Urban Company Q1 FY27 earnings call

Urban Company reported a robust start to FY27, with consolidated NTV growing 42% year-on-year to ₹1,465 crore and revenue increasing 44% year-on-year to ₹528 crore. Total orders surged by 79% to 13.2 million, and the company added a record 1.2 million new customers, bringing its annual transacting user base to 9.3 million. This broad-based growth was highlighted as one of the company's best quarters, demonstrating strong operational momentum.

The core India services business, excluding InstaHelp, demonstrated significant acceleration, with NTV growing 29% year-on-year to ₹1,056 crore, marking the first time it crossed the ₹1,000 crore mark. This represents the fourth consecutive quarter of accelerating growth, up from 10% last year. The Adjusted EBITDA margin for this segment improved to 6.9% of NTV, up from 5.2% in the same period last year, driven by consistent quality, customer trust, and micro-market densification.

The international business scaled rapidly and profitably, with NTV growing 76% year-on-year to ₹237 crore, with UAE and Singapore delivering profitable growth. The Native segment also showed strong performance, with NTV up 51% year-on-year to ₹119 crore and net revenue up 60% to ₹95 crore. Its Adjusted EBITDA loss narrowed significantly to (7.3)% of NTV from (11.4)% a year ago, an improvement of 410 basis points, supported by a 75% filter renewal rate for water purifiers.

InstaHelp remains Urban Company's largest investment, delivering 3.82 million orders, up 43% quarter-on-quarter. While it contributed to a consolidated Adjusted EBITDA loss of ₹132 crore, the loss per order improved from ₹447 in Q4 to ₹346 in Q1. Management views InstaHelp as strategically important for creating a high-frequency volume moat and aims for break-even by FY31, targeting an AOV of ₹300 to cover professional payouts and operational costs, acknowledging the competitive intensity.

The company maintains a strong balance sheet with ₹2,019 crore in cash and treasury investments, only ₹2 crore lower than the previous quarter. Management reiterated its long-term guidance for consolidated Adjusted EBITDA breakeven by Q3 FY28 and ₹1,000 crore in adjusted EBITDA by FY31. The India Consumer Services business is expected to continue generating cash and achieve 9-10% NTV margin, while International and Native segments are also on track for profitability in coming quarters.

Urban Company is aggressively deploying AI across its operations, aiming to be an 'AI-native company.' AI is being leveraged in customer and supply-side support, onboarding, training, quality control, fraud detection (90-95% of code written by AI), marketing, finance, and HR. While AI's impact on margins has begun to show, management believes there is significant room for further efficiency gains and improved service quality, which will contribute to long-term profitability and a healthier marketplace.

The Beauty segment has seen a resurgence in growth over the last two to three quarters, driven by improved service quality through retraining and retooling of professionals. A mobility program has increased the number of beauty professionals with two-wheelers, enhancing fulfillment times and densification. The company also expanded its assortment with new offerings like Japanese facials and Ayurvedic solutions in the Luxe category, staying ahead of market trends and maintaining a competitive edge.

Native's strategy is to offer exceptional, world-class products in categories adjacent to core services, targeting underserved markets and capturing a disproportionate share of the profit pool rather than just revenue. New products like the M3 water purifier (3-year no service needed) and Smart Lock Ultra exemplify this approach, focusing on premium offerings that provide lower lifecycle ownership costs and enhanced user experience for its 9.3 million transacting users. The company plans to limit new category entries to one more in the next five years, prioritizing deep penetration in existing markets.