According to a report by Inc42, SoftBank has set March 31, 2020, as the deadline for Oyo to phase out unprofitable contracts which are not EBITDA-positive. It has also set July as the deadline for Oyo to shut down ancillary businesses that fail to generate an operating profit.
With Oyo expected to go public in the US by 2022-2023, SoftBank might be looking to keep everything in order.
The development comes weeks after SoftBank and Oyo’s founder and CEO Ritesh Agarwal invested a massive $1.5 billion in India’s leading hospitality startup in December 2019.
Furthermore, there have been multiple media reports talking about Oyo’s toxic culture which are bound to keep SoftBank on its toes in order to avoid another disaster like WeWork.
During FY19, Oyo saw its losses rise over 5x to ₹2384. 69 crores from ₹360.43 in the previous fiscal. While the revenues saw an over threefold surge, its losses rose by 3.9x during the fiscal year 2019.
As per the report, Oyo is expected to report losses to the tune of $285.9 million in 2020 but is looking to turn profitable by 2022. However, despite rapid growth and expansion, it remains to be seen how Oyo manages to cut down its losses and delivers the dream of profitability to SoftBank.