Inexpensive startup Oyo reported a loss of $ 335 million on global sales of $ 951 million for the fiscal year ended March 31, 2019, and promised to cut spending as the India-based startup faced its aggressive expansion becomes more careful.
The six-year-old startup's growing sales of $ 211 million in the fiscal year ended March 31, 2018 are in line with the company's ambition to take a clear path to profitability this year, said Abhishek Gupta, Global CFO of OYO Hotels & Homes, in an explanation.
But the loss of the startup has also increased. The consolidated loss increased from 25% in FY 18 to 35% in FY 19. In India, where Oyo had sales of $ 604 million in fiscal 19, it was able to reduce its loss to 14% (from 24%) of sales in Reduce fiscal 19 to $ 83 million.
The startup, which now operates more than 43,000 hotels with over one million rooms in 800 cities in 80 countries, said its expansion into China and other international markets contributed to the loss.
“These markets accounted for 36.5% of global sales. While the company continues to improve in mature markets such as India, where gross margins are already improving, the company is determined to introduce the same budget discipline in emerging markets in the coming fiscal year, ”the startup said.
Oyo has been examined in recent months for its aggressive expansion, which some analysts believe is unsustainable. The startup, which renames and renovates independent budget hotels, has also made a sketchy effort to sign new hotels, such as that of New York Times earlier this year.
In recent months, Oyo executives have recognized that the startup has grown too quickly and faces a number of “teething problems”. Oyo has fired at least 3,000 people, mainly in India, in the past three months.
According to local Indian laws, every startup must disclose its annual financial information. Most of them submitted their financial information in early October.
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