Ola Revenue Decline and Future Business Strategies

Ola reported a 5.5% decrease in revenue for the fiscal year ending March 2024, signifying a period without growth. Nevertheless, the company achieved EBITDA profitability, attributed to reductions in costs related to employee benefits and communication expenses.

Financial Performance Overview of Ola

In FY24, Ola’s revenue from operations dropped by 5.5%, amounting to Rs 2,012 crore, down from Rs 2,128 crore in FY23, according to consolidated financial statements from the Registrar of Companies (RoC).

Ride-Hailing and Financial Services Revenue

The ride-hailing sector of Ola accounted for 87.5% of total operating revenue in FY24, despite witnessing an 11.3% reduction in revenue to Rs 1,761 crore from Rs 1,985 crore in FY23. In contrast, the financial services sector saw remarkable growth, with revenue surging 3.6 times to Rs 227 crore from Rs 63 crore in the previous year. This segment primarily engages in offering insurance policies and financing services for vehicle purchases, particularly focused on Ola Electric.

Total Income Breakdown

Additionally, Ola generated Rs 192 crore from interest on deposits, raising its overall income to Rs 2,204 crore in FY24 compared to Rs 2,277 crore in FY23.

Cost Management in Ola’s Ride-Hailing Business

Transportation expenses represented 28.8% of total costs for Ola’s ride-hailing business. These costs dropped by 15.2% to Rs 607 crore in FY24 due to decreased mobility. Employee benefit expenses were reduced by 42% to Rs 334 crore, and telephone and postage expenses declined by 28% to Rs 280 crore.

Advertising and Overall Costs

Interestingly, Ola increased its advertising expenditure by 2.6 times to Rs 107 crore in FY24. Other costs, including legal, rental, and various overheads, raised total expenses to Rs 2,107 crore in FY24, down from Rs 2,517 crore in FY23.

Cash Flow and Profitability Analysis

It is important to note that the calculation of losses excludes the allowance for impairment of goodwill and other intangible assets, which were recorded as Rs 319 crore in FY24 and Rs 149 crore in FY23 due to their non-cash nature. Despite the revenue challenges, Ola effectively managed its costs, leading to a loss of Rs 10 crore in FY24, a significant improvement from the Rs 623 crore loss in FY23. The company reported EBITDA profitability in the preceding fiscal year, with operating revenue costing Re 0.89 per rupee earned.

Upcoming Changes for Ola

In August 2024, Bhavish Aggarwal announced a rebranding of Ola Cabs to Ola Consumer, consolidating its financial services, cloud kitchens, and electric logistics under one unified platform. The company is also approaching its initial public offering (IPO).

Extraordinary General Meeting for IPO Discussion

Sources indicate that Ola’s parent company, ANI Technologies Private Limited, has convened an extraordinary general meeting (EGM) on November 14, 2024, to deliberate on IPO-related matters. However, there has been no official statement from Ola regarding the timeline for its public listing.

Valuation Changes and Investor Concerns

Ola has encountered valuation markdowns by investors in recent times. As of August 2024, Vanguard revised Ola’s valuation to approximately $2 billion, down from an earlier adjustment of $1.88 billion on November 30, 2023. This decline is notable compared to 2021, when Ola was valued at $7.3 billion.