OYO, the Delhi NCR-based hospitality unicorn, is poised to announce its first-ever profitable quarter in the second quarter of the financial year 2023-24 (FY24), as revealed by founder and CEO Ritesh Agarwal in an internal communication to the leadership team.
Agarwal expressed that OYO is set to achieve a “maiden profitable quarter” with a projected profit of INR 16 crore in the period spanning July to September 2023. The news underscores a significant milestone for the company.
The IPO-bound OYO reported robust financial figures for the previous fiscal year, FY23. The operating revenue reached INR 5,463 crore, marking a substantial 14% increase from INR 4,781 crore in the previous fiscal year. Additionally, the company managed to reduce its loss by an impressive 38%, with FY23’s loss amounting to INR 1,286 crore compared to INR 1,939.8 crore in FY22.
Agarwal highlighted, “Our adjusted gross profit margin rose to 43% of revenue, and adjusted gross profit increased by 23% to INR 2,347 crore in FY23 from INR 1,915 crore in FY22.”
OYO attributes its improved financial performance to a series of strategic measures, including a focus on core markets, centralization of key functions, cost optimization initiatives, divestments, and the streamlining of non-core businesses.
In the first quarter of FY24, OYO announced an adjusted EBITDA (earnings before interest, taxes, and depreciation) of INR 175 crore during a town hall meeting with its employees.
The company also rationalized its hotel portfolio, reducing the number of hotels to 12,938 by the end of FY23, compared to 18,037 at the end of FY22. This reduction is part of OYO’s commitment to delivering a higher level of customer service and quality across its hotels worldwide.
Agarwal emphasized the company’s shift towards prioritizing the customer experience, stating, “We have started thinking of shifting our mindset from offering a value-first approach to an experience-first offering for your customers.”
OYO’s initiatives, such as ‘Spotless Stays’ and ‘Super OYO,’ have already yielded a 35% improvement in customer satisfaction scores during the pilot phase across 250+ hotels.
Looking ahead, OYO sees significant growth potential in future markets, particularly in the United States and the United Kingdom.
It’s worth noting that top executives, including Ankit Gupta, OYO’s India CEO, and Mandar Vaidya, the head of OYO Europe, recently left the company. These roles had transitioned six months ago to Varun Jain, COO India, and Gautam Swaroop, CEO of OYO Vacation Homes, respectively.
OYO initially filed its Draft Red Herring Prospectus (DRHP) for an INR 8,430 crore ($1.2 billion) IPO with market regulator SEBI in September 2021. However, the company later adopted a confidential filing approach, reducing the IPO size to INR 3,286 crore – INR 4,929 crore ($400 million – $600 million).
