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Travel technology firm OYO has announced its first-ever annual profit, recording a profit after tax (PAT) of Rs 229 crore for the fiscal year 2024. This marks a significant turnaround from the Rs 1,286 crore loss reported in FY23, according to a recent company filing. 

OYO's revenue remained relatively stable at Rs. 5,388 crore, a slight decrease from Rs 5,463 crore the previous year. Despite the dip in revenue, OYO's cost-cutting measures and exceptional items played a crucial role in the turnaround. Notably, the company benefitted from a Rs 453 crore boost through various exceptional items, including a Rs 240 crore fair value gain from the acquisition of Oyo Hotels Cayman and a Rs 249 crore reversal of financial liabilities.

OYO's financial improvements were underscored by a substantial 215 percent increase in Adjusted EBITDA, which soared to Rs 877 crore in FY24 from Rs 277 crore the year before. The company's earnings per share (EPS) also rose to Rs 0.36 in FY24 against a loss per share of Rs 1.93 in the previous year.

The company also reported a 13 percent reduction in total costs, bringing them down to Rs 4,500 crore. This reduction was achieved through a leaner cost structure, including cuts in general and administrative expenses and optimized marketing spend, while still maintaining revenue growth.

Salaries and employee benefits saw a nearly 52 percent decrease to Rs 744 crore, largely due to a reduction in employee stock option plan (ESOP) costs, which dropped from Rs 363 crore to Rs 107 crore, according to TheKredible data. Additionally, OYO incurred Rs 844 crore in interest payments on a $660 million term loan secured in 2022.

In a bid to expand its European presence, OYO is acquiring K&J Consulting, a French vacation rental company operating the premium rental service Checkmyguest Group. The acquisition includes Studio Prestige, a luxury apartment rental service in Paris, and Helpmyguest, a property design an renovation firm. The deal will involve issuing nearly 8 million preference shares, with the majority of the transaction being conducted through a share swap. This strategic move aims to enhance OYO's market presence in Paris - one of the world's top tourist destinations.

OYO's inventory also saw significant growth, increasing from 12,938 at the end of FY23 to 18,103 by the end of FY24.

The announcement follows a recent investment of Rs 830 crore from OYO founder Ritesh Agarwal, through his wholly owned entity, Patient Capital. This investment boosts the total funding for the latest Series G round to Rs 1,457 crore. Despite this influx, OYO's valuation has dropped to $2.4 billion from its peak of $10 billion in 2019.

This development comes amid OYO's withdrawal of its draft red herring prospectus for an initial public offering (IPO) for the second time this year. Originally filed in 2021, the IPO aimed to raise approximately $1.2 billion at a valuation of $12 billion.

OYO's financial turnaround turnaround and strategic moves signal a new chapter for the company as it navigates its expansion and restructuring efforts. 


OYO achieves first-ever annual profit of Rs 229 Crore in FY24

Often pitted against each other, coming together of marketing and finance resources are redefining the growth of companies today. A successful and strong CMO and CFO alliance hinges on the CFO understanding consumer demand and marketing initiatives objectives and a CMO who works through data.

In partnership with Kantar, Google recently spoke to dozens of Fortune 1000 company leaders and marketers across industries about this topic. During those conversations, one alliance emerged as the most critical: the CMO and CFO power pair.

A majority of top executives said that their most senior-level marketing leaders not only have strong relationships with their CEOs but also with their CFOs. We also heard that leaders of digitally advanced companies reported much higher levels of synergy between their finance and marketing teams than did the leaders of digitally emerging companies.

Experts in the industry that Storyboard18 spoke to highlighted that over the years, the pressure on budgets and business outcomes have put pressure on the CMO to also be a co-owner of delivered ‘numbers’. This, in turn, has brought the CMO in closer proximity to the CFO, who is primarily responsible for keeping the number delivery on track.

