Startup Deep Dive : OYO — the profit that wasn’t quite a profit

In May 2025, founder Ritesh Agarwal told reporters OYO had become India’s most profitable startup, citing a profit after tax of ₹623 crore (about $65 million at $1 ≈ ₹96.0, as of 18 September 2026, Trading Economics) for the year ended March 2025. The audited numbers filed with regulators months later told a narrower story: a net profit of ₹244.8 crore, most of it produced by a one-time ₹765.6 crore deferred tax credit sitting on top of an actual pre-tax loss of ₹489.3 crore.

That gap between the founder’s number and the auditor’s number is a fitting summary of OYO’s whole arc. A budget-hotel aggregator that once chased a $10 billion valuation, cut most of its India workforce inside a single pandemic year, withdrew its own IPO papers twice, bought the American motel chain Motel 6, and is now, under a renamed parent called PRISM, making a third run at going public at roughly a quarter of its old peak price.

Quick facts

What they do

OYO puts a single brand, a booking app and a standard set of room amenities on top of independently owned budget and mid-market hotels, so a traveller booking a stay in Jaipur or Jakarta gets a roughly consistent room, price and cancellation policy regardless of who actually owns the property. Its customers are largely price-conscious domestic travellers and small business trippers in India and Southeast Asia, plus, since the Motel 6 acquisition, roadside American drivers who would never have heard the OYO name. Its other side of the market is the patron: an independent hotel or home owner who hands over pricing, branding and often day-to-day operations in exchange for OYO’s demand and technology, more than 293,500 such storefronts across upwards of 35 countries as of 31 December 2025, according to OYO’s own IPO filing.

The origin

Ritesh Agarwal was still a teenager, travelling around India on a shoestring, when he built Oravel Stays in September 2012 as a listings marketplace for budget accommodation, an idea good enough to win him a spot in the Venture Nursery accelerator and, in 2013, a $100,000 Thiel Fellowship from Peter Thiel — the first ever awarded to an Indian, according to his own account and multiple profiles of the founder. Oravel’s marketplace model failed on a simple problem: it matched travellers to cheap rooms without doing anything to guarantee those rooms were actually livable, so guests kept getting burned and stopped trusting the listings. Agarwal’s fix, launched as OYO Rooms in May 2013, inverted the model. Instead of just listing hotels, OYO would inspect them, renovate the worst of them to a minimum standard, brand them, and sell rooms under its own name and pricing — a franchise-like relationship rather than a directory. That shift, from marketplace to managed brand, is the idea the rest of the company was built on.

The struggle years

OYO’s growth through 2018 and 2019 was funded on a minimum-guarantee model: it promised hotel owners a fixed monthly payout regardless of occupancy, a structure that scaled the network fast but left OYO holding the downside risk of every empty room. That risk detonated with covid-19. Operating revenue, which had reached ₹13,413 crore in the year ended March 2020, per Business Standard’s review of the company’s filings, collapsed as international borders shut and domestic travel froze; OYO’s own account put its bookings at roughly a quarter of pre-pandemic levels within weeks. The company responded with layoffs across multiple markets in 2020, cutting close to 360 jobs in the US in February alone and hundreds more in the UK and other markets over the following months, according to contemporaneous reporting by Inc42 and Yahoo Finance UK, while remaining leadership took pay cuts of 25-50% and Agarwal said he would forgo his own salary for the rest of the year. Alongside the layoffs, OYO tore up the minimum-guarantee contracts that had nearly sunk it, shifting 99% of its franchise agreements to a revenue-sharing model in which OYO only earns when a room actually sells — a structural pivot forced by near-collapse rather than chosen in good times. A second, slower-motion struggle ran in parallel: OYO filed its first IPO papers with SEBI in October 2021 seeking to raise about ₹8,430 crore, only to withdraw that filing in January 2023 after the regulator raised questions about its disclosed KPIs, outstanding litigation and valuation; a second, smaller confidential filing was itself paused in May 2024 so OYO could first refinance about $450 million of debt, according to Skift’s reporting at the time.

