MakeMyTrip (MMYT) Q2 2026: International Revenue Climbs to 28% of Mix as AI Engagement Scales

October 28, 2025 | By EarningsIQ Research

International segments fueled MakeMyTrip’s Q2 rebound, with AI-powered engagement driving deeper customer penetration and operational leverage. Domestic air supply remained a drag, but robust growth in hotels, bus, and ancillary services offset softness, while new AI-driven products began to reshape the user journey. Management’s focus on diversified growth and platform innovation positions the business for sustained outperformance as macro and regulatory tailwinds build into FY26.

Summary

• International Expansion Drives Mix Shift: Overseas travel and hotel segments now account for a record share of revenue.
• AI-Powered User Engagement Gains Traction: Early adoption of Myra and voice-led features is deepening customer relationships.
• Regulatory Tailwinds Set Up H2 Acceleration: Tax and policy changes are expected to unlock new demand among value-sensitive travelers.

Performance Analysis

MakeMyTrip delivered robust Q2 adjusted operating profit growth despite domestic air supply constraints, with international air and hotel segments sharply outpacing industry trends. The international business now comprises 28% of total revenue, up from 25% a year ago, reflecting a strategic pivot toward higher-growth, underpenetrated segments. International air ticketing revenue surged over 29% year-on-year in constant currency, while international hotels posted 42% growth, signaling successful execution in cross-border travel demand capture. The domestic air business remained pressured by a 3% market decline, but MakeMyTrip held its market share above 30%.

Hotels, bus, and ancillary services provided ballast, with accommodation volumes up 18% and bus ticketing margin growth accelerating to 44% year-on-year. The company’s “one-stop shop” model—offering air, hotels, bus, rail, and cabs—enabled agile reallocation of focus and capital as travel patterns shifted. Marketing and sales expenses moderated as a share of gross bookings, supporting margin expansion. Strong cash generation and a fortified balance sheet provide flexibility for both organic investments and opportunistic buybacks, even as reported net income is optically impacted by non-cash interest charges from zero-coupon convertible notes.

• International Mix Shift: Overseas segments are now a material growth engine, offsetting domestic air softness.
• Margin Expansion: Adjusted operating margin improved to 1.8% of gross bookings, reflecting disciplined cost and mix management.
• Cash Generation: Cash and equivalents rose to $835 million, enabling continued investment and buyback flexibility.

The company’s diversified portfolio and operational discipline have proven resilient, positioning MakeMyTrip to capture both cyclical and secular growth drivers as travel demand normalizes and regulatory actions boost consumer spending power.

Executive Commentary

Strategic Positioning

1. International Growth as a Core Lever

International air and hotel segments are MakeMyTrip’s fastest-growing businesses, with outbound Indian travel and digital adoption in Tier 2 and 3 cities fueling outsized gains. The company is leveraging its platform to capture this shift, adding inventory across destinations and tailoring offerings—such as curated holiday packages with direct flights—to address demand for unique, accessible experiences. This mix shift not only diversifies revenue but also lifts blended margins given higher take rates in international travel.

2. AI-Driven Engagement and Product Innovation

AI is central to MakeMyTrip’s user experience strategy. The Myra conversational assistant, now handling over 25,000 daily conversations, is driving early engagement, especially in voice-first and vernacular use cases. With 35% of travelers engaging up to 90 days pre-trip and significant repeat usage, Myra is positioned as an end-to-end travel companion. Voice adoption is especially strong in non-metro markets, expanding the addressable market and lowering digital friction for new users. The company is also deploying GenAI-powered bots in cabs and post-sales support, improving conversion and customer satisfaction while reducing manual intervention.

3. Diversified “One-Stop Shop” Model

MakeMyTrip’s multi-modal travel platform mitigates segment-specific volatility, as seen in Q2 when accommodation and bus offset air softness. The company continues to expand its supply base, now offering 95,000+ accommodation options and broadening bus and rail partnerships, including state transport corporations. Ancillary services—such as insurance, forex, and experiences—are being layered on to drive higher wallet share and customer stickiness.

