Le Travenues Technology Limited (NSE: IXIGO) Q2 2025 Earnings Call dated Oct. 24, 2024
Corporate Participants:
Aloke Bajpai — Chairman, Managing Director and Group Chief Executive Officer
Rajnish Kumar — Director and Group Co-Chief Executive Officer
Saurabh Devendra Singh — Group Chief Financial Officer
Analysts:
Rohit Thorat — Analyst
Swapnil Potdukhe — Analyst
Anmol Garg — Analyst
Pankaj Kumar — Analyst
Aman Singh — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to IXIGO Q2 FY25 Investors Conference Call hosted by Axis Capital Limited. As a reminder, all participant line will be in listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]. Please note that this conference is being recorded.
I now hand the conference over to Mr. Rohit Thorat. Thank you and over to you sir.
Rohit Thorat — Analyst
[Technical Issues] Axis Capital, I welcome you all to IXIGO’s Q2 FY25 earnings call. Mr. Aloke Bajpai, Chairman, Managing Director and Group CEO; Mr. Rajnish Kumar, Director and Group Co-CEO; and Mr. Saurabh Devendra Singh, Group CFO.
Before I hand over the call to Aloke, I would like to highlight that the Safe Harbor statement on the second slide of the earnings presentation is assumed to be read and understood.
Over to you Aloke.
Aloke Bajpai — Chairman, Managing Director and Group Chief Executive Officer
So I am joined here by my colleagues Rajnish who is Director and Group Co-CEO; and Saurabh who is the Group CFO. Welcome to the ixigo earnings call for the second quarter of fiscal year 2025.
Our playbook of building the best customer experience for travelers and addressing the needs of the next billion user market segment continues to drive our ability to grow faster than the overall market at the GTV level.
This quarter, we are pleased to share yet again that the ixigo Group hit an all time high on our gross transaction value, revenue from operations contribution margins as well as EBITDA for the quarter. We exceeded INR3,528 crores of total gross transaction value booked through our platforms in Q2, a 40% increase year-on-year compared to the Q2 of last fiscal year.
Our Trains business grew at 36.1% at the GTV level by a Y-o-Y. Our Flight business grew at 42.6% at the GTV level Y-o-Y and our flights business grew at 42.6% at the GTV level Y-o-Y.
Our Bus business has delivered the strongest growth with 45.5% increase in GTV Y-o-Y. This acceleration in our growth in a seasonally weak quarter has been achieved while keeping our EBITDA margin stable with the company delivering INR22.4 crores EBITDA in Q2, a 655% increase in our EBITDA.
For the month of September 2024, we’ve recorded nearly INR1,200 crores of monthly GTV, a new record and we closed the quarter with a 20% increase on that number sequentially, if you compare with the month of June 2024 when it was around INR1,000 crores, over 93.97% of our transactions in the quarter close to 94% continue to be those with a leg of the journey in a Tier 2, 3 or 4 town.
Despite the unusually strong monsoon range disrupting travel in some parts of the country. We achieved the growth acceleration in GTV while maintaining a double-digit adjusted EBITDA margin in the quarter, achieving a margin of 10% of our revenue from operations with the Q2 adjusted EBITDA coming in at INR21 crores for the first time ever. This was achieved on the back of the operating leverage derived from the expanded contribution margins in our business with INR91.1 crores of contribution margin in the quarter up 23.6% versus last year.
For our trains line of business, we continue to see good momentum in growth on the back of capacity growth as well as market share gains with 27.6% growth in train passenger segments, crossing 2.5 crore passenger segments booked in a quarter and strengthening our market leadership even further within the trains OTA market.
Domestic aviation continues to be plagued with supply side constraints though the situation is now showing signs of marginal improvement every quarter. The domestic air market has grown at just around 5% year-on-year for H1 of FY25. However, we managed to continue on our trajectory of beating the market space of growth by delivering 28.4% growth in our passenger segment and over 42% growth in revenue from our flight segment.
While our overall flight GTV grew 42.7% to INR1,237.5 crores, that’s INR1,237.5 crores. Our international flights GTV continued outpacing our domestic growth with a 47% GTV expansion. We continue to see a large opportunity over the longer-term for our flight business given the number of new flight bookers being added in India every year and our right to win in our captive user base relying on our own distribution flywheel that allows our airline partners to tap into a unique user base of potential first time flyers, as well as international players emerging from Tier 2, 3 airports in India.
From and to certain Tier 2 and 3 airports such as Vijayawada, Jharsuguda, Varanasi, Rajkot, et cetera. We continue seeing 50% plus growth Y-o-Y in passenger segments. And for some of them it has even crossed 100% growth.
In the bus market, we’ve materially accelerated our business this time with 45.5% growth in Q2 GTV and a 44.8% growth in bus passenger segments in Q2 Y-o-Y. Thereby we have gained market share and where the market would have grown in the 20s, we have grown in the 40s. We’ve signed up more operators in far flung regions in this quarter and we’ve also nearly doubled the number of operators that form part of our Abhi Assured program.
