Oyo, the IPO-bound travel tech startup, in an employee town hall held recently said its adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) in the second half (H2) of FY23 was expected to jump by about 3X year-on-year (y-o-y) to Rs 182 crore. The company had reported a negative adjusted Ebitda of Rs 190 crore in H2FY22. Going by the presentation, FY23 would be Oyo’s first profitable year, on the basis of adjusted Ebitda, since its inception around 2013.
Prior to this, in H1FY23, Oyo had registered an adjusted Ebitda of Rs 63 crore, according to an addendum filed with capital markets regulator, the securities and exchange board of India (Sebi). In total, Oyo was likely to exit FY23 with an adjusted Ebitda of around Rs 245 crore for the full year. At the same time, the company’s revenue was also likely to increase 19 per cent from Rs 4,780 crore in FY22 to Rs 5,708 crore in FY23. It had registered a revenue of Rs 3,960 crore in FY21. Oyo has used a foreign exchange rate of Rs 76 against the US dollar.
The rise in earnings, Oyo said, was because of the recent cost cuts, an improvement in operational efficiencies and expansion of its hotels business, among others. This comes just as the Gurugram-based startup prepares to refile its draft red herring prospectus (DRHP) with the Sebi, likely around mid-February. The regulator had asked Oyo to update its risk factors, basis of offer price and outstanding litigations, mainly due to a change in the business environment, as reported earlier.
“Revenue for H2 is expected to be over Rs 2,800 crore marking a year-on-year (y-o-y) increase of about 15 per cent vs H2FY22 while holding steady sequentially. Adjusted gross profit margins are expected to remain steady at around 41 per cent for FY23…marking the company’s first financial year of adjusted Ebitda profitability,” the company’s presentation said. FE has reviewed a copy of the presentation shown to employees. The company’s margins would have likely climbed from 33 per cent in FY21 to 41 per cent by end- FY23, one of the slides said.
But, the growth isn’t across the board yet. “Oyo’s homes business may show a decline of about 8 per cent monthly, (on a) revenue per home (basis) given the turmoil in the European market and the current geopolitical implications in the region,” the presentation further read.
To counter that, the company continues to undertake measures to bring costs down while maintaining a “healthy” cash runaway for the coming years. The company’s overall operating cost was likely to reduce further by around 13 per cent. According to the company’s latest filing, employee expenses, net of share-based payment expenses, constituted the largest component on the cost side, at 18 per cent of the revenues, followed by marketing expenses which accounted for 14 per cent. The general and administration expenses made up 7 per cent of the revenues for H1FY23.
The Soft Bank-backed hospitality unicorn filed preliminary documents with the Sebi in September 2021 for a Rs 8,430 crore IPO, including a fresh issue of equity shares aggregating up to Rs 7,000 crore and an offer for sale of 1,430 crore. However, after the failure of some marquee names like Paytm and Zomato, among others, from the startup space, created a negative sentiment in the stock market, the company was forced to rethink its fundraising plans.