong brand presence in NVO markets is driving a decent part of this growth.
Over 50% of new flight bookers that were coming from our NVO app users continue to be first-time flyers, allowing us to keep adding new travelers to the overall market, even in a time when the overall market did not grow, demonstrating the unique demand pool we have access to. Our tier one flight bookings also continue to grow nicely, and we see our brand purchase for the keyword "ixigo" continuing to rise as evidenced on Google Trends. Finally, our international flights business is growing faster than domestic and remains a focused area for product enhancement. We've also managed to improve take rate through our peace of mind stack and other ancillary services that we sell to those users. On capacity too, we are seeing some green shoots in October, with a peak day recently.
We have seen a peak day recently crossing 500,000 passengers flown in the market in a day. As per the winter schedule filed with DDCS, departures across airlines will be up nearly 6%. It's 26,495 per week over the winter schedule of 2024, when there were 25,007 weekly departures. On buses, we saw good inventory additions in the overall market, with private operators adding many new buses and routes, and the addition of seven new SRTCs in our inventory: Odisha, Southern Bengal, Telangana, Punjab, Kerala, Sikkim, and Uttarakhand, now aggregating 17 major state transport corporations on AbhiBus for wider route connectivity. We saw strong bus demand for pilgrimage routes to Tirupati, Nashik, Ujjain, Varanasi, and Haridwar this quarter. On trains, it was actually a defining quarter, testing our resilience amid ecosystem-related adjustments.
Our DNA to adapt and turn change into opportunity has helped us maintain our market share leadership and seed new growth engines. While growth in this vertical standalone appears softer compared to our exceptionally strong past quarters, we have to see it in the context of the overall business growth as well as the rail market's inventory growth, given the series of changes introduced by Indian Railways this quarter and prior, which I had already alluded to in our previous earnings call last quarter. These changes include things like the reduction of the advanced purchase window, some reductions in late listed inventory, Aadhaar-based authentication for tatkal bookings, and the restricted time window for agents regressing to 30 minutes for tatkal bookings. However, for the advanced reservation period bookings, Aadhaar-verified users on OTAs have been allowed to book just 10 minutes after opening time for ARP, that is 8:10 A.M. onwards.
All these changes temporarily altered booking patterns in the beginning of the quarter for the whole ecosystem, and it took a couple of weeks for the users to adjust to these changes, making year-over-year comparisons less representative of the underlying momentum in the train segment. Though we rapidly implemented Aadhaar-based authentication, these changes impacted our algorithms for ixigo Assured and Travel Guarantee, which we now know as Alternate Travel Plan. It took some weeks of data for the algorithms to recalibrate and adjust to the new demand patterns, as well as the new waitlist confirmation prediction patterns, leading to some contribution margin squeeze in this segment when seen year on year. By the end of the quarter, we saw some normalization and stabilization from the dip we saw in the beginning of the quarter due to these changes.
In fact, we touched a new all-time high of 350,000 train packed segments in a day, around the time when the advanced bookings for Diwali opened in August. The new policies introduced also mean that the future revenue and profit pools will need to come from more product and tech-led solutions, and we will continue identifying more opportunities to solve customer problems and maintain our growth. To summarize, this was a quarter that tested our resilience, agility, and responsiveness to changes in the macro environment, and the fact that we still delivered profitable growth across all three lines of business and remain the fastest growing OTA in the market. I remain hopeful that in quarters where the macro is more favorable, we can continue to shine. With that, I hand over the mic to my dear friend and Co-CEO Rajnish to talk about hotels and our product and AI initiatives.
Thanks, Anmol. This quarter, our product and teams were quite busy improving the customer experience for our users. Beyond, as you noticed, integration expanded our international connection with GPS and NTC content. We also launched smart AI screens for our flight desktop model, allowing users to apply screens in their natural language. Partnerships also went live to Bharat's Iron Bookings and API cards. Our train team rolled out a beta version of train alternate features such as GL Mode from ticket options by exploiting near-miss and partial journey alternate gates and routes. Only when implemented Aadhaar-based authentication for allowing bus bookings in record time, which is the in-bus booking over 10,000 verifications paid that fully complied with the railway regulations. We also integrated Delhi Metro rail ticketing through the ONTC's app, which is seen in charging updates.
In partnership with NTC SmartBank.
Rajnish, I'm really sorry to interrupt you, sir, but your voice is not audible now.
Okay. Is it better now? Is the voice better now?
No, sir. It's still the same, sir.
I'll take it forward. We also integrated Delhi Metro rail ticketing through ONTC, which is seeing encouraging uptake. Partnerships with NTC SmartBuy and Rapido are already helping us expose our trains funnel to newer user segments. Even small UX changes are improving food on train uptake and conversion rates. Overall, our MTU to MEU ratio is 4.9% in the first half of FY2026, reflecting better engagement and monetization. We're still in the early stages of scaling up performance and brand investments in buses, flights, and hotels. There are plenty of growth levers ahead. On hotels, I'm pleased with our progress on both product and supply enrichment, as well as the consistent room night growth quarter on quarter. Many of you have asked how building a hotel OTA today differs from building one a decade ago. The short answer is a lot has changed, but a lot still needs to.