The turning point

The clearest single before-and-after in OYO’s numbers is the covid crash and the model change that followed it. Revenue fell from ₹13,413 crore in FY20 to roughly ₹4,155 crore in FY21, a decline of close to 70% in one year, before recovering to ₹4,905 crore in FY22 and ₹5,464 crore in FY23, according to Business Standard’s and Entrackr’s coverage of the company’s Registrar of Companies filings. What changed on the other side of that crash was not just the smaller top line but the cost structure underneath it: with minimum guarantees gone and the network running on revenue share, OYO’s losses narrowed from ₹3,382.5 crore in FY21 to ₹1,851 crore in FY22 and ₹1,286 crore in FY23, before the company posted its first full-year net profit, ₹230 crore, in FY24. The pandemic did not just shrink OYO — it forced the one contractual change that let a smaller OYO eventually turn a profit.

The money behind it

OYO has raised more than $3.4 billion in funding over 21 rounds, per Tracxn’s tally of its cap table, a figure Crunchbase’s own count puts at a broadly similar $3.3-3.6 billion. SoftBank became the defining backer in 2018-2019, leading a $1 billion-plus run of financing including a $1.5 billion round in October 2019 alongside Lightspeed Venture Partners and Sequoia India (now Peak XV), a round that valued OYO at close to $10 billion and bankrolled its aggressive expansion into more than 800 cities and 80 countries within months, as TechCrunch reported at the time. Microsoft came in later as a strategic rather than purely financial backer: a 2019 filing showed a $5 million equity investment at a $9.6 billion valuation, paired with a multi-year alliance to co-develop hospitality technology, according to Inc42’s reporting. Airbnb also holds a stake from an earlier funding round. None of that early capital has been recycled through the IPO: SoftBank and Agarwal are both explicitly not selling any shares in the 2026 offering, which is structured as a 100% fresh issue rather than an exit for existing investors. The last private mark on the company, a 2024 funding round, valued OYO at about $2.4 billion, according to StartupTalky’s review of the prospectus — meaning the $7-8 billion IPO target asks public investors to pay roughly three times what OYO’s own backers paid eighteen months earlier.

How it makes money

Most of OYO’s revenue is a commission on the franchise model: hotel owners keep their property and staff but hand pricing, distribution and branding to OYO in exchange for a fee typically quoted between 20% and 35% of gross booking value, a structure that industry estimates put at roughly 75-90% of OYO’s overall revenue depending on the year. On top of that commission, OYO charges one-time onboarding fees for branding and light renovation when a hotel first joins the network, and sells subscription access to its OYO OS booking and property-management software, a smaller but higher-margin line. A minority of revenue still comes from hotels OYO operates itself rather than merely franchises, and from vacation-home rentals in Europe. The part people get wrong is assuming OYO is primarily an Indian budget-hotel company: in FY25, India generated only about 20% of revenue, or ₹1,255.6 crore, according to Medianama’s review of the company’s filings, while the US alone contributed roughly 27% of revenue in the nine months to December 2025 per the company’s own prospectus — a business now weighted toward markets far from where it was founded. The margin sits in the commission line because OYO carries none of the real-estate or renovation capital cost that a hotel-owning chain would; its costs are mostly technology, sales and marketing, and, since December 2024, the operating costs of the Motel 6 and Studio 6 chains it now runs directly in North America.

The numbers

OYO’s revenue and profit or loss over the four most recent fiscal years, drawn from Registrar of Companies filings as reported by Business Standard, Entrackr, Medianama and Inc42, show a covid-era collapse followed by a slow, tax-assisted return to the black:

The FY25 profit line needs a footnote the headline figures do not carry: of that ₹244.8 crore, ₹765.6 crore came from a deferred tax credit, an accounting adjustment tied to the expected future use of accumulated tax losses rather than cash the business actually generated that year. Strip the credit out and FY25’s pre-tax result was a loss of about ₹489.3 crore, according to Inc42’s reading of the company’s disclosures — a materially different picture from the “most profitable startup” framing Agarwal used in May 2025, when the figure being cited was an earlier, unaudited ₹623 crore.

