Awfis Space Solutions sees 40% revenue jump in Q2 as demand for flexible workspaces surges

Awfis Space Solutions Limited, a prominent provider of flexible workspaces in India, revealed a significant 40% year-on-year revenue growth for Q2 FY25, reaching ₹292 crores. The company’s growth reflects an increasing demand for flexible and adaptable workspaces across India, as both large enterprises and SMEs embrace hybrid work solutions.

Impressive Financial Performance: Revenue and Profitability Highlights

In its latest financial report, Awfis credited the robust revenue growth to the addition of new seats and heightened occupancy rates across its established centers. Operational EBITDA soared by 67%, amounting to ₹100 crores, which raised the EBITDA margin to 34.3%, marking a substantial 550 basis-point improvement from the previous year. Company representatives attributed the margin boost to high occupancy levels and the expansion of operational seats, which strengthened operational efficiencies.

Awfis noted an occupancy rate of 73% across its locations, with mature centers—those operational for over 12 months—reaching an occupancy rate of 84%. This impressive figure underscores the sustained demand for flexible office solutions in India’s evolving commercial real estate market.

Expansion into Tier-II Cities and New Business Ventures

Capitalizing on the growing demand for adaptable office spaces in smaller cities, Awfis expanded its presence in Tier-II markets, now operating 20 centers in these regions—up from 14 the previous year. As part of this expansion, Awfis recently launched a new center in Guwahati, further extending its commitment to supporting smaller but high-growth markets.

Beyond Tier-II growth, Awfis introduced its premier “Elite by Awfis” center in Hyderabad’s Hitech City, which blends luxury with functionality in flexible workspace design. The Elite centers aim to provide an elevated work experience, catering to professionals who prioritize sustainability, comfort, and style.

Managed Aggregation Model Drives Growth

Awfis relies on its asset-light Managed Aggregation (MA) model, which constitutes 67% of its seats and 64% of its centers. This model enables Awfis to optimize its return on investment by focusing on flexible, less capital-intensive growth strategies. According to Awfis, this approach has enabled a sustainable scaling strategy across cities, meeting the needs of corporate clients and offering them an attractive blend of flexibility and resource efficiency.

Expert Analysis: Demand for Flex Workspaces Continues to Rise

Industry experts noted that the demand for flexible workspaces shows no signs of slowing down. The shift toward hybrid work, combined with a corporate emphasis on reducing fixed costs, has positioned companies like Awfis for sustained growth. They further pointed to the rise of managed office spaces as an appealing alternative for companies looking to avoid long-term real estate commitments.

Awfis’s Path Forward: Expansion and Innovation

Looking ahead, Awfis is on track to meet its goal of 135,000 operational seats by March 2025, a target supported by ongoing additions and a pipeline of projects in various stages of development. The company reported that it currently manages over 110,000 seats across 180 centers, with total assets—including fit-out and Letters of Intent (LOI)—covering more than 150,000 seats across 224 centers.

Financial Snapshot: Q2 and H1 FY25

For the half-year ended September 2024, Awfis reported a 39% increase in operating revenue, totaling ₹550 crores. Its operating EBITDA margin improved by 460 basis points to 32.6%, driven by enhanced occupancy, enterprise client growth, and efficiency gains. Awfis recorded a profit of ₹17 crores, marking a turnaround from a loss of ₹13 crores in the same period last year. Cash EBIT also saw a staggering 132% rise, reaching ₹90 crores.

In the recently concluded Q2 FY25, Awfis posted a profit of ₹15 crores, reversing a ₹4-crore loss in Q2 FY24. The company’s exceptional items included the sale of its facility management business, Awfis Care, which contributed to its improved financial position.