Ten years ago, most hotels were offline, manual pricing, OKK inventory, and on-ground aggregation teams doing the heavy lifting. Today, a majority of mid-range and budget hotels use PMS and channel managers, making rates, availability, and content live across platforms. Access to inventory is now a commodity. Tier 2 and Tier 3 cities are the new growth engines. Digital payments and pay-at-hotel options have reshaped booking behavior. Consumers are no longer chasing the lowest rate. They want peace of mind. Assurance, transparency, cancellation, flexibility, and refund speed matter as much as discounts. For hotel owners, the OTA's role is also evolving. The real value add comes from solving their pain points with empathy, ensuring that travelers actually get what was promised. Over time, as we integrate more directly and curate deeper mixed-tier supply, quality of experience will matter more than sheer quantity of inventory.
Interestingly, even today, OTAs only drive about 10%- 20% of bookings for the average budget hotel in India. The opportunity remains massive, with over 2 million rooms to fill daily. Now, moving to AI, we believe our company is at an inflection point in fulfilling its vision of building the best AI-first travel experience. The immediate opportunity is to invest deeply in emerging agentic AI capabilities. This is needed to solidify our presence in hotels, build stronger brand recall, and accelerate growth through new AI platforms, products, and services. Our incoming investor Prosus has been a global pioneer in AI-led innovation and backed companies that are reshaping industries. Their vision of unlocking an AI-first world for billions aligns beautifully with ixigo's mission to build the best AI-first experience for the next billion travelers of Bharat. This moment in history is rare.
First, the global build-out of AI in infrastructure means the cost of models will keep falling as adoption grows. Second, efficiency gains are already visible. Early adopters are driving meaningful productivity jumps. Third, we are still defining what the best AI-native experience looks like for travel, which will open entirely new demand pools and business models. The dawn of the AI era gives us a once-in-a-lifetime opportunity to reimagine our company's future. Companies that succeed in the next decade will look very different from those today. Travel apps will evolve into conversational, multimodal, hyper-personalized agents that don't just assist but act. At ixigo, that's the vision we had even back in 2017 when we launched Tara, our travel assistant. On the AI efficiency side, the impact is very visible.
Nearly half of our voice support calls are now resolved end-to-end by agentic voice agents, and over 90% of customer chat interactions are handled by AI, managing 2.69 million interactions this quarter. As a result, 97.4% of calls are answered within two minutes now, and refunds now happen in just under three hours on average, with a large percentage processed within minutes. Now, stepping back for a moment, every few decades, the world experiences a technology inflection point. These moments don't just change tools, they redefine entire industries. For incumbents, they are both an opportunity and existential threat. Startups born in the new era move faster, unbounded by legacy systems, while incumbents struggle with inertia. The paradox is simple. The very size and success of incumbents make them vulnerable. The only way to avoid being disrupted is to disrupt yourself first. With that, I'll hand it to Rajnish, who's back.
I think he'll try his connection once.
Can you hear me now properly?
Yes.
Hello.
Great. Yes. Can you hear me now properly?
Yes, we can hear you, sir.
Okay. I'll just carry on. The paradox is, because the very size and success of incumbents makes them vulnerable, the only way to avoid being disrupted is to disrupt yourself first. We call this building a new coin-signed vehicle. The new behavior is like a startup, small, focused, unencumbered, but with the parent's data, domain expertise, and resources. Turnaround, it can disrupt your old business model before the outside world does. We've lived this story before. Back in 2013, 2014, as the mobile revolution was unfolding, we were hit with this desktop-first business that was at risk. Instead of tinkering at the edges, I locked myself in a room with key engineers. Out of that sprint was born the ixigo train app. That app didn't just supplement the old business, it rewrote our future.
It gave us massive distribution, created a new growth engine, and eventually made the old business model obsolete. We disrupted ourselves. The new core overtook the old core. Today, we stand at the biggest inflection point in the history of humanity, which is AI. Unlike Google, which changed how we access the internet, AI is reshaping how we think, work, and create. That scale of disruption means the risks are proportionately larger. For incumbents, the danger is not simply losing market share, but becoming irrelevant overnight. This time, our new core must be AI-native from day one, rethinking products, processes, and customer experiences with AI as an effort, not as an add-on or a mandate. Becoming AI-native means reimagining around three key vectors: conversational, multimodal interfaces, which means moving away from tech-based rigid workflows to natural, human-like interactions that scale infinitely.