4. Regulatory and Macro Tailwinds

Recent fiscal and monetary policy changes—GST reductions, income tax cuts, and lower interest rates— are expected to unlock $3–3.5 billion in incremental consumer spending in H2 FY26, with travel a key beneficiary. GST cuts on hotels and buses directly benefit MakeMyTrip’s value-sensitive customer base, particularly in urban and emerging markets, setting the stage for volume and penetration gains as supply normalizes.

5. Capital Allocation and Buyback Flexibility

Following a $3.1 billion capital raise and Class B share repurchase, the company has expanded its buyback program to $200 million and extended the window through FY30. While no buybacks occurred in Q2, management retains flexibility to deploy capital opportunistically across shares and convertible notes, underscoring confidence in long-term value creation.

Key Considerations

The quarter highlighted MakeMyTrip’s ability to pivot across segments and capitalize on emerging demand signals, even as certain legacy businesses faced headwinds. The company’s focus on AI and product innovation is beginning to yield tangible improvements in engagement and conversion, while regulatory changes provide a supportive backdrop for H2 and beyond.

Key Considerations:

• International Outperformance: Overseas air and hotel segments are growing much faster than the domestic core, reshaping the revenue mix.
• AI as an Engagement Multiplier: Myra and voice-led features are broadening the funnel and building loyalty, especially in underpenetrated markets.
• Margin Resilience: Cost discipline and improved segment mix have driven operating margin expansion despite macro and FX headwinds.
• Regulatory Boost: GST and tax cuts are likely to catalyze demand in value segments, with a lagged but material impact on bookings.
• Buyback Optionality: Expanded authorization provides downside protection and capital return flexibility amid market volatility.

Risks

Domestic air supply constraints remain a near-term drag, and any prolonged recovery delays could pressure overall growth and blended margins. FX volatility and non-cash interest charges create optical headwinds for reported net income, though underlying cash flow remains strong. Competitive intensity is rising, particularly from well-capitalized entrants and strategic investors backing rivals, which could pressure share and pricing in select segments. Execution risk around scaling AI-driven products and maintaining service quality as volume grows should not be underestimated.

Forward Outlook

For Q3 2026, MakeMyTrip expects:

• Domestic air supply to recover to prior year levels, supporting sequential improvement
• Continued robust growth in international and non-air segments, with regulatory tailwinds aiding demand

For full-year 2026, management reiterated:

• Adjusted margin growth in the “20s” percent range, with all segments contributing

Management cited ongoing macro stimulus, normalization in air supply, and AI-driven engagement as key drivers for sustained growth and margin resilience. Guidance is framed on adjusted margin, not gross bookings, to better reflect business model dynamics and global OTA benchmarks.

• Regulatory actions expected to benefit value segments
• AI adoption and product launches to further enhance engagement and conversion

Takeaways

MakeMyTrip’s Q2 performance demonstrates the strength of its diversified business model and its ability to capitalize on secular and cyclical growth drivers.

• International and Ancillary Segments Lead Growth: Overseas demand and new product streams are reshaping the revenue base and driving margin gains, insulating the platform from domestic air volatility.
• AI and Platform Innovation Are Early but Promising: Myra’s rapid scale and engagement in voice-first markets signal a step-change in user experience and market penetration, with further upside as features mature.
• Watch for Domestic Air Recovery and Policy Impact: Investors should monitor the pace of domestic air normalization and the realized impact of regulatory tailwinds on value and mid-market travel segments in H2 and FY27.

Conclusion

MakeMyTrip’s Q2 2026 results underscore a successful pivot toward international and ancillary growth, with AI-driven engagement and regulatory changes setting the stage for continued outperformance. Operational discipline, a robust balance sheet, and platform innovation position the company well to capture the next wave of Indian travel demand.

Industry Read-Through

MakeMyTrip’s results highlight the accelerating shift in Indian travel from domestic to international and from offline to digital channels. The company’s success in scaling AI-powered engagement and broadening its product suite signals rising expectations for user experience and personalization across the travel sector. Regulatory actions lowering GST and taxes are likely to benefit value-oriented segments and drive incremental demand for both incumbents and disruptors. Competitive intensity is set to rise as strategic capital enters the space, but market leaders with diversified platforms and technology edge are best positioned to capture share and margin expansion as travel demand normalizes.

MMYT Consumer Discretionary Online Travel AI International Expansion Ancillary Services Platform Regulation