Symbiotic relationship

In new age companies, the relationship between finance and marketing is evolving into a more symbiotic one where they come together to work towards the growth of the business.

“Today the calculation of return on marketing spends is much easier and more efficient than what it used to be a couple of years back," says Smita Murarka, who is the chief marketing officer of Duroflex. "This has built new bridges between the two functions," she adds, saying that at Duroflex, the two teams work collaboratively towards planning a campaign and even on analysing the results of the campaign.

Murarka shares that regular conversations with the company's finance team helps her team have data driven insights about the impact of marketing efforts on the business.

“The insights also help us plan the areas where we can focus our efforts more efficiently,” she adds.

The Google-Kantar study quoted above states that CMOs who can translate their marketing metrics into business impact—such as tying incremental investment to a certain sales growth percentage year over year—are 37 percent more likely to report revenue growth compared to leaders who communicate strictly in marketing language.

Shared insights

For online hotel booking platform OYO having a CFO that works closely with the brand and marketing team not only helps the company with strategic insights but also ensures that the marketing budgets are being leveraged wisely.

Mayur Hola, head of global brand, OYO says that their finance team is like members of the extended marketing team, in fact "our star players". The company’s strategic finance team works closely with the marketing team from the very initial stages of the company's campaign.

“They understand the scale of marketing allocation that works best for the business. And together we work to make our campaigns super-efficient and not wasteful. And finally, our group CFO Abhishek Gupta is the biggest champion of the brand. These are folks who are hard-nosed when it comes to finances and totally understand what investment in the brand will reap. As such they sow. In a nutshell that is the ideal relationship and we're fortunate to enjoy the same,” he notes.

Key challenges

One of the biggest challenges, which could possibly be dubbed as a major bone of contention, for CMO-CFO function is how RoI is calculated.

Duroflex’s Murarka believes that analysing everything in terms of RoI is something that comes naturally to finance. However, sometimes, it is important to understand that ROI is not always tangible, it is not always something that can be put into numbers.

“The outcome of marketing efforts is the growth of the business, but it is also customer loyalty, it is also brand salience. Building them takes a significant part of marketing efforts as well as spends, and they are as important as sales for a business,” she explains.

Marketing, being one of the larger expense lines, has always been seen as a cost, expendable, whenever there is any profit pressure or need to cut costs.

Ajay Kakar, chief marketing officer, Aditya Birla Capital Limited notes that for a company that believes in keeping the customer at the forefront, today, there is need and pressure for the CMO and CFO to be aligned about the ‘cost-benefit’ of the marketing budget.

“To borrow from an accounting vocabulary, I believe that marketing budgets and agendas should be categorized as balance sheet and/or P&amp;L items - those that will take time, but deliver on agreed-do outcomes, and those that will have immediate or attributable outcome within the same calendar year. The CMO-CFO jodi therefore has to work together, from vision, to strategy, till execution and outcome. And presenting a joint face to the management and board is the need of the hour,” he adds.

Upskilling and keeping up with times

Pradeep Mishra, CFO – Duroflex admits that while finance would want to measure everything through the ROI lens, it is often very difficult to quantify the long term impact of brand building activity of the marketing function.

“Understanding the two activities and balancing them with the financial objectives is a very important activity. And, when there is a conflict between the two teams, both teams should learn and understand how to balance long term value creation vs the financial targets every year,” he notes.

Mishra also emphasises the need for finance teams in companies to upskill themselves and better understand the evolving digital space, customer tracking etc.

“The skills needed now are totally different from what finance were trained into and this will be fast evolving at the pace of changes in the likes of the customer and changes of his requirement, so it is going to be a progressive journey to constantly reskilling oneself,” he concludes.

As brand building and marketing becomes more specialised and highly trackable in a digital-first world, data driven insights can bring marketing and finance resources together to achieve key business goals. Their unified efforts can turn the fortunes of the company that is looking to achieve sustainable growth. A Jodi No.1.