Urban Company Ltd has reported a significant net loss in its first quarterly results post-listing, signaling a deliberate strategic shift towards long-term growth and increased customer engagement in India’s household services market. The Gurugram-based company’s net loss widened to ₹59.3 crore in the September quarter, a substantial increase from ₹1.8 crore reported a year ago. This loss is primarily attributed to rising investments in its new high-frequency vertical, Insta Help.

Despite the widening loss, Urban Company demonstrated strong operational growth, with revenue from operations climbing 37% year-on-year to ₹380 crore. This growth was propelled by robust performance in its beauty, cleaning, and home-maintenance categories. Abhiraj Singh Bhal, co-founder and chief executive, articulated that the September quarter marked the start of an aggressive investment cycle aimed at scaling new categories. He emphasized the company's intentional focus on high-frequency services that foster deeper customer engagement, stating, “Insta Help has scaled to nearly 470,000 monthly orders in just eight months, a milestone that took our India consumer business four and a half years to achieve.”

Bhal acknowledged that near-term profitability would remain under pressure due to these investments but stressed their importance in building a sustainable, long-term compounding business. He underscored the commitment to controlling the end-to-end customer experience and empowering service professionals through enhanced training, technology, and earnings, viewing this as the only viable model for sustainable growth and trust-building.

Examining the Q2 performance further, Urban Company’s Net Transaction Value (NTV) – the total value of customer orders – grew 34% year-on-year, reaching ₹1,030 crore. This growth was broad-based, driven by its India consumer business, international markets, and the home products vertical, Native. The company operates four main business segments: India consumer services, Insta Help, Native (products), and international operations. However, its adjusted EBITDA loss expanded to ₹35 crore, contrasting with a ₹21 crore profit in the preceding quarter. Bhal clarified this as an “intentional short-term margin dilution,” aimed at increasing platform engagement and fostering long-term habit formation among customers. He affirmed the company’s strategy to maximize long-term free cash flow per share for shareholder value, despite not yet generating free cash flow.

The India consumer-services segment, encompassing beauty, grooming, cleaning, and appliance repair, contributed nearly 69% of the second-quarter revenue at ₹262 crore. This core segment maintained healthy growth through higher repeat rates and improved partner utilization. The company plans to reinvest in this segment over the next few quarters to strengthen service depth and coverage, anticipating adjusted Ebitda margins of around 9-10% as it scales efficiently. Insta Help is poised to expand the overall addressable market and improve usage frequency, aligning with the long-term strategy. Even with a cooler summer impacting seasonal categories, overall revenue growth exceeding 30% indicates successful diversification across services and geographies.

The Native vertical, which offers home improvement and lifestyle products like water purifiers, air purifiers, and smart locks, experienced a significant revenue surge of 179% year-on-year, reaching ₹75 crore, approximately 20% of total revenue. This segment also narrowed its quarterly loss to ₹9 crore from ₹26 crore in the previous year, with gross margins improving sharply from a 30% loss to around 9% profit due to better pricing discipline and offline traction.

International operations, active in the UAE and Singapore, contributed ₹43 crore, roughly 11% of overall revenue. This segment achieved Ebitda breakeven and saw its order value grow 73% over the year-ago period, indicating steady progress in profitability outside India. Urban Company intends to establish a wholly owned subsidiary in the UAE to deepen its presence and expand Native product sales in the Gulf region.

Currently, Urban Company collaborates with over 57,000 monthly active service professionals and serves 7.4 million annual transacting users across 51 cities. Bhal stated that the company is still in the early stages of expansion, having covered barely one-third of potential micromarkets within its 47 active cities. The long-term opportunity, he noted, extends to the top 100-200 cities in India.

Industry analysts, such as Sandeep Abhange from LKP Securities, view Urban Company’s September-quarter results as indicative of a deliberate investment phase. Abhange stated that while profitability was temporarily affected by upfront investments in Insta Help, management perceives this as a crucial long-term growth lever to deepen user engagement and expand the company’s daily-use category. Urban Company’s robust balance sheet of over ₹2,100 crore provides the necessary flexibility to sustain this investment cycle. Analysts will be closely watching the efficiency of Insta Help’s scaling and the timeline for Urban Company’s margin normalization, noting the company’s disciplined capital management and focus on free cash flow per share as a long-term performance metric.

Meanwhile, competition in the home services market is intensifying, with platforms like Bengaluru-based Snabbit recently raising $30 million in Series C funding. Despite the market dynamics, Urban Company’s shares closed 2.36% higher at ₹158.30 apiece on NSE on Friday, contrasting with the Nifty's 0.60% decline.