Delhi NCR-based hospitality unicorn OYO is on track to report its first ever profitable quarter in Q2 of the financial year 2023-24 (FY24), according to its founder and CEO Ritesh Agarwal.
In an internal mail sent to the leadership team of the startup, Agarwal claimed OYO will mark its “maiden profitable quarter” with a projected profit of INR 16 Cr in July-September 2023.
Inc42 has accessed the internal mail.
Agarwal said IPO-bound OYO reported an operating revenue of INR 5,463 Cr in FY23, a 14% increase from INR 4,781 Cr. The startup also narrowed its loss by 38% to INR 1,286 Cr in FY23 from INR 1,939.8 Cr in the previous fiscal year.
“Our adjusted gross profit margin rose to 43% of revenue and adjusted gross profit increased by 23% to INR 2,347 Cr in FY23 from INR 1,915 Cr in FY22,” Agarwal wrote in the mail.
As per sources, OYO attributed the improvement in its financials to its focus on core markets, centralisation of key functions, cost optimisation initiatives, divestment, and rationalisation of non-core businesses.
In the first quarter of FY24, the startup, in a town hall, informed its employees that it reported an adjusted EBITDA (earnings before interest, taxes and depreciation) of INR 175 Cr.
The startup has also reduced its number of hotels to 12,938 at the end of FY23 from 18,037 at the end of FY22 citing an increased focus on quality customer service across OYO hotels globally.
“We have started thinking of shifting our mindset from offering a value first offering to an experience first offering for your customers. We have taken some initial steps in this area with initiatives such as ‘Spotless Stays’ and Super OYO’. The program’s pilot across 250+ hotels has seen customer satisfaction score improve by 35%,” Agarwal wrote in the mail.
Agarwal also said that the startup sees immense potential in future growth markets like the US & the UK.
Earlier this month, it was reported that top executives at OYO – Ankit Gupta, its India CEO, and Mandar Vaidya, the head of OYO Europe – have quit the startup.
“Both roles were already transitioned 6 months ago to Varun Jain, as COO India, and, Gautam Swaroop, as CEO OYO Vacation Homes, respectively,” an OYO spokesperson said then.
OYO first filed its Draft Red Herring Prospectus (DRHP) with market regulator SEBI in September 2021 for an INR 8,430 Cr ($1.2 Bn) IPO. However, it later took the confidential route to pre-file its draft documents and reduced the IPO size to INR 3,286 Cr – INR 4,929 Cr ($400 Mn – $600 Mn).
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