Oyo Rooms might’ve seen its valuation slashed by 75 percent this week, but it’s reached a milestone that’s taken it eleven long years to achieve.
Oyo Rooms has reported a PAT (Profit After Tax) of Rs. 229 crore in FY24. The company had said a few months ago that it would report a profit of Rs. 100 crore in FY24, but was waiting for the official numbers. The official numbers seem to have come in higher than expected, with a Rs. 229 crore profit for the company.
Oyo’s consolidated revenue, however, was down slightly from Rs. 5,463 crore in FY23 to Rs. 5,388 crore in FY24. Its total costs decreased by 13 percent, which included a 52 percent reduction in salary costs, mainly driven by a lowering of ESOP costs, which fell by more than 60 percent. Oyo said its costs were down through “reduction in general and administrative spend and optimising marketing spends while maintaining topline growth”.
The profit is a turnaround for Oyo, which had reported a loss of Rs. 1,286 crore in FY23, and a loss of Rs. 1,941 crore in FY22. Oyo had reported losses for every single year starting from when it was founded in 2013.
But there are some caveats with Oyo’s latest results — Oyo Rooms reported a Rs. 453 crore of gain from exceptional items in FY24, including a Rs. 240 crore fair value gain from acquiring Oyo Hotels Cayman, and a Rs. 249 crore reversal of financial liability. Without these exceptional items, Oyo Rooms would’ve still reported a loss this financial year.
These results have been announced days after it had been reported that Oyo had raised funds at a valuation of $2.4 billion, down from a peak valuation of $10 billion it had attained in 2019. The funding round was worth $173 million, and interestingly, was led by Patient Capital, which is run by Oyo Rooms founder and CEO Ritesh Agarwal himself.
But the reporting of its first ever profit would be a shot in the arm for the firm, which has had an indifferent few years. Oyo Rooms isn’t the only Indian startup that’s reported its first profit in recent times — last year, Zomato had reported its first ever profit, and this year Urban Company and Delhivery were profitable for the first time. It remains to be seen if these profits will sustain, but Oyo seems to have crossed the first hurdle of finishing a year in the black in FY24.
Travel tech firm OYO clocked its first-ever profit after tax (PAT) of Rs 229 crore for FY24, a significant turnaround from the Rs 1,286 crore loss it posted the previous year, the company said in a statement on August 14.
This turnaround was fueled by a stringent cost cuts and a Rs 453 crore boost from exceptional items, including a Rs 240 crore fair value gain from acquiring Oyo Hotels Cayman and a Rs 249 crore reversal of financial liability.
The profit follows eight consecutive quarters of positive Adjusted EBITDA, which grew 215 percent to Rs 877 crore in FY24 from Rs 277 crore in the previous year.
The hotel aggregator’s earnings per share (EPS) rose to Rs 0.36 in FY24 against a loss per share of Rs 1.93 in the previous year, it said.
Meanwhile, the consolidated revenue remained stable at Rs 5,388 crore, slightly down from Rs 5,463 crore in FY23.
Related stories
- OYO raises Rs 1,457 crore in latest funding round
- Softbank nominee to join OYO board: Sources
- Vishal Mega Mart weighing confidential filing of IPO papers; fourth after Tata Play, Oyo & Swigg…
Total costs decreased by about 13 percent to Rs 4,500 crore on the back of a leaner cost structure “by reduction in general and administrative spend and optimising marketing spends while maintaining topline growth”, the company said.
OYO’s spending on salaries and employee benefits decreased by nearly 52 percent to Rs 744 crore in FY24, mainly due to a reduction in ESOP costs, which fell to Rs 107 crore from Rs 363 crore in FY23, according to TheKredible data.
Additionally, the company paid Rs 844 crore (around $100 million) in interest during FY24 on the $660 million term loan it secured in FY22.
New deals
As part of its move to expand its presence in Europe, OYO is acquiring a French vacation rental company. The company announced it will issue nearly 8 million preference shares to buy K&J Consulting, which runs the Paris-based premium rental service Checkmyguest Group.
The deal also includes Studio Prestige, a luxury apartment rental service in Paris, and Helpmyguest, a property design and renovation firm. OYO plans to acquire premium rental homes in Paris, one of the world’s top tourist destinations.
While the deal involves some cash payments, the majority of the purchase is being made through a share swap, an OYO spokesperson said. The company’s new assets will quickly start generating revenue, helping to offset the cost of the acquisition, the spokesperson said.
OYO’s inventory grew from 12,938 in FY23 (EoY) to 18,103 as on FY24 (EoY).
The latest update comes a day after founder Ritesh Agarwal invested Rs 830 crore in the company through his wholly owned entity, Patient Capital. This investment brings the total funding for the latest Series G round to Rs 1,457 crore.
The round, however, saw Oyo’s valuation drop from $10 billion at its peak in 2019 to $2.4 billion.
The new funding follows Oyo withdrawing its draft red herring prospectus for an initial public offering (IPO) for the second time earlier this year. The startup had originally filed for an IPO in 2021, seeking to raise about $1.2 billion at a valuation of $12 billion at the time.