Number two, hyper-personalization through vertical data, using our deep travel data to deliver predictive, preemptive experiences, knowing what the user wants before they ask for it. Lastly, agent economy, going beyond just recommendations to real actions, researching, booking, and solving tasks automatically on behalf of the customers without them having to lift a finger. These key pillars map directly to our AI strategy, which is to shoot around efficiency leveraging and disruption. When disruption arrives, you only have two choices: be the company that gets disrupted or be the company that creates that disruption. The easiest path is to choose the latter again and again at every inflection point. There's a narrow window right now to combine our deep tech DNA and proprietary data with disciplined investments in self-disruption. Those who do will be rewarded with disciplinary growth and operating leverage.
As I've said before, we'll deliberately deploy some capital within the vertical. Our AI disruption strategy led to what ixigo should look like in the AI-native world ahead. I'll end by saying that we're all probably using the worst AI we'll ever use in our lifetimes. From here, our economy gets smarter, stranger, and far more capable, which makes this the most exciting and slightly terrifying time to be building. With that, I'll hand over the call to our friend and Group CFO, Saurabh Devendra Singh, to talk about numbers.
Thanks, Anmol. Now, if I had to name this quarter, I would call it adolescence. We've outgrown childhood, but our journey towards who we are meant to become is only just beginning. Now, we are at an age that allows us to stumble, like we did right now, occasionally fall, scrape our knees, then rise again, stronger and perfect, and then smile and say, "We told you, sir." I know what you might be thinking here. Here, I'm being pompous, and you've just seen the result, and slide 28 of what we call the beautiful slide has its first hint of red. You would not be wrong to point out that unlike recent quarters, this one was not perfect. Like all things adolescent, this was never meant to be perfect or easy. If I'm being totally honest here, most of the quarter was tough. That is what makes it special.
We fought hard. We accelerated when we had to. We also learned to stop when that was the wiser choice. When the present looked tough, we built for the future. We also made new friends through new customers, new partnerships, and some great new investors. Quarters like this showcase the ixigo DNA and form the foundation of our growth for years to come. Now, let's talk numbers. As always, all numbers are in INR currency unless stated otherwise, and year-over-year comparisons are Q2 FY2026 against Q2 FY2025. On the headline numbers, our gross transaction value stood at INR 4,347.5 crore, up 23% from INR 3,528.7 crore last year. Revenue from operations came in at INR 282.7 crore, a 37% YOY increase. Contribution margin was INR 109.6 crore, up 20%, with a contribution margin percentage at 39%.
Adjusted EBITDA stood at INR 28.5 crore compared to INR 21 crore in Q2 FY2025. This was a growth of 36%. CAC came in at a negative INR 3.5 crore versus INR 13.1 crore last year. This included a one-off, Westinghouse milestone-based non-cash ESOP charge of INR 26.9 crore and also some other one-offs, which I will discuss closer to the end of my speech. Our cash flow, as Aloke mentioned earlier, came in at INR 91.5 crore for the first half of FY2026. Let's go on to the business segment overview. In flights, it was a month and a half ago when I found myself sitting in the Gurgaon office mess for a late lunch. As luck would have it, our flight business head walks in a few minutes later and chooses the seat furthest away from mine. I obviously ask him why.
He smiles and says he wants to avoid another conversation about how we will be growing in the flight business compared to the industry. Now that the numbers are out, I owe Nitin an apology and thank you. In a slow market, we stood out for our growth. We booked 2.41 million flight segments, up 19%, with a GTV of INR 1,592.4 crores, up 29%. Contribution margins of flights rose 45% to INR 39.6 crores at a contribution margin percentage of 44%. Flights contributed 36% of our group's total CM. Our bus business reminds me of elephants. They listen carefully, remember everything that matters, and move with a surprising speed to turn speed back into better products. Before you say elephants are not fast, remember they can move at almost 40 kilometers per hour, not too far away from Pikku Sendboat.
The speed for our bus team was evident in this quarter's numbers too. Our passenger segment grew at 46% YOY, reaching 6.04 million passenger segments, with a GTV up 51% to INR 571.9 crores. Contribution margin was up by 31% to INR 34.1 crores at a 52% contribution margin. We see this as a high-growth area and will continue to invest in this business. Buses contributed about 31% of our total CM. I think I've mentioned this before, but I have a standing coffee bet with our train business head. With our dominant market share in trains, we shouldn't be able to grow faster than the market. Every quarter till now, I have lost this bet badly. It took what I call a perfect storm or what Aloke referred to as ecosystem-related adjustments to convert this to a close fight.
Still, we grew faster than the market, though it was much, much closer than before. Dinesh, if you're on this call, I think we'll call this quarter a draw. In the train segments, we booked about 27.2 million train segments, up 10% YOY, with a GTV at INR 2,125.9 crores, up 12%. Revenue stood at INR 122.9 crores, up 11% YOY. CM shrank by 9% to INR 34.2 crores with a 28% contribution margin percentage. Trains contributed 31% to our overall group CM. In their sections, both Aloke and Rajnish talked about the capital raise and why the future will allow us to be more strategic and allow us to invest in building AI-driven digital assets, platforms, and capabilities that will power the next phase of growth. That said, as an ongoing business, let me highlight the one-offs and key callouts in our current operation.
The one-off and callouts that are there in Q2 FY2026 include a one-time ESOP accounting charge of INR 26.9 crores on account of early achievement of performance thresholds specified in the grant terms. Two, share of loss from Fresh Bus and Associates Company of INR 1.47 crore. For Q2 FY25, the one-off and callouts comprise the following: share of loss from Fresh Bus and Associates Company of INR 1.93 crore, gain on account of reversal of exceptional item pertaining to share issue expense amounting to INR 0.83 crore. If we were to compare on a like-by-like basis by excluding the respective item in both the periods, our profit before tax would have increased by 26% YOY from INR 19.4 crore in Q2 FY25 to INR 24.4 crore in Q2 FY26. This quarter is about growing up and putting the building blocks in place for what we know is our true destiny.
I'm reminded of a few lines from Shivmangal Singh Suman's poem that my father used to recite back when I was in adolescence. [Foreign language] Over the next few quarters and years, there will be victories, and there will be setbacks. There will be moments when patience will be the most prudent. During this journey, we ask not for luck, but for endurance and the focus to deliver perfect journeys to our customers. With this slightly philosophical closure, I will pass it on to operators for Q&A.
Hi, can we pass it on back to the operator, and you can pick it up from us?
Sure, sir. Shall we start the Q&A? Question and answer?
Yes.
Thank you very much. We'll now begin with a question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use headsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Anmol Garg from DAM Capital Advisors. Please go ahead, sir.
Yeah. Hi. Thanks for the opportunity. Sir, a couple of things. Firstly, out of the INR 2,300 crores that we are raising, we have allocated nearly INR 320 crores to acquisition and a similar amount to working capital. I understand that working capital in our business is negative. What is the reason for raising money or allocating the same money for working capital? Are we looking to acquire a company with higher working capital requirements?
Hi, Anmol. So there are parts to this, right? One of the parts of this is, as the business grows, there is a need for working capital based on how the business is growing. I'll explain it to you. In fact, I had done that earlier too, but I'll explain it to you. Something like, say, when bank offers come in or when we build out our advertising platforms, and when more and more advertising come in, all of these require working capital. With volume in the normal course of business, even though it's not for a large period of time, it's just for a few days, there is, and that you see also when you see, say, look at my March 31st number, look at the number right now, whenever you're in the long holidays.
There is a certain amount of money where train and flight do need working capital. Buses are a negative working capital business, but train and flight do need the working capital. As they grow, there will be a need there too. It's a combination of these, and it's a combination of how the business grows where this comes in.
Okay. Understood. Just on the second part of this question, what kind of acquisition are we looking at? What I mean is that in which particular area are we looking to acquire any assets?
Yeah. Hi, Anmol. This is Aloke here. We have specified unidentified acquisitions because at this point, we do not have any identified acquisition target per se. I'll just walk you through our typical thinking on our acquisition philosophy. When it comes to compare, typically, a fast track record is that we've found good quality, high-quality entrepreneurial teams who are building something either synergistic to what we do or which can add a new vertical or a new market to our business. The process for evaluating these deals typically spans several quarters. I think Saurabh will vouch for how rigorous that process is at our end in terms of how long we take to evaluate these deals and do diligence on them. Typically, the criteria is essentially around four pillars.
There's quality of the leadership or founding team and its cultural fitment with us, clear strategic fit and synergy with the existing business, either in terms of offerings or in terms of what we want to enter, and market impact, including share gains, or is it entering into a new vertical or a new geography or a new product type? Then there's access to technology or IP or some sort of leverage that you can gain on some of the AI stack that we're building. I think those are the areas that we look at. Of course, the pricing has to be reasonable. The terms have to be favorable, and the company should not be heavily into losses and all that. We typically don't even look at those assets. Those come as a natural filter.
Our people will not change if you look at what we did with Confirm Ticket and AbhiBus and even Zoop. These were companies which were already well proven, small teams, frugal, capital-efficient, profitable. That's the kind of acquisition that we typically like. Having said that, we usually have a long pipeline of things we are evaluating. As and when we build conviction, we'll move on something.
What this capital does give us is the ability to be very, very strategic and decide when such an opportunity arrives. Having said that, as Aloke said and Rajnish can vouch for, and I've seen Aloke and Rajnish both on this and the team, I think the first reaction is not to look at anything rather than look at anything.
Sure. Understood. Second, on the quarter itself, just talking about the AI segment, while our YOY growth looks decent versus the industry, we have seen a sharp dip in the GTV in this quarter. When I look at it more sequentially, the dip is around 14%, while the industry dip or the GTV dip is relatively lesser. I understand it was a weak quarter from the volume perspective from the industry level, but still, can you indicate why our growth sequentially was a little lower? Is it because of lower ad spends during the quarter, or is it something else?
Anmol, firstly, you have to realize something, right? Aloke mentioned it in his call. The audience that we are getting has a different cycle than the audience you are conventionally used to on this. What you have to realize is when you start looking at sequential on a particular thing, it's a different audience I'm creating. When I launched a travel guarantee product and when we are getting new flyers in this world, I think it's a metric which you can look at. In my mind, it's on either way. It's a great growth. Last time, my growth number, my base number, and which I've said in your meeting or every meeting that I've had is last two quarters, the growth number is something which was extraordinarily high. Yeah, I mean, yeah, as an API.
Just to add to that, we have to recognize we are in a seasonal business, right, when it comes to all three lines of business. Flights are typically a jazz B2C flight, the seasonally weakest quarter. If you look at year on year, I mean, actually, if you ask me, I'm very satisfied with what we've achieved this quarter because if you look at the market, it was a 2% decline, right? If you're talking about growing 29% on GTV in an environment where there's a 2% decline, I would rate it as an achievement and nothing to be shy about. I think what we could have done and maybe we underinvested, we could have grown faster if we actually chose to invest more and sort of not optimize on discounts or marketing spend as we did.
If you look at our contribution margin percentage, and there, if you look at it sequentially, our contribution margin percentage has actually gone up, Q1 versus Q2. We have actually increased our contribution margin in the flight business. That was deliberate. When the market is not growing, why would you choose to invest more? We kind of remained a little conservative. That's my read on it. As the market comes back, which we have seen already in green shoots in October, November, how the market seems to be coming back in terms of supply, I think you will see the kind of acceleration we want.
Anmol, looking at business, I don't look at things quarter by quarter. If I've had a great quarter, that doesn't mean that next quarter we need to do anything silly just to give a segment number for the next quarter.
Understood. Just one last thing from a more outlook perspective. Going ahead, how should we look at the business? Are we looking at growth going ahead, or would the focus be towards margin expansion?
The biggest focus would be trying to solve customer problems, like Rajnish, and Rajnish can talk about that. We believe everything else is a follow-up from that.
Yeah. I think, I mean, I don't think any changes in our playbook, and Rajnish can add to that. Basically, you know, we keep doing the same thing. I don't think we did anything dramatically different last quarter except that we were trying to sort of understand the ecosystem-related or macro-related impacts and try to optimize for that. Again, you know, as supply comes back, and I think I see it as a one-time problem last quarter, essentially, supply on both train and flight felt as thin in the market, right? You saw the result of that not just for us, but also for our peers. I think as that situation improves, and we already see it improving, right, I think that the demand is very strong. I mean, that's something we can just put out there, that the demand continues to be very strong.
I think it's the supply side that has to catch up. Buses is a proof that when the supply actually catches up, you see the growth in that category. Yeah.
Sure. Understood. Understood. Thanks, guys. I'll join back in the next week. Best of luck for going ahead.
Thank you.
Thank you, sir. Our next question comes from the line of Swapnil Kudike from JM Financial. Please go ahead.
Hi, everyone. Thanks for the opportunity. I have two or three questions. Just continuing with the previous participant's question on the flight growth over the end, and especially when you look at it at a sequential basis, I was just looking at the numbers and comparing it with your large competitors. The passenger segments are in decline on a sequential basis. It seems to be far more than for the last year also. Are there any particular things to look at? Are there any things related to your PhonePe partnership coming into the base this quarter?
It's more weaker. Last year, look at what last quarter, why did a particular person decline or not decline? Even at that point of time, you have to look at the market and you have to look at the performance last quarter. Yes, sequential quarter on quarter. I'll tell you, this is not a sequential industry, as Aloke mentioned right now. The second part is, I mentioned it in the last quarter answer too. Why did I do better with geopolitical problems? Because I was more domestic in that sense. Even in that part, with the world changing like it is, I believe that in a world where it's moved minus two and me giving you 29% growth, as in, on any level, looking at a sequential number where operations, Sindhu, Rorishu, around it, happened for international problems, yes, it's mathematical. That is what is mathematical.
More than what happened in the outside world or why did somebody perform badly last time is not something that I can cure. What I can cure is what I did last time and what I did this time. I think in both the quarters, I've done far better than the market. That is what I have to do.
Yeah, sort of. If I were to just add one more variable to that, your attach rate, which used to be around 29% to 30%, that also seems to have come down to 27%. I mean, any.
Yeah, I'll explain now. I'm glad that you finished the question, and then I'll explain.
Yeah, my question is because we were benefiting from the travel guarantee feature in the past, right? We were able to move some train customers to flights. Is that also a part of the reason that the numbers seem slightly below what most of the sales side or the consumers was expecting?
Firstly, why is the number below? I like you saying it that the number is the number below. What is the industry number for?
Obviously, the industry numbers are poor. No doubt about that. I'm just bringing some.
Just a very macro perspective on this, right? Yeah, last quarter, where I'm saying Q1, right, despite Sindhu and everything and 20 other things that were going wrong in that quarter, if we were growing at a 70% plus, sort of revenue, I think it's not a great benchmark to look against on a sequential basis, to be honest, right? I think that was, by far, you know, in the last five quarters, we've given out, you know, our best quarter, right? Having said that, even if you look at it, including that, and you look at the overall pace of the industry, the OTA market growth and our growth, we are growing faster than, you know, all OTAs out there in all the three categories we operate, right? I mean, and that's something, you know, I think that's the way we think about building up.
We're not going to hold ourselves accountable to what somebody else is doing out there. Look, think of it differently. I'll answer your question on attached rate now. Now, one of the parts of attached rate, if you're asking me, are we getting more train bookers to flight? The answer is a very minute yes. We are still, and if you look through, I know that, we have to increase the time between, we release the FAQ and if you absorb it. If you look at FAQ, we have answered that question saying that, we are still doing that quite, quite nicely and getting a lot of new users in the market. The other part is to realize is the attached rate that you have is a combination of attached rate across all parts of business.
What has changed is that, monsoon did affect the trains and buses side of the business. In some of the scenarios, in trains, as Aloke mentioned in his call, the algorithm needed to be rechecked. And EG is just one of the many products that we are selling. If your question is, did that change? No. In fact, I'll say the reason that why when the industry shrunk and we grew 29% was because we were doing that a lot. The pattern changes, the things change. It takes some time. Attached rate, yes, it did go down, but not for the reason which you suspected too.
Got it, sir. Now, just taking this forward conversation, you know, how do we see this full year FY2026 planning for you at a GTV growth level? Because if I remember correctly, we were starting to do around 40% GTV at a consolidated level. Yeah, for. Obviously, it was not a guidance. It was an aspiration. I think, yeah.
I have said that where we are, we expect to grow significantly faster than the market on this. I'll keep it there. I have never guided to a particular number on this. Yes, in either of the three, we'll continue growing. I can talk about in more detail why we feel we can grow significantly faster. If you had asked me earlier, say this was a 15% market quarter, and had you asked me what is our 20% market quarter, and you'd ask me what would you have expected on flights, I would have said it's a 20% market quarter where the market is growing by 20%. I would have ideally wanted to expect that growth of flights at 40%. Now, it's a lower market quarter. I'm in the market as a participant. The idea is 29% is great. I'm a market participant.
It depends on market, but I still continue believing that way. Buses are the one which is more interesting in that sense. It's a lower penetration market. A lot is changing. We believe a lot can happen there. That is how it is. As I said in my train section, as in I, and I've always said that I personally believe that with our market share, we'll grow closer to the market. My great LOB believes we'll still grow faster. It's who you want to believe out of the two.
Just to push on this a bit more.
What I'm hearing is that the supply side issues on the flight side will slightly improve. There is not a meaningful improvement even in the December quarter also. Should we be looking at, you know, should we start reworking our numbers with that thought in mind going ahead in the second half is what I'm trying to understand?
If I had a clearer view on where the market would be, base your knowledge on where you feel the market should be and expect us to grow significantly faster than the market. If you're very bullish on the market or if your analyst who covers the flight is very bullish on the market, and if you can base it, take a multiple of that, that is where we will be.
Got it. Got it, sir. Just to, on the cost side, now there are two ESOP numbers mentioned in your presentation, one of INR 32 crore and one of INR 27 crore. You have mentioned INR 27 crore as a one-off. The difference.
If you go back to my last quarter's FAQ, I know there are three kinds of ESOPs that we would have. One is the normal flagship-based ESOP. The other ones were the ones which were given, which were target-based, given to the two guys. Then there is another ESOP which we give, say I'm acquiring a company like we did with Zoop. I've got a choice of either giving, and I've talked about it a lot in detail. That's a question which I would recommend that you go to the last FAQ, but I'll give you a summary on this. There are some ESOPs where, say, I acquired Zoop. I could have given him cash. It goes from the balance sheet. I don't think that's right because that doesn't align into me. I would take it on as an ESOP.
I would give it because I want his interest to be aligned to the company interest going up in the future. It's a combination of these three which I would give.
Going ahead, we should factor in the difference between the two as an.
There is one. That too, I've given in a lot of detail. There were two targets, and both were based on, in fact, it's this one too. Both were based on 30-day VWAP. In fact, if anything, I believe that the fact that this was reached earlier is a kind of reflection of investors believing in it because it was in the public domain all the time. I've kind of hinted at it much, much more clearly. One was at INR 9,000 crores. The other is at INR 14,000 crores. Depending on when you believe or when you project that INR 14,000 crores will come in for, and I have zero idea on that, that would be the other part. These would be the only two which would be what I call the Monte Carlo-based ESOPs.
Okay. Just a last one on your brand spends. Sequentially, they were down by around INR 10 crore. Is that entirely because there were a few spends related to the IPL last quarter? This quarter onwards, we should see some normalized spends of around INR 20 crore. Is that how we should look at those brand spends?
Yes, we may have last time discussed it, first quarter maybe? That is what happens with us. Sorry, because there are English-speaking audience too. What happens with us is that we choose our branchments across quarters. When you look at branchments, look at it as a complete year number. As a mass business, there are times when I would be using IPL to increase the bang for the buck for my branchments. It all remains the same, what we've talked about for two years. There is no other change in this. Again, broadly, it's nothing else to do apart from where we had budgeted it.
Yeah. Just to add, I think branchment is somewhat discretionary in nature, right? There could be quarters where we choose to spend more, and there could be quarters where we choose to spend less. It's a function of the strategy and how we believe the market and demand or supply is shaping up out there. I think even how this quarter macros are looking like, you know, we chose not to spend more.
Got it. Thanks a lot for the answer. All the details are moving forward.
Thank you, sir. Our next question comes from the line of Arpit Shah from Stallion Asset. Please go ahead.
Yeah. Hi, Saurabh. Hi, Rajnish. Hi, Aloke. A phenomenal execution in a tough quarter. Growing aviation, flight, railways also in a very tough situation where I love card authentication. All the tough words in that are to judge what the demand patterns could look like. It's coming to quarter three, right? You have already seen the rally gone by this year, gone by October, gone by since probably see the advanced bookings for the quarter which is happening currently. Do you see trends which are similar to Q1 in terms of growth rates, or you would see a very similar muted quarter like Q2 or Q3?
Yeah. Thank you. I think I wouldn't call it a muted quarter. I would just call it a quarter where the macro was tough, and we managed to continue executing our strategy. Having said that, I think there are green shoots in October that we are seeing, both in terms of supply coming back on the air side, and we've seen announcements from airlines. We've seen the winter schedule that was filed in EGCA, both indicate that there will be more planes up in the air. Of course, because of the change from four months to two months for the train advance booking, we've started to see now bookings for Christmas, New Year break. I think that's shaping up quite well. All I can say is that the macro environment looks better in this quarter.
I would not give any specific guidance around it, but I can just say that we don't see the kind of supply constraints we were seeing in the beginning of the previous quarter.
Got it. Now, when do we start expecting to see the cash on the books and process? Does it happen from quarter three and onwards, or when do we see the cash coming in the books?
The EGM happens in about two days' time, and the voting happens. Once that happens, there is a process of a couple of days, and you get that.
To be honest, complete cash coming in one go, right?
Remember that the voting is still not done, as in one of the quarters. The voting is still not done. Whatever I'm saying, I assume that the voting gets passed. If the voting gets passed and the EGM is successful on first, in a maximum of a couple of weeks, we should have the capital in.
Got it. You mentioned ESOP targets of INR 14,000 crore market cap. Would the quantum also be similar? What do you rate this quarter?
Yes. What I would recommend here, and I have given all the links to all the filings in the last quarter's FAQ, just go through that. It's the same amount as this one. It needs to, the stock needs to be there for 30 trading days VWAP for that to actually come into action. Also, remember that the actual vesting that will happen will happen after a year for this. Right now, what we're doing is we're doing it because the target has been hit. Even in that case too, if it happens before, and I have no way of knowing whether it will happen before or not, if it happens before, it will be in a similar way.
Got it. Thank you so much.
Thank you.
Thank you, sir. Our next question comes from the line of Akhil Kuleisha from Humble Capital. Please go ahead.
Yeah. Hello, and congratulations on another great quarter and the fundraise as well. My question is on the flight segment. We saw a GTV growth of 29%, but we see a revenue growth of 60%. Would it be fair to understand that the difference between the GTV and the revenue growth, a large portion of that has come from the value-added services component? Are there any new products that we worked on in the flight segment? Can you explain the difference?
Yeah. It's a good question. What you mentioned, look, there are a couple of legs to that. Part of it was what you're saying, yes, it's WAP or what we call the peace of mind stack. Say something like what we called as either travel guarantee or price lock. All of that appear much stronger in the operating revenue than otherwise. There is more to it too, right? It kind of answers what we talked about earlier in the question. Things like the bank offers and advertisements, they are chunky and campaign-based. They'll appear in some quarters. They won't appear in some quarters. My hope is that as we keep on gaining more market share in the flight segment, assuming we continue doing that, these keep on increasing, which come, but they are selective.
What I would always say is that for this line item too, think more over the year. Don't think of it as sustainably. We'll keep on having that difference. Apart from this, there's just one more small point which also leads to this and which Aloke Bajpai mentioned in his speech, which is that the discounts this quarter were slightly less than the corresponding quarter last year because our team took that call, and which is what I was mentioning to Swapnil in his meeting. At times, they could have chosen to chase the top line, but they took the call that it is not profitable chasing top lines because the markets are tougher. They took the call that let's not be too aggressive on everything. There are times when you kind of work through things which are more sustainable.