As we mentioned in our last call, we’ve shifted our focus towards growth over contribution margin percent in the categories of buses and flights and the results have started becoming visible in terms of growth acceleration, though it leads to a lower contribution margin per booking, but at an aggregate level due to the volume growth, our contribution margin continues to grow given we see a large opportunity of acquiring first time online bus bookers and first time flyers on our platform.
We also have a more strategic announcement today. Our Board, at its meeting held today on October 24th, has approved entering into a definitive agreement to acquire 51% stake in Zoop Web Services Private Limited, known as Zoop, for a total consideration of INR12.54 crores including non compete fee, subject to the completion of certain conditions precedent through a combination of secondary and primary share purchases. Additionally, we have the option to purchase the remaining stake in the future subject to fulfillment of certain conditions.
Zoop started in 2016 and is a leading IRCTC authorized e-catering partner for food delivery on train. Led by Puneet Sharma and Manoj Kumar, the team has grown the business frugally and with a lot of resilience, emerging as one of the respected trained food delivery players, delivering food at over 192 stations in 18 states from over 400 partner restaurants. Zoop has also been building its own in-station logistics network for delivering food more efficiently, directly to the berth or seat of the passengers.
E-catering on trains has become a fast growing part of the market for IRCTC and its food aggregator partners and as per management estimates, food on trains has a TAM potential of nearly $1 billion. This strategic partnership also gives us an opportunity to deepen our partnership with IRCTC on another front of e-catering growth with synergy creation for everyone involved in this process.
With this, I’m now handing over our call to our Group Co-CEO Rajnish, who will give you some interesting updates on our business, products, and technology. Over to you Rajnish.
Rajnish Kumar — Director and Group Co-Chief Executive Officer
Thanks. Aloke. So indeed, it’s been a pretty busy quarter for us we had over 78 million monthly active users this quarter and 3.43 million monthly transacting users. Over 3.1 crore passenger segments were booked with us during Q2 FY25, which helped our GTV grow that fast and we achieved a high MTU to MAU ratio of 4.4% in the quarter.
Our monthly transacting users grew nearly by 43% year-on-year to almost 3.43 million for the quarter. We saw growth in conversion rates and transactions through data science and AI led optimizations in our conversion funnels, optimizations in our payment flows, and better targeting of our non transactional users for transactional use cases.
The lowest hanging task for us remains to convert more of our large user base into first time bookers with us, and to improve retention, repeat, and cross sell within our existing booker base. We are working on both of these, as we speak. We are proud to share that we now have 38.2 million lifetime transacted users on our platform.
Now let me share some key developments in our business from this quarter and I’m going to start with the bus line of business which is our fastest growing line of business in the previous quarter. We continue to add bus supply every quarter in certain parts of the country where we had some missing inventory. Certain new operators such as Flixbus have come on board on existing routes as well. We’ve also added Jammu and Kashmir State Road Transport Inventory this quarter, further strengthening our SRTC inventory footprint. We’ve almost doubled the number of Abhi Assured operators as well.
In addition, we have been doubling down on marketing as well as distribution channels for growing our bus ticketing volume in order to capture a large share among the first time online bus brokers. Given how low the overall online bus market penetration continues to be, which is roughly around 20% as we speak. This should allow us to continue growing faster than the overall market for some time.
This quarter, we launched a very interesting product called Bus Insight. This provides a real time view of the exact bus likely to be assigned to your trip right on the search result page so that you can know how old the bus is, what make it is and what its likely conditions will be, helping travelers to decide what to book based on the age and quality of the bus they will travel on.
On the flight side, ixigo Group’s unique advantage continues to be our unique access to a large user base of the emerging middle class where rising aspirations and increasing discretionary incomes continue to fuel the aspiration to start taking a flight instead of a bus or a train for a long distance trip. The fact that most trains tend to get waitlisted closer to the peak season also leads to a lot of spillover demand from these passengers who are unable to find a confirmed seat.
Our users have familiarity with our brand, with our customer service and with our ability to handle cancellations and refunds efficiently. Hence, as their incomes improve, or as an airport arrives in their proximity, or as they start spending a larger share of their wallet on experiential travel, et cetera, our flight business and eventually our hotel business will continue to be a natural beneficiary of that.
I’m going to talk about another interesting and innovative product that we launched which is Price Lock. A Price Lock feature in our flight business is a fintech driven product. It’s a game changer for both our customers and our monetization.
Price Lock addresses a key pain point that travelers often face, which is the fear of price hikes before they are ready to book. With Price Lock, bookers can secure flight fares for small fees, giving them the flexibility to finalize their plans after a few days without the pressure of fluctuating fares. If the price falls, customer can book at the new lower fare and if the price goes up, the customer can pay the logged amount to book the flight. This added peace of mind has resonated strongly with our users as it empowers them to plan their trips at their own pace without the fear of missing out on the best deals. The early response is quite positive and we are extremely satisfied with the early progress.
Now, on the train side, we have accelerated our growth. A large part of it is due to the capacity improvements that we have seen, but on our train searches, you can now see trains from nearby stations, which is immensely helpful when there are no direct trains available, or there are limited trains available from stations being searched.