Where the money comes from

By revenue line, accommodation services brought in ₹3,824.8 crore in FY25, commissions and royalties added ₹1,562 crore, and rental income grew 77% to ₹156.9 crore, according to Medianama’s breakdown of the company’s FY25 filing. By geography, the surprise is how thoroughly the centre of gravity has shifted away from India: overseas markets supplied about 80% of FY25 revenue, and in the nine months to December 2025 the United States alone accounted for roughly 27% of revenue with the US, UK and Europe together contributing more than 72%, against India’s 16%, per the company’s own updated prospectus reported by Bizzbuzz. The Motel 6 deal accelerated rather than started this shift — OYO’s international expansion into more than 35 countries predates the acquisition — but a chain most Indians associate with a domestic budget stay now earns the bulk of its money keeping American highway motels and European vacation homes booked.

The risks

OYO’s own prospectus names risks that are unusually specific for a company that spent years insisting its story was one of pure growth. The first is geographic concentration: with the US, UK and Europe together supplying more than 72% of revenue in the most recent nine-month period, any regional downturn, currency swing or regulatory change in those markets now hits OYO’s overall numbers disproportionately, a dependence that has only deepened since the Motel 6 acquisition. The second is a long-running legal dispute with Zostel, arising from a 2015 acquisition agreement that was never completed; an arbitral tribunal initially ruled in Zostel’s favour, and although the Delhi High Court set that award aside, Zostel has challenged the reversal, and OYO’s own filing states that if Zostel ultimately prevails, OYO may have to issue or transfer up to 7% of its shareholding, or pay an equivalent amount in cash, according to Bizzbuzz’s reading of the DRHP. The third is a financing risk closer to home: 100% of the equity in one promoter entity, RA Hospitality Holdings (Cayman), is pledged to a lender, and if that pledge were ever enforced it could change the ownership structure of the promoter group itself, a disclosure that sits alongside roughly ₹3,969 crore of litigation exposure against OYO’s subsidiaries across 22 civil and 7 criminal cases named in the prospectus.

The takeaway

The transferable lesson from OYO is not about hotels; it is about reading a turnaround claim past the headline number. A company can genuinely improve — cut losses, change a punishing contract structure, reach positive EBITDA for ten straight quarters, as OYO says it has — and still not be “profitable” in the way a one-line profit-after-tax figure implies, if that figure leans on a deferred tax credit rather than operating cash. The discipline worth borrowing is simple: before accepting a founder’s profitability claim, ask what the number would look like with the tax line removed, because that is usually the difference between a business that has actually turned a corner and one that has merely found a more favourable way to describe the same corner.

Frequently asked questions

Is OYO listed on the stock exchange?

No. OYO is privately held under its parent company, renamed PRISM (formerly Oravel Stays) in September 2025. PRISM filed an updated draft red herring prospectus with SEBI in June 2026 for a ₹6,650 crore fresh-issue IPO, targeting a listing in the second half of 2026, though the exact date has not been fixed.

Is OYO actually profitable?

It depends on which number is used. Founder Ritesh Agarwal cited an unaudited profit after tax of ₹623 crore for FY25 in May 2025. The audited figure later disclosed in filings was ₹244.8 crore, and that figure relied on a ₹765.6 crore deferred tax credit; excluding it, OYO posted a pre-tax loss of about ₹489.3 crore for the year, according to Inc42’s reporting on the company’s disclosures.

What is OYO worth today compared with its peak?

