OYO turns EBITDA positive in Q1 FY23, files addendum to DRHP with SEBI

Oyo has reported its maiden EBITDA positive quarter as per the latest financials filed with SEBI. The hospitality unicorn reported Rs 7 crore (~$1 million) adjusted EBITDA in Q1 FY2023 driven by an increase in the overall Gross Booking Value (GBV) while improving the company’s unit economics. 

EBITDA margins rose to +0.5% in Q1 FY23 from -44%in FY21 and -9.9% in FY22. OYO filed the addendum to the draft red herring prospectus (DRHP) on September 19 for its initial public offering (IPO). 

OYO saw its monthly gross books value per hotel increase recently, with a 47% growth in Q1 FY23 to Rs 3.25 lakh vs Rs 2.21 lakh for Q1 FY22. The easing of COVID-19 restrictions has helped demand surge, the company said in the filings.

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“The performance in the ongoing quarter seems to indicate another EBIDTA positive quarter. OYO may be able to generate positive free cash flow by the end of this fiscal if the revenue growth continues at the same or higher pace and the control on costs that OYO has been able to achieve continues,” a source close to the company told YourStory.

“The key markets which need to perform to accomplish this are India, Northern Europe, Indonesia and Malaysia,” the person added. 

Emerging from the COVID impact, OYO’s revenue from operations has seen an uplift of 21% to Rs 4781.4 crore in FY2022 from Rs 3,961.6 crore in FY2021 due to a recovery in travel demand as restrictions on movement lifted across key markets where OYO operates. The growth momentum seemingly continued with Q1 FY23 revenue being reported at Rs 1,459.3 crore. 

The trajectory is also supported by the growth in storefronts to 1.68 lakh at end of Q1 FY23 from 1.57 lakh at end of FY2021. This includes both organic and inorganic growth in storefronts across geographies. As per the filing, the company made tuck-in acquisitions including the acquisition of Croatian vacation rental company - Direct Booker. In August 2022, OYO announced the acquisition of another Denmark-based holiday home   - Bornholmske Feriehuse which indicates its intention to continue strengthening its position in Europe.

An indicator of unit economies, the company’s Adjusted Gross Profit Margin has seen a steady uptick from 33.2% in FY21 to 40.1% in FY22 to 41.3% in Q1 FY23.

OYO’s strong foothold in its core markets of India and South Asia played a critical role in its resurgence over the last quarter. On its home turf, India, the rise in bookings is also primarily attributed to OYO’s platform actions. Introducing a slew of consumer-focused measures on payment methods gave consumers the leeway to make prepaid booking or opt for the ‘Pay at hotel’ feature, further opening up the platform to a larger set of users.