And with the Zoop acquisition that Aloke talked about, we have also just gone live in the ixigo trains and confirmed ticket apps with food ordering on trains with food being directly delivered to the passenger seat off berth from restaurants at 192 plus station, we will roll this out to all our app platforms and web platforms over time and integrate more deeply within all major train use case funnels. We believe we have a unique advantage in this due to the depth of data that we possess about trains as well as the user base that we have.
Our unique position in the market catering to the next billion users means that we have an unprecedented opportunity to add new transacting users to the online travel market and grow the market by offering more value added services that cater to these users. To do that, we have to invest in product enhancements that can lead to conversion and MTU growth, as well as double down on performance marketing and brand building in those lines of business where our contribution margin was decent but we were not market leaders.
Customer experience continues to be a reason why users shift to us. We managed to improve the percentage of customers who connect to a customer support agent over a call within two minutes to almost 94.9% in the second quarter, and we have maintained over our average refund time to customers at 3 hours and five minutes, despite the increase in scale of our business. We will also continue with our ahead of the curve investments in technology and AI wherever we see an opportunity to create a more evolved user experience and create efficiencies.
Now I’m handing it over to Saurabh, who will talk about our financial highlights.
Saurabh Devendra Singh — Group Chief Financial Officer
Thanks, Rajnish. Now, if I had to imagine a structure of a result that sets us for track for our next for a long-term ambition at this point of time in our evolution, this would have been this quarter. It’s got everything we hoped for, we earned where we wanted to. Our spending was more or less on plan. And the success and challenges we faced were broadly in line with expectations.
Now, for the sake of efficiency, I will use rupees crores as the unit of reporting unless otherwise specified. The ratios will remain as stated. While discussing year-over-year changes, I will refer to change from Q2 FY24 to Q2 FY25, unless otherwise stated.
Indians are traveling more and we believe this trend is a multi year trend and that is why continuing our GTV growth is important to us. Our GTV increased 40% as Aloke had mentioned earlier, to INR3528.74 crores. Gross ticketing revenue grew by 30.3% to reach INR258.21 crores up from INR198.17 crores. This growth comes at a gross take rate of 7.32%, which fell slightly year-over-year from last year’s 7.86%. The ATV average transaction value per segment improved from INR1,055 to INR1,137.
Revenue from operations, which excludes discounts and other operating revenues, rose by 25.96%, amounting to INR206.47 crores up from INR163.92 crores. At the group level, the contribution margin which we define as revenue from operation less direct expenses such as partner fees, payment gateway fees, performance marketing cost and cancellation costs increased to INR91.08 up from INR73.67. Correspondingly, the contribution margin percentage as a proportion of revenue from operation decreased slightly to 44.11% this quarter from 44.94%.
Our adjusted EBITDA, defined as EBITDA excluding other income and ESOP cost rose to INR21 crores up from INR4.92 crores. Now I would take a moment here to highlight what Rajnish discussed just before. We are a data company with users in over 2400 pounds in cities and more than 78 million monthly active users. This extensive reach has enabled us to develop proprietary data and analytics, allowing us to be more selective in when and where we allocate our branding expenses.
Consequently, the branding expenses may not follow the swift seasonality of the rest of the business. While this may add some fluctuation in our adjusted EBITDA on a quarterly basis, it’s important to note that these variances are expected to balance out over the course of the fiscal year. I wanted to explain this because there was a massive difference between this time’s EBITDA and last time’s EBITDA even though it’s great EBITDA even otherwise.
Now our profit after tax reached INR13.09 crores compared to INR26.70 crores in the previous fiscal. Now, this includes one off, which I will discuss in the end like I usually do.
Now, let me talk about the three core lines of business. In FY25, trains booked INR2.48 crores segments up 27.7% Y-o-Y, generating a GTV of INR1,895.86 up 36.1%. As I said before, whenever I’m not putting in crores on it, it means rupees crores as I’ve stated before.
Revenue from operations of INR110.43 with a contribution margin of 37.66% — 37.66% sorry which accounted for around 41.34% of our group contribution margin down from 42.27% as our business diversified. Now our train business takes great pride with its flawless execution and the results are evident in the continued market share gain even as we build on an already dominant position in the train OTA market. Now, in fact, many of our brands like ConfirmTkt and ixigo Trains are becoming synonymous with the OTA business for trains, much like xerox is for photocopying or Vaseline is for petroleum jelly. Now, this adds further responsibility for us to maintain and exceed our standards going forward.
Now as I mentioned last quarter our bus line of business Air Abhibus was focused on growth and this quarter it managed to achieve it. The bus vertical booked 4.14 million passenger segments generating a gross transaction value of INR377.69. This represents a 44.76% increase in segments and a 45.52% higher GTV compared to the second quarter of fiscal year FY 2024. The gross take rate was almost flat at 11% compared to 10.78%.
The contribution margin for the segment grew 34.74% Y-o-Y to 25.99% with the contribution margin percentage decreasing as we had discussed last quarter to 65.22% from 66.13% last year. Buses contributed 10.7% of group GTV up from 10.3% in Q2 ’24 and its share of group contribution margin increased to 28.54% from 26.18% in a subsequent quarter last year.