OYO was valued at close to $10 billion in a 2019 SoftBank-led round, according to TechCrunch. SoftBank internally marked that down to about $2.7 billion by 2022, per TechCrunch and Business Standard, and a 2024 private round reportedly valued the company at around $2.4 billion, per StartupTalky’s review of the prospectus. The 2026 IPO targets $7-8 billion.

How does OYO make money?

Mostly through a commission, typically 20-35% of gross booking value, charged to independently owned hotels that operate under the OYO brand. Additional revenue comes from onboarding and branding fees, OYO OS software subscriptions, company-operated hotels, and, since December 2024, direct operation of the Motel 6 and Studio 6 chains in North America.

Who are OYO’s biggest shareholders and backers?

Founder-CEO Ritesh Agarwal and SoftBank Vision Fund are OYO’s largest shareholders, and neither is selling shares in the 2026 IPO. Other investors across its funding history include Lightspeed Venture Partners, Sequoia India (now Peak XV), Microsoft and Airbnb. OYO has raised more than $3.4 billion in total funding, per Tracxn.

Sources

Figures are as of September 2026. Currency converted at $1 ≈ ₹96.0 as of 18 September 2026 (Trading Economics).

• Business Standard, “OYO most profitable startup in FY25 with ₹623 cr profit: Ritesh Agarwal,” May 2025
• Inc42, “OYO Retains Profitability In FY25 On Deferred Tax Gain, Changes Corporate Identity,” September 2025
• Medianama, “OYO FY25 Revenue Hits ₹6,252 Cr, India Only 20%,” September 2025
• IndMoney, “OYO IPO Analysis: 5 Key Insights from the Updated DRHP,” 2026
• Bizzbuzz, “OYO DRHP Flags Overseas Revenue Dependence, Zostel Dispute Ahead of IPO,” 2026
• The Week, “OYO parent Prism files updated IPO papers: No share sale by Ritesh Agarwal or SoftBank,” 30 June 2026
• StartupTalky, “OYO is trying to list at $7-8 billion. Eighteen months ago its own investors valued it at $2.4 billion,” 30 June 2026
• TechCrunch, “SoftBank cuts internal valuation of $10 billion Oyo to $2.7 billion,” September 2022
• Business Standard, “SoftBank cuts valuation of IPO-bound Oyo by 20% to $2.7 bn: Report,” October 2022
• TechCrunch, coverage of OYO’s $1.5 billion Series F led by SoftBank, Lightspeed and Sequoia India at a near-$10 billion valuation, October 2019
• Entrackr, “Oyo posts Rs 5,464 Cr income in FY23, losses shrink 34%,” October 2023
• Entrackr, “Unpacking Oyo profitability and its financial position in FY24,” August 2024
• Equitypandit, “Oyo’s Revenue Rises 18% in FY22, Net Loss to Rs 1,851 Crore,” September 2022
• Entrackr, “OYO acquires Motel 6-parent G6 Hospitality for $525 Mn,” September 2024
• CNBC, “Motel 6 sold to Indian hotel operator Oyo for $525 million,” September 2024
• Skift, “Oyo Completes Motel 6 Acquisition. Next? 150 New Hotels by 2025 With a Focus on Direct Bookings,” December 2024
• Inc42, “As Coronavirus Bites Revenue, OYO Lays Off Employees In US,” 2020
• Yahoo Finance UK, “SoftBank-backed Oyo to lay off most UK staff over COVID-19,” 2020
• Business Standard, “Oyo likely to withdraw IPO papers, may opt for private fundraise: Report,” February 2024
• Skift, “Oyo Pauses IPO – Plans to Refile After Refinancing,” May 2024
• Storyboard18, “OYO renames corporate entity name to ‘PRISM’ to reflect global expansion,” September 2025
• Inc42, “Microsoft Checks In OYO With Strategic Investment At $9 Bn Valuation,” 2019
• Tracxn, “OYO – 2026 Funding Rounds & List of Investors”
• Wikipedia, “Ritesh Agarwal” and “Oyo Rooms,” accessed September 2026

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