In a town hall on Thursday, the travel technology company Oyo informed its staff that it had achieved cash flow positivity during the fourth quarter of FY23 and that its next objective is to become profitable.
In a town hall on Thursday, the travel technology company Oyo informed its staff that it had achieved cash flow positivity during the fourth quarter of FY23 and that its next objective is to become profitable.
According to sources in the industry, the company informed its staff that it had a Q4 cash flow surplus of almost Rs 90 crore. The company’s founder and CEO, Ritesh Agarwal, also informed the staff that FY23 was the company’s first financial year of adjusted Ebitda profitability and that FY24 is anticipated to see adjusted Ebitda of close to Rs 800 crore.
Increasing bookings across all major geographies, but particularly in the Europe homes business, which is seeing exceptional advance bookings for the upcoming summer season peak and even the relatively off-season period from November to March, according to sources, can be credited with Oyo’s shift towards profitability. “Seasonality is a factor in cash flows as well. When advance reservations are at their highest in Europe’s high season, they rise. Therefore, it is anticipated that the positive cash trajectory will last through the first quarter of FY24. The balance statement for Oyo last showed a cash corpus or treasury of Rs 2,700 crore, according to the sources.
Oyo revised their draught red herring prospectus (DRHP) in March and re-filed it with the Securities and Exchange Board of India using the just-introduced pre-filing procedure. The company had first submitted preliminary documents to Sebi in September 2021 for a Rs 8,430 crore initial public offering (IPO), which would have included a fresh issue of equity shares worth up to Rs 7,000 crore and an offer to sell shares for Rs 1,430 crore.
In order to inform the public of the considerable improvement in its business performance since its first IPO application in September 2021, Oyo’s last submission to Sebi was of its revised financial results for the first half of FY23 in November 2022.
The latest financials demonstrated a recovery in the top line, a consistent rise in gross margins, and an overall decrease in losses. It had recorded its first ever positive adjusted Ebitda of Rs 63 crore in H1FY23, along with a 24% year-over-year growth in revenues and a 69% increase in monthly booking value (gross booking value per month) for its hotels.
Additionally, it is anticipated that the company will triple its adjusted Ebitda to Rs 185 crore in H2FY23. This 3X increase was attributed to cost savings brought on by operational efficiencies and expansion in the hotel industry.
Additionally, Oyo expects its revenues to increase by 19% year over year and reach Rs 5,700 crore or more in FY23. Its adjusted gross margin is anticipated to maintain a constant 41% of revenues in FY23.
In the months leading up to its IPO, Oyo also reduced the size of its personnel, firing 600 of its 3,700 employees as it shut down a few products and reduced headcount in December of last year. Oyo reported at the time that teams from corporate headquarters, the Oyo vacation homes teams, and the product and technical teams were all affected by the downsizing.