Our flight business performance underscores the quality of our offering and our unique funnel. We managed to shake off, as Aloke mentioned, sluggish industry conditions and have a great quarter. In Q2 FY25 flights achieved INR1237.48 of GTV which represents a 42.61% our contribution margin in Q2 FY25 grew at a rate of 32.53% to 27.29%. Flight contributed 35.07% of our group GTV and 29.97% of our group contribution margin. I would like to highlight here that if you see the contribution margin is getting more equally divided among the three line of businesses, which is something that we like and we have strived for.
In Q2 FY25 — let me also discuss the one-offs now in Q2 FY25. Our share of loss on Fresh Bus which is an equity minority investment that we have amounted to INR1.93 crore with the loss increasing from INR0.75 crores. The tax amount was a tax credit of INR0.43 crores in Q2 FY24 whereas for Q2 FY25 there was a tax expense of INR5.24 crores due to the reversal of deferred tax credit. Going forward, I think we see a more normalized tax rate and we believe that is how, and we said that before, how it should be looked at.
Now, I’ll end up with the thought that although in this quarter we have achieved our initial goal, we remain humble, recognizing that this is but a small step in a very, very, very long journey. Mahatma Gandhi once said, the future depends on what we do in the present, a principle we are committed to implementing.
With that, I’ll hand it back to Aloke for closing comments.
Aloke Bajpai — Chairman, Managing Director and Group Chief Executive Officer
Thanks Saurabh. Thank you everyone for joining our earnings call. Take care and have a great Diwali, Christmas and new year break with your loved ones. Keep travelling and speak to you again soon. But now we are handing it back to the moderator for Q&A. Moderator please take it forward.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions]. The first question is from the line of Swapnil from JM Finance. Please go ahead.
Swapnil Potdukhe
Hi, thanks for the opportunity. We have got a great set of numbers. Absolute positive surprise there. My first question is not related to the operation. It’s related to your acquisition. I mean, any particular reason you would like to call out? By the looks of it, the acquisition looks more like a food services company. I might be wrong there. Please correct me if I’m wrong, but do you think the acquisition was necessary given that this is not our core business area of operations? So if you can just answer that, I will come back with more questions later. Thanks.
Aloke Bajpai
See the way we look at travel and this is something from day one ixigo has been very unique at. The way we look at travel is very different, right, essentially it’s an experiential category where whatever is happening before, during, and after the trip is as much a part of the traveler’s experience as the process of booking a ticket, right, and this company has never started with the booking a ticket part as the core.
If you look at, how we got into trains, how we got into flights, I mean, the story is really about solving pain areas of travelers right. Now the more we speak to trained travelers, the more we identified that getting quality meals during the trip was as much a part of that experience, and it was essentially an integral part of the journey, right. So today, you have premium trains where that could be bundled in and that could be available. But that’s a very small percentage of trains where essentially, it’s a single digit percentage of trains where you have that option, right.
A large number of our — most of our train passengers today do not have option to get a quality meal during the trip. And the options that do exist out there, like, again, from a NPS perspective or a liability perspective, quality of service being provided perspective, I think there was a lot lacking. The other thing which is very unique here is that, look, delivering food on the seat is not an easy problem, right. It’s actually a Goldilocks zone problem, as I call it, right. So the food has to arrive just at the right time. If it arrives at the station early, you get a cold meal. If it arrives late, you don’t get your meal.
Now, ixigo’s crowdsource running status, as you all know, is one of the best out there in the market today because of the depth of users that we have and our ability to therefore make sure that the food arrived on time and in the right sort of Goldilocks zone, as I call-it, is something that we have already identified as a huge moat for us when we get into this business.
And the third most important thing is look, we have the largest data of train users outside of IRCTC in the country, right. And obviously we are the largest partner for them on the B2C side. We see a lot of not just PNRs but also people checking their running status. And many of these people we are able to use the data to identify based on the time of the trip and stations along the way where would this person likely need a meal.
Now, using those sort of insights, we can actually grow this category, right. So the way we think about it is it’s worthwhile entering a category if you think you can grow the category. So we are not in this category to take market share, but actually to create a market, right. We believe that we can create a market here. Today that market may be sub $100 million in size but the way we look at it is that it’s $1 billion TAM opportunity and we have the right to kind of go and take a large share of that. That’s the way we think about it.
Saurabh Devendra Singh
Swapnil, this is Saurabh. Just to add on that. Remember, we are not — this is not food delivery anywhere in the city, anytime. This is a very specific use case which we are saying there is a user travelling with us. We are increasing the attach to the user when he’s travelling with us.
Where we are getting more confidence is: A, as Aloke talked about our products. Also, if you see this is an area which is growing. There is a set policy created on this and Zoop has been doing it and we realized the culture that Zoop had and that’s what they do. They don’t deliver generally, they just deliver on a train. So that was the idea. So it’s an extension, it’s an ancillary which we are selling. It’s another product that we are selling to our train users.
Swapnil Potdukhe
Sure Saurabh but a follow-up to that would be that how will the business be built given that you are focusing on category creation here and it will — it can need substantial investments, that’s one.
