"EDITION 7"

Published: 6/5/2020

“EDITION 7”

Can you believe it’s been 6 whole days since I’ve talked about a SoftBank backed company? Well fret not, today we have stories about some of SoftBank’s most valuable Indian companies: OYO & Ola. Interestingly these are also some of the few Indian consumer companies that have achieved some level of scale globally. But at what cost? Here’s more:

  • https://tcrn.ch/39JmFJi (TechCrunch): So OYO’s financials for FY19 are finally out and 🎶“My, Oh My”🎶 am I excited. To kick things off, their Indian business has actually been doing pretty well. Revenue was up 2.8x (from FY18) to $581M, with losses growing slight slower at 2.6x to $676M which amounts to a loss of $95M (EBITDA). The good news is that the EBITDA % (Operating Revenue/Operating Expenses) has gone from -27% to -16% and a source told me that Ritesh said (at the Indian Harvard Conference) that OYO is now EBITDA positive in India (which actually seems plausible). Globally is a whole different story though, revenue (& losses) surged in China from 0 → $300M (Revenue), & 0 → $200M (Losses) [For every $5 that OYO spent, they earned $2]. And while OYO’s total revenue grew significantly, their losses are still growing at a much faster pace. It will be interesting to see FY20’s financials because I assume the Indian business might hit a profit, but the global business might have even higher losses with the US (esp with the property purchases) & Japan expansion (& the China business probably being hit severely with the recent Coronavirus pandemic).
  • http://bit.ly/38CFeyE (Mint): We also had OLA expanding their presence in the UK in London with over 25,000 drivers! They have actually been operational in the UK for a while at this point with London being the 28th city being launched. As for other expansions, OLA is also present in Australia (40,000 drivers) & New Zealand (85,000 drivers). What’s a little interesting with the London launch is that the company is giving £25 worth of ride credits with an additional £10 for each referral. Who knows how long that will last and how far it gets them? But deep-discounting has usually been a tactic employed by Indian startups to woo customers, and might help OLA become the market leader in London (& the UK) which is now largely devoid of Uber which got banned earlier last year. I initially read about the ride credits & the breakdown of it here: https://oversharing.substack.com/p/the-real-unicorn-is-a-profitable
  • Feedback & ❤️ always appreciated

    More tomorrow :) BONUS (Tweet of the day): https://twitter.com/abhayjani4/status/1229290631383502848

    PS: OYO’s Annual Report recap has more interesting stats on how the year looked for them- https://www.oyorooms.com/officialoyoblog/2020/02/17/annual-report-card-fy-2019