Ola revenue up 2X in FY22; losses widen as costs rise

Cab aggregator Ola doubled its revenue in the financial year March 2022, reflecting a recovery from the widespread disruptions caused by the pandemic to the mobility business globally.

The company, led by co-founder and chief executive Bhavish Aggarwal, posted a consolidated operating revenue of Rs1,970.4 crore in FY22, rising from Rs983.2 crore in the year before, showed its latest annual filings with the Registrar of Companies.

The improved financial performance came amid an easing of covid-induced lockdowns and a gradual recovery in travel demand. Revenue, however, widely lagged Rs2,662.3 crore in the pre-covid year of FY20.

The increased sales failed to outweigh higher costs as Ola widened its net losses in FY22 to Rs1,522.33 crore from Rs1,116.6 crore in FY21. The company was forced to cut costs and lay off staff, helping narrow its losses from Rs2,208.2 crore in FY20.

Ola was started in December 2010 by Aggarwal and Ankit Bhati, its former chief technology officer, both of whom were IIT Bombay graduates. It now services over 250 locations in India, Australia, New Zealand and the UK. Ola counts marquee investors such as SoftBank, Tiger Global, Matrix Partners, Temasek and Warburg Pincus among its backers. It became a unicorn or a startup with a valuation of $1 billion or more in 2015.

The group’s business extends beyond mobility, with added financial services offerings including payment systems, insurance agents and cloud kitchens, among others.

In FY22, Ola derived about 61% of its revenue or Rs1,208.6 from its ride-hailing business in India, which also posted a loss of Rs101 crore. Financial services comprised a small part of the revenue.

Most of Ola’s losses came from its ‘Other’ segment, which comprises its cab hailing business overseas, the business of buying and selling of used cars, cloud kitchens and stores business. The segment reported a revenue of Rs666.4 crore during the year and a loss of Rs725.5 crore.

Expenses surged 67.5% to Rs3,362.1 crore in FY22 due to a rise in the cost of materials, and employee benefit expenses, among others.

Aggarwal also founded Ola Electric, which makes electric scooters. The venture was last valued at $5 billion, when it raised around $200 million from Tekne Private Ventures, Alpine Opportunity Fund and Edelweiss. The company is in talks with investors to raise another round and Aggarwal had also disclosed plans to take the electric mobility business public.

Meanwhile, there has been a markdown in Ola’s valuation. Recently, one of its investors, US investment firm Vanguard, again slashed the Bengaluru-based company’s valuation in its books amid a slowdown in the global startup ecosystem that has impacted market capitalizations.

The latest cut values Ola at about $3.6 billion, after factoring in foreign currency fluctuations that brings down the dollar valuation of India-incorporated companies due to the depreciation of the Indian currency against the greenback. Investors make their own estimates according to different valuation models though the exact valuation cannot be determined unless Ola raises its next round or makes a public listing.