Two, management bandwidth, right. And three, how do you intend to execute because the services will be limited to ixigo. People will be booking tickets on ixigo app or it will be open to all, you might also extend this service to other competitor apps?
Aloke Bajpai
See the way I look at it Aloke here. The way I look at it is very simple that look where do companies burn money when they create a category? They burn it on two things. One is the distribution or the marketing part which I don’t need to burn money on that I have a very large — I mean just to remind everyone, close to 80 million monthly active users and many of these using our app several times a month almost on every trip they take on a train.
Number two on creating the supply/bringing the other side of the network online. Now Zoop has been around for eight years and they have already got a network in 192 stations, right. More than 400 restaurants that they have onboarded and they are onboarding more as we speak. Now in that sense it looks like a perfect marriage because you have on one side supply and operations and delivery excellence already in place and on the other side you have a very large demand funnel already in place, right.
And I think those are areas where typically people would burn money on category creation. I think all we need to do is just make sure that we integrate this beautifully into the journey and experience in our products which by the way we have just gone live with. So you can open the ixigo trains app and experience it yourself on what that journey. This is just a sneak preview that we have taken live. It will be obviously enhanced in the coming quarters, but this will be live in our ixigo train app, ConfirmTkt app, our website over time you’ll see it on all our platforms and it will be an integral part of all our journeys inside our apps and products.
So in that sense I can assure you that the idea here is not to go and burn money because this company we are acquiring is profitable. We think that we can grow this profitably from here and the growth has been staggering in the past also for them, in last year they almost doubled their revenue. And it’s not a business where we are anticipating burn for category creation but we can do this in a way which is saner.
Saurabh Devendra Singh
So Swapnil, again, just to be very clear on this number. We would not burn anything, at least for the next couple of years, as we are seeing on this business. And most of the things that we have are internal, are already connected. And in terms of the management bandwidth answer, one of the reasons why we chose, and we got Zoop was the management is well known to us. We worked with them as a counterparty. And the founders are people whom we trust in their ability to grow this business with our other businesses.
Swapnil Potdukhe
And the last — the other one with respect to where all would people be able to book these Zoop services? I mean will it be limited to ixigo? Or….
Aloke Bajpai
The other part of your question, to some extent, look, there is definitely — I mean, I’ve already talked about the Zoop, right, 192 stations across 18 states, more than 400 active restaurants. But to your question as to are we open to partnering with others? It’s a function of, again, like who wants to do the last mile delivery, right. I mean we definitely want to be the company that does the last mile and make sure that you get a great experience in getting the food warm and on time right into — on your seat or berth.
And I think if there are partners, I mean both on the supply side, whether it’s a restaurant or a food chain who wants to partner with us or whether it’s some aggregator app who also wants to use our last mile, I think we are open to those conversations.
Swapnil Potdukhe
Got it, Aloke. And a couple of questions on your operations. I understand that we have seen some decline in our contribution margins, partly because we are investing, but what is interesting is train ticketing, gross take rates have also come down meaningfully. And now that I don’t think would be related to your investment, I think on the bus side I can understand, but I think train side if you can explain that.
Aloke Bajpai
So contribution margin, if you’re talking about absolute, it has kept increasing for the company. I don’t think there is a decline there. If you’re talking about bus and flight, yes, the contribution margin as a percentage you would have seen that. But that’s something we guided last quarter as well, that we would rather pursue growth in these categories as opposed to growing our contribution margin percentage. Because we are already operating at a very healthy contribution margin. Even if you look at this quarter we are still operating at a very healthy contribution margin of mid 40s for the consolidated level. And if you look at the bus side, then it will be in the 60s, right.
So I think in that sense, we are happy with where we are there. If you’re talking about the train take rate, look, there’s also seasonal variation in that. There is some revenue deferral that happens on certain items because many of the bookings get stretched because people are booking for Dussehra and Diwali in the JAS quarter and some portion of those revenues pertaining to our ancillary businesses get deferred there as a result of it. And therefore you might have some minor variation there.
I think from a guidance perspective, right, 6% kind of a take rate on an annual basis is something we will continue to maintain. Plus there has been a change in mix also. So some of the ATV expansion also optically leads to a drop in intake rate as you can imagine, right, because part of the train earning is linked to a fixed convenience charge, right. So if the ATV actually expands a bit, you start seeing a take rate percentage drop. But in reality on an absolute basis, the take trade hasn’t dropped.
Saurabh Devendra Singh
Swapnil, just to add on to Aloke’s question, as in I think there are two parts to your question. One of them is the take rate for trains. I think, yes, it’s showing lower right now, but part of it is, as we said, it’s a mix. Part of it is how it’s grown. So if you see on a volume basis as well as on a GTV basis, it’s grown very fast. And it is how the mix changes in that sense and how the underlying number is.
In terms of the contribution margin percentage, remember last quarter, we had guided that for at least two of the businesses we would be investing for the long term. And this is what we’ve done. It still remains healthy. If anything, if you ask me, probably I’m a couple of percentage points more in the flight business compared to where I would want to be if I had to choose between a 45% contribution margin in flight, and a far stronger growth on a sustainable basis. As of right now, I’ll choose growth in that area.
