As Smartworks Coworking Spaces prepares to launch its Initial Public Offering (IPO) on July 10, the company has revealed its financial performance for the fiscal year 2024-25 (FY25), showing a significant 32% increase in revenue from operations to ₹1,374.05 crore. However, this robust top-line growth was accompanied by a widening of net loss to ₹63.17 crore, up from ₹49.95 crore in the preceding financial year.

The details, disclosed in the company's Red Herring Prospectus (RHP), provide a snapshot of Smartworks' trajectory as it seeks to tap into the public markets. The Gurugram-based managed office space provider, which currently boasts 48 operational centres with over 1.9 lakh seating capacities, attributes the widened losses to its total income being lower than expenses for the fiscal. The company stated its intention to "generate and sustain increased revenue levels and decrease proportionate expenses in future periods to achieve profitability."

Smartworks operates on a model where it leases large office spaces from landlords and then sub-leases these fully serviced, tech-enabled areas to corporates. Its operational portfolio spans 8.31 million sq ft, with an additional 0.7 million sq ft under fit-outs and 1.7 million sq ft secured through leases but not yet in possession. The total portfolio, including spaces under fit-outs and signed, is expected to cross 10 million sq ft.

The IPO, set to open on July 10 and close on July 14, has seen a downward revision in its size. The fresh issue component has been reduced to ₹445 crore from the initially planned ₹550 crore, while the offer for sale (OFS) by promoters has been cut to 33.79 lakh shares from 67.59 lakh shares.

The proceeds from the IPO are earmarked for strategic growth initiatives. Approximately ₹226 crore will be allocated for capital expenditure related to fit-outs in new centres and security deposits for these new spaces. Another ₹114 crore will be used for the repayment of existing loans, with the remaining funds designated for general corporate purposes.

Smartworks positions itself as a leading player in India's burgeoning co-working sector, catering primarily to mid-to-large enterprises requiring over 300 seats. The company emphasizes providing a comprehensive "office experience" through amenities such as cafeterias, sports zones, gyms, and medical centres. This enterprise-focused approach has allowed Smartworks to secure longer lease terms, typically ranging from two to five years, providing a more stable revenue stream compared to traditional month-to-month coworking models.

The flexible workspace market in India has witnessed significant growth, driven by factors such as the rise of hybrid work models, a thriving startup ecosystem, and the increasing demand from large enterprises for agile and cost-efficient office solutions. Despite the overall market tailwinds, Smartworks' financial results highlight the considerable upfront investment and operational costs associated with scaling a managed office space business, particularly in fitting out new centers.

As Smartworks steps into the public market, investors will keenly watch its ability to translate its impressive revenue growth and expanding footprint into sustainable profitability. The funds raised from the IPO will be crucial for the company to solidify its market position and continue its expansion plans in a competitive yet rapidly growing industry.