Oyo Hotels & Homes, the Indian lodging startup, reported a four-fold increase in revenue for the year ending in March 2019, a dated but detailed disclosure of results at the controversial company backed by SoftBank Group Corp.
The six-year-old Oyo increased revenue to $951 million for the fiscal year 2019, from $211 million for the previous year. Losses climbed to $335 million, or 35% of revenue, from $53 million, or 25% of revenue, as the startup expanded into China and other new markets. India’s regulations require companies like Oyo to disclose their financials, but with lags that can reach about a year.
Oyo, founded by 26-year-old Ritesh Agarwal, began in India as a way to reserve budget accommodations online with reliable quality. With the backing of SoftBank, the company has expanded internationally and is aiming to become the biggest hotel chain in the world by room count. Its aggressive expansion has proven controversial after another SoftBank portfolio company, WeWork, crashed after attempting to go public.
In its results, Oyo focused on its progress in moving toward profitability and global expansion. For example, India accounted for roughly 63.5% of its revenue in fiscal 2019, down from 99% the year before. In addition, Oyo’s loss in India was 14% of revenue, down from 24% the year before.
“We are on the path to profitability,” said Aditya Ghosh, a board member, in a media conference call after the figures were released. “We haven’t set a timeline for profitability, but revenues are growing, losses have halved and margins are looking healthy.”
Its gross margin rose to 14.7% from 10.6%, the company said. Oyo has cut back in certain markets, firing about 20% of its 12,000 people in India for example.
“We have pulled out of 200 cities in India, and these accounted for less than 5% of revenues,” said Rohit Kapoor, chief executive officer for India and South Asia.
The two executives were cautious about the Chinese market, given the coronavirus that has all but put a halt to travel.
“The coronavirus crisis is gripping all of China, it will impact the business in the short term. We can’t say how much,” said Ghosh. “It is too soon to say how much our business will get impacted, there are too many affected provinces and it is too sensitive a matter.”