Swapnil Potdukhe
Sure, Saurabh, absolutely clear on that part. And this last one, it is again related to costs. Our branding expenses seems to have come off a bit y-o-y.
Aloke Bajpai
That’s what — I told you, that’s what I’ve mentioned there. Remember branding in quarter-over-quarter, which is what I highlighted in my speech. Look, when I, when I was talking about EBITDA, maybe I should have been more direct talking about branding. What happens is our branding is very different from anybody else’s branding because I’m spread across a lot more towns and my user base is way deeper. So I selectively decide where and when I would invest in branding over time. So at times looking at it purely on a quarter-over-quarter basis isn’t right. Over the course of a year, we will manage it out.
Last year, remember we had bunched it up because we’ve seen an opportunity in Asia Cup. But the broad idea is that branding will always be bunched up based on what we are seeing. So this time we are seeing selective opportunities in selective areas where we are investing and what the broad thumb rule guidance we’ve always talked about will remain in as a percentage. We’ll be near and near about what I think is about 3/5% of the GTV as my branding plus performance plus discount which is where we internally think of that business as an expense.
Swapnil Potdukhe
Got it. Just last one, is there any — will there be any seasonality benefit because of the festivals? I mean, if you can just call out that if that is the case.
Aloke Bajpai
Yes, I mean, usually look OND third quarter is usually the seasonally strong quarter, right in travel. The quarter that we reported is usually the weaker quarter, even though we have managed to grow faster than the market. But I think usually OND is where all the action is. And yeah, we’ve started to see some of that.
Swapnil Potdukhe
Got it, Aloke. Thanks a lot. All the best for future but a great set of numbers. All the best.
Aloke Bajpai
Thanks Swapnil.
Saurabh Devendra Singh
Thanks
Operator
Thank you. The next question is from the line of Anmol Garg from DAM Capital. Please go ahead.
Anmol Garg
Yeah, hi. Thanks guys for the opportunity and great set of numbers. I have a couple of questions. Firstly, I wanted to understand that from a sequential perspective, our flight take rate has gone up almost by 100 basis points. Now, what is — if you can indicate that from which part of the flight take rate has gone up in this particular quarter?
Aloke Bajpai
See, I think there’s some quarter-on-quarter variation that you see on flight take rate, which is quite expected due to, not just seasonality, but also just the mix of, whether you are getting more of the Tier 2, 3 bookings or more of the long distance booking, right. So in this case, I think compared to last quarter, indeed, it looks like a move, which is positive, right.
I mean, because last year, it seems like — I mean, sorry, compared to last quarter it looks like a move, which is positive, right, about 1% but if you look at the last year number, which was around 8.9% — 8.96% I think compared to that take rate has remained kind of in the ballpark. So if you look at JAS quarter, typically for us, has always had a slightly higher take rate as compared to the seasonally high quarters of AMJ and OND is just the nature of bookings that happened during that particular season.
Anmol Garg
All right, see I’m also coming from the perspective that there was a relatively higher supply issue in the market for some time, and therefore the airline incentives were fairly low. So have we seen any increase in the airline incentives in this quarter versus the last couple of quarters?
Aloke Bajpai
Not particularly. I think one factor which has also influenced our take rate is the launch of some new ancillary products. You would have seen that we launched Price Lock, right. Which is our new value added service. Now some of that has also started playing into this take rate and of course this take rate also includes ixigo Assured, Assured Flex and some of the other advertising/offer led third party incentives, right. So I think it’s a mix of all of that.
Anmol Garg
Understood. Just one question on the bus part. We have seen very strong y-on-y growth over here now while our bus business is growing. But again in terms of the overall size of the business, it’s still far behind our largest competitor. So if you can indicate what steps are we taking to expand this business, particularly to increase the bus operators as well as to increase our presence, particularly outside Southern part of India? And would this require more ad spends from your side?
Aloke Bajpai
See, I think if you just look at what we are doing right now, it’s very simple that we’re trying to, first of all, plug all the supply holes or inventory holes that we have, which means if there are routes where there were no operators available, or very few operators available, we’re trying to add more operators there. So this quarter, we have added more operators. I can’t go into the numbers, but I can tell you that we’ve added quite a few operators, right. Both private and SRTC, we added JNK, SRTC, we added a bunch of private operators.
Secondly, I think it’s a function of targeting our existing user base and making sure that more and more of the ConfirmTkt ixigo and web users, et cetera. Start looking at booking buses, right. through Abhi Bus as well. And I think we made significant progress there in the last quarter. We’re quite happy with what we’ve been able to achieve there.
So if you look at — and when you talk about competition, basically there’s just one major player that we’re talking about. But essentially if you look at the growth of that player versus us, you might think we’ve grown twice as fast in this particular quarter, right. And I think given that we are coming off a smaller base, we can afford to do that, which is to grow faster than the market in the foreseeable future, that’s what we’ll attempt to do.
But again, remember, we don’t want to sacrifice too much on the contribution margin. We’ll try to keep it in the 60% plus kind of ballpark. So we don’t want to sort of again, play a discounting game or anything like that here. It’s more a function of bringing new bus bookers online. That’s a real opportunity out there. Only 20% of the market books online, and we think that we have a significant opportunity of bringing more bus bookers online.
Saurabh Devendra Singh
Remember, in our case, being multimodal also has an advantage where both flight as well as train and bus have people who are traveling across these three mediums and shifting these three mediums during the course of the year, the journey that they are taking and what is available, which is the other thing which is beneficial. And we want to continue doing that as we move forward. And just on reiteration [Technical Issues] as a long term contribution margin for this business, when we think of this business.
Anmol Garg
Understood. I just had one question from a more longer term point of view. Wanted to understand that what is our right to win in our flight business? As you have indicated earlier, that larger part of our bookings comes from Tier 2, Tier 3 towns. So if you can give a ballpark number on how much percentage of the booking within the flight segment would be within the Tier 2, Tier 3 towns and what would be the approximate growth rate over here?
Aloke Bajpai
Yeah, we had declared one number in our RHP, if you recollect, right. And I think we pretty much remain within that ballpark in terms of what percentage of our flight bookers emanate from the NBU user. So that is something that pretty much is still going on with the same kind of velocity. But if you look at our overall percentage of bookings which have a Tier 2, 3 leg, which is something we do declare every quarter, it continues to be, despite our growth on the flight side, it continues to be close to 94%, right.
And having said that, I mean, look, right to win the way we think about it is very different here. We don’t think of it as a zero sum game at all. The next 50 million flyers are people who are already traveling today by trains and buses, and a lot of them already use ixigo ConfirmTkt or AbhiBus, right. And I think that’s the biggest right to win we have over the next five years in terms of getting faster growth than the overall market because most of those people have already used us multiple times and for them, like making their first flight booking is a quantum leap in terms of trust and spend.
I — maybe, Rajnis, you want to add something there, but this is a very different playbook we are following here as to how we are growing flights.
Rajnish Kumar
Yeah, I mean, the only thing I want to say is that, and it might again sound like a broken record, because that’s what I keep saying every time I get the question, this question specifically asked about the right to win, is that — for any company, in a sufficiently long-term play, the company with a superior customer experience will always win, irrespective of their current size. And this has happened over and over again and will continue to happen.
So our bet will always be, but we’ll continue to kind of endeavor to build the best customer experience and differentiate ourselves. If you think about us like –unlike all the other OTAs, not just in India but globally, the most important focus area for all of them has always been ticketing, which means that once you have the money from the customers and you issued the ticket, your job is done. But for ixigo, if you look at our line of products, our job starts much before they book the ticket. And our job doesn’t end once we sell the ticket. After we have sold the tickets, we still continue to build interesting products and services to cater to the customer and their needs, even after booking.
Like, for example, we have Flight Tracker Pro, we have Automatic Web Check-in, and all those things are basically contributing to [Indecipherable] and same for trains as well. If you think about it, our entry into the food space is basically a confirmation of the fact that we are obsessed about customer experience and we are not worried about just selling a train ticket, but also helping them get a choice of meals delivered safely and on time at their seat or berth, right.
Anmol Garg
Understood. Very deliberate. Just one small thing, bookkeeping one. Should we assumed an ESOP cost to be INR3 crores for the following quarters as well.
Aloke Bajpai
Sorry, could you repeat the question? I think your voice broke.
Anmol Garg
Yeah, just wanted to understand that, should we assume ESOP cost to be around INR3 odd crores on a quarterly basis for coming quarters as well?
Saurabh Devendra Singh
I retain that. How you should look at it is look at the past two, three years. We won’t break that range. And I’ll maintain the same answer. We won’t break that range as of right now. If we do that, we won’t do it in an unfair way. So this is for ESOP cost. Just assume the last two, three years, what it’s been, and it will be in that — broadly, in that pin code.
Anmol Garg
Understood. Thank you so much, guys, for answering my questions.
Saurabh Devendra Singh
Thank you.
Aloke Bajpai
Thanks.
Operator
Thank you. The next question is from the line of Pankaj from Bank of America. Please go ahead.
Pankaj Kumar
Hello.
Operator
Hello, Mr. Pankaj.
Pankaj Kumar
Congratulations on a great set of numbers. My first question is, could you talk about the repeat rates on the platform that you seeing?
Aloke Bajpai
See — Hi, Pankaj. Aloke here. I think at this point, we’re not really disclosing repeat rates, so I couldn’t talk very specifically about it, but I think what I’ll guide you to is two things.
One is, if you look at the way our organic user funnel flows, right, and then the fact that we do disclose that large percentage, 90% of our user base continues to remain organic, right. And I think the fact is that for the remaining portion that we actually spend to acquire, most of that spend goes towards new user acquisition, larger part of that spend goes towards new user acquisition. So we have fairly healthy retention cohorts, which is also reflected in our growth, because that’s the only way I think companies can grow faster than the market, which is to retain users better and give them something valuable enough to come back to.
