The home services startup reports 30% revenue growth in FY24, reduces losses by 70%, and completes a $63 million secondary transaction as it prepares for a potential 2025 IPO.
Introduction:
Urban Company, the Gurugram-based at-home services platform, has reported significant financial improvements for the fiscal year 2024, marking a pivotal moment in its journey towards profitability. The company has not only narrowed its losses but also completed a substantial secondary share sale, signaling strong investor confidence in its growth trajectory.
According to the company’s annual business summary, Urban Company’s net revenue increased by 29.8% to Rs 827 crore in FY24, up from Rs 637 crore in the previous year. More notably, the company managed to reduce its loss before tax by 70%, bringing it down to Rs 93 crore from Rs 312 crore in FY23.
1. Financial Performance and Growth:
Urban Company’s financial results for FY24 demonstrate a clear path towards profitability. The company’s revenue growth was driven by investments in service quality, partner training, technology development, and the launch of new product lines such as the ‘Native’ RO water purifier devices. The Indian segment, which accounts for 89% of the company’s net revenue, generated Rs 738 crore in FY24, with losses in this segment reducing significantly from Rs 177 crore in FY23 to Rs 21 crore in FY24.
2. Recent Funding Activity:
In a significant development, Urban Company recently concluded a $63 million secondary share sale led by Dharana Capital. This transaction allowed some existing backers, founders, and employees to partially liquidate their holdings. Sources suggest that this secondary sale was completed at a valuation range of $2.2 to $2.5 billion, underlining the company’s strong market position despite the challenging economic environment for startups.
3. Profitability Milestone:
Urban Company has reported its first profitable quarter in Q1 FY25 (April-June 2024), with a profit before tax of Rs 12 crore on a net revenue of Rs 281 crore. This achievement is particularly noteworthy as the company prepares for a potential public listing in 2025. The move to profitability is likely to strengthen Urban Company’s position as it approaches the public markets.
4. Service Partner Earnings:
The company has also highlighted the earnings potential for its service partners. According to Urban Company’s data, service partners delivering more than 30 services per month earned an average of Rs 33,469, while the top 20% of partners earned as much as Rs 42,792 net of all commissions, fees, travel, and product costs. Interestingly, the company reports that female service partners earned 23% more than their male counterparts in the second half of 2023.
5. Market Position and Future Outlook:
Urban Company’s performance indicates a strong market position in the Indian home services sector. With its expansion into new product categories like water purifiers and wall panel solutions, the company is diversifying its revenue streams. The startup’s presence in international markets such as the UAE, Saudi Arabia, and Singapore, although currently small, provides potential for future growth.
Key Statistics:
- FY24 net revenue: Rs 827 crore (29.8% YoY growth)
- FY24 loss before tax: Rs 93 crore (70% reduction YoY)
- Q1 FY25 revenue: Rs 281 crore
- Q1 FY25 profit before tax: Rs 12 crore
- Secondary share sale: $63 million
- Estimated valuation: $2.2 to $2.5 billion
- Average monthly earnings of top-performing service partners: Rs 42,792
Implications for the Indian Startup Ecosystem:
Urban Company’s financial performance and recent funding activity have several implications for the Indian startup ecosystem:
1. Profitability Focus: The company’s ability to significantly reduce losses while maintaining strong revenue growth demonstrates a shift in investor and founder priorities towards sustainable business models and profitability.
2. Secondary Transactions: The successful completion of a large secondary share sale indicates that there is still appetite for quality assets in the Indian startup ecosystem, even in a challenging funding environment.
3. Gig Economy Evolution: Urban Company’s model and the reported earnings of its service partners provide insights into the evolving gig economy in India, particularly in the home services sector.
4. Pre-IPO Preