In the fiscal year 2023, OYO posted income of INR 5,464 Crore, accompanied by a notable 34% reduction in losses.
OYO’s primary sources of revenue include the sale of accommodation services, commission from bookings, and income generated from rental and subscription services. In this financial year, domestic income accounted for only 25% of the total, amounting to INR 1,383 Crore, while 75% of the income came from international operations, marking it as an export service.
On the expenditure side, lease rentals and service components constituted 42% of the overall costs, with a surge of 10.3% to INR 2,843 Crore in FY23 from INR 2,578 Crore in FY22. Employee benefits, the second-largest component, decreased by 16.8% during FY23, with 40% of the employee costs being non-cash ESOP components in the previous fiscal year.
Additional costs, such as advertising, commission, information technology, and other operational expenses, brought the overall cost to INR 6,800 Crore in FY23, compared to INR 6,985 Crore in FY22.
According to the financial statements, OYO held trade receivables of INR 158 Crore, with cash and bank balances amounting to INR 1,677 Crore as of March 2023.
Effective cost management and a modest increase in scale resulted in a 33.7% reduction in OYO’s losses, dropping from INR 1,941 Crore in FY22 to INR 1,287 Crore in FY23. The Return on Capital Employed (ROCE) and EBITDA margin stood at -8.6% and -4.23%, respectively, during the previous fiscal year.
At a unit level, OYO spent INR 1.24 to earn INR 1 of operating revenue in FY23.
For the current fiscal year, OYO claims to have registered an adjusted EBITDA of INR 175 Crore in Q1 FY24. The company also anticipates reporting its first-ever profit of INR 16 Crore in the second quarter of this fiscal year, Q2 FY24.
OYO, which has raised over $3.4 billion in multiple funding rounds and was valued at $9.6 billion at its peak, has Softbank as its largest external stakeholder with a 42.62% stake, followed by Peak XV (Sequoia) and Lightspeed. The company’s founder and CEO, Ritesh Agarwal, holds a 33.15% stake.
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OYO’s journey has been marked by highs and lows, but the company has demonstrated resilience and adaptability. While it may not have achieved the colossal status initially projected in the hospitality sector, OYO has undoubtedly disrupted and transformed the market it operates in. The significant proportion of non-India revenues raises questions among analysts about the company’s future, but the prospect of profitability is a significant milestone. The next phase of growth may well hinge on a successful IPO, which presents its own set of challenges given the company’s history. However, OYO’s path as a true disruptor in the hospitality space has earned it opportunities over the past three years.