The other reason is frequency. So if you look at categories like Trains or even Buses, right. I mean the frequency with which you interact, especially on trains, where people end up doing five, six bookings a year, right. And I think those kind of categories inherently have more stickiness. I mean, imagine someone checking their PNR status to see if they will confirm or not, and then coming back on the day of the travel, checking their running status again and then sitting there and maybe consuming some content in our app news, et cetera. And coming back again for their next trip to look at the schedules and routes. So there is a frequency of engagement that’s pretty high and we do disclose our screen views and you can do the math around screen views to MAU ratios to see how — it’s actually pretty similar to what content apps have as opposed to what travel apps have.
Pankaj Kumar
Understood Aloke, that’s helpful. Second question is about the early trends that you’re seeing from October data. How is the OND quarter panning out? Any directional thing that you could say?
Aloke Bajpai
All I would say is that, look, it’s a seasonally high quarter and it’s panning out that way only. So typically like in this year, obviously Diwali is a little, in the earlier part of the quarter per se, so I think we started to see some of that already.
Saurabh Devendra Singh
And I think the other good thing which is happening is, as Aloke mentioned earlier, the products that we’ve introduced, the response on that has been good. The initial response on those has been good.
Pankaj Kumar
Thanks, Saurabh. Just one last question from my side and — could you speak about any early indications that you are probably seeing or any sort of impact that you could call out on the basis of one of the large flight operators wanting to go or push more direct booking. That’s it from my side.
Aloke Bajpai
Yeah. So again, direct versus indirect is a moot question in the context of someone who’s making their first flight booking of their life, right. That’s the way we have to start thinking about the world that ixigo is in. Because for that person to not take a bus or a train on their next trip and instead consider taking a flight is the more important question in life than the question of whether I should book it, direct or indirect. And we have that unique capability to: A, target that person at the right step of that journey or process while when he’s thinking through this decision. And secondly, being able to offer the most convenient and trustworthy platform for making that transaction and getting customer support and refund in case something goes wrong. So I think that is one.
And the second is, remember that a large percentage of our customers come to us for our value added services. We do disclose this number unlike any of other peers that we have. We do tell you that about 28% to 29% of our transactions have some kind of value added service. Being bought alongside. That is something that helps in two areas.
One is that typically these customers who are willingly coming to pay you more for an added service or benefit are the ones who are also more sticky. And secondly, that it does help to keep the take rates same in order for you to be able to match whatever deals are out there being offered by anybody else. So in that sense, we remain competitive without burning money.
Pankaj Kumar
Thanks, Aloke. Just a quick follow-up on that. Would it be safe to say that you are — because of the customer base, you are rather immune to any perceived challenge that could come in the future?
Aloke Bajpai
Immune is a strong word. What I would say is that we believe that our products make us more resistant and our product and our user base make us more resistant.
Saurabh Devendra Singh
See, I think one has to look at it this way, that the more evolved customers usually have a larger prerogative of spend, which is counterintuitive because their time value of money should be higher, but they end up spending more time deal hunting. And this is a user behavior insight from India, as opposed to people who actually are just looking for the fastest, most trustworthy and most reliable way to get their travel done, which is the behavior we see from the Tier 2, 3 side.
So I wouldn’t call-it immune, but I would just say that at least in our cohorts, we see the NBU cohort as much more sticky, right, as compared to the cohorts you are referring to, which may get swayed by what’s happening elsewhere.
Aloke Bajpai
And if anything, what we need to be worried about much more is a fall in our service quality because our customer is based on trust. As long as we keep on listening to the customer, we keep on giving them the things that they need. That is what we are most worried about.
Pankaj Kumar
Thank you both. And again, congrats again on a great quarter and all the best for future. That it from my side.
Aloke Bajpai
Thanks.
Operator
Thank you. The next question is from the line of Aman Singh from ProfitGate Capital Services. Please go ahead.
Aman Singh
Hello. Basically, I just want to ask about the flight bookings that is happening from ixigo’s app. Can you throw some light on that, the way it was before and now? And what’s your outlook on that? Are we focusing on that area? Sorry, I just mistakenly said flights, hotel bookings. I want to know about the hotel bookings. Thank you.
Aloke Bajpai
Yeah, so I think it’s still too early to make any comments on that side as to where we are trending in terms of number. But we’ve been working hard on building the right product and experience, last few quarters, like as you know, we launched December last year and we have been working very hard to figure out what those customer problems are in that — in this sector for different customer cohorts that we cater to both on the train side and the flight side.
The good thing thing is that, it’s very advantageous to be in a situation where you have access to 80 million multi active users and you could then throw in a product which is like a latch on an add on product and see how it works. What do they need and how that kind up scale up that cross sell or upsell that’s happening. So I think most of our time these days is spent on building the best customer experience and seeing how we could sustainably keep cross selling upselling from the large distribution that we have into the hotel funnel. But I think as and when the time comes, we might start revealing those numbers, but as of now, I think we’ll refrain from that.
Aman Singh
Okay, thank you.
Operator
Thank you. As there are no further questions, I would now like to hand the conference over to Mr. Aloke for closing comments.
Aloke Bajpai
Thank you, everyone. Thank you for joining our call. Wish you very Happy Diwali, in 2025. Thank you so much.
Operator
[Operator Closing Remarks]