Okay. Got it. Thank you so much. Last question. All of these investments that you would be making in the hotel OTA segment or on AI, etc., how would we be accounting for it? Will we be writing it off immediately as the investments happen? Will we be following a depreciation policy? What are your thoughts on it?
There is something we've always done. Part of it depends on what kind of investment it is and what the impact is. Things which are more short-term will be expensed off right away. Things which are more, which are massively strategic in nature, I'll give you an example. We've done it before when the entire world changed and what Rajnish referred to when he talked about the mobile evolution. At that point of time, there'll be some things which will be capitalized and which are more long-term in nature. It can be a combination of both.
Okay. Got it. Thank you so much, and best of luck.
Thanks a lot. Thank you.
Thank you.
Thank you, sir. Our next question comes from the line of Prateek Kumar from Jefferies. Please go ahead.
Yeah. Good evening. We have a couple of questions. Firstly, what is ixigo Group's current market share in air and bus bookings? How do you expect it over the next 12 and 24 months? In general, how do you see competitor intensity across the future segments? As you said, there's a mass count for yourself in this segment.
Yeah. Hi, this is Aloke here. I think we haven't really called out specifically the market share, but what I can guide you towards is that on buses, we would be mid to late teens of the OTA market. On flights, we would be close to 10% of the OTA market at this point. I think we're not really super obsessed about chasing market share for the sake of it, but what we want to do is grow faster than the overall OTA market, which is what Saurabh was talking about, which I think we've managed to do in the last five quarters in a row, and we want to continue doing going forward. There's no sort of short-term target that I can talk to you about.
Flight market share we know once everybody releases too. One of the participants doesn't release, otherwise.
What about the competition intensity? You said, lowering of discounts for yourself. Overall, like in the smaller players or target player, how is the overall competition in the flight segment?
We've not seen it change materially for us because remember that we don't really overlap in terms of audience with most of the other sets. Even on flights, I'm talking about our audience, part of it is pretty much unique to us, right? We don't really spend that much time looking at the competitive intensity, to be honest, because we've been kind of immune to it for the last five years that we've been building the flight business. I think one thing is very certain that in the world that's coming, if you're building with the AI-first approach that we are now building our entire new existence around, product and tech capabilities are what will matter.
I think on that metric, if you talk to industry experts, you will get to know that there's very few companies who have the kind of talent or the kind of resources disposable to build what we are talking about. It requires patience because it's not going to get built overnight. It might take several quarters to build out what our vision is. We are confident that we will build it because we have a track record of doing these things.
Just another philosophical question. What do you think can be the most breakthrough AI things that you probably work on which can help solve problems which you are currently not able to solve?
Yeah. I will defer this question to Rajnish. I hope his line is better at this point. Rajnish, you want to come in on that?
Yeah, can you hear me?
Yes.
Sorry. It's still not clear.
It's better. We should go on.
Sorry, I'm just trying to understand your question. Your question was around any specific technology, with AI for travel, or are you talking about in general AI as a technology to travel is able to do again.
My question was like the general AI-related travel, which can help boost your market share and engagement with the customer.
Yeah. I mean, as you can see, what has happened with AI is that execution in some form has been commoditized to a large extent. I mean, companies, everybody has the same starting point, and everybody has the same set of technologies to build. Right now, if you think about it, like earlier, in the earlier point, customer experience, you can share different stages of things like distribution, IT technology, etc. That does not matter anymore. I think the only thing that matters in the current world is the customer experience. If you have that degree of extreme customer obsession, if you're obsessed with customers and solving their problems, this is the best time to build because AI has kind of commoditized execution to a large extent. Our belief has always been the same, focusing on customer problems and keep solving them through AI.
What is definitely going to happen is, with agentic AI, you will see a big transformation in how consumers research and book. A lot of those things that I think we talked about, how much of a hyper-personalized user experience will change the way people book. This opens a new way for people to research and book because it just makes it a lot easier for them to research and book. At the same time, people are also able to, in this kind of a world, the user experience and the user interface is such that people are actually exposing a lot more about their taste and preferences and a lot of personal information about what they really want, compared to the world where they were just doing a keyword search on Google and just putting some advertising links. In that sense, the world is changing very rapidly.
I think there are already scenarios where we are experiencing people using our products and services where the users themselves are not doing anything, whereas our agentic systems are doing a lot of things for them. I think the rise in agentic systems is probably one thing that is going to change the whole landscape of how travel or any other vertical is seeing the consumption of the changes online. I think that shift is going to be game-changing.
Thank you. Let me share with you my question.
Thank you very much. In terms of the time, that was the last question. I now hand the conference over to management for the closing comments. Thank you. Over to you, sir.
Thank you, everybody, for attending our Q2 earnings. I hope you all have a great Christmas and New Year break, and we'll see you on the other side.
Thank you, sir. On behalf of DAM Capital Advisors, that concludes this conference. Thank you for joining us. You may now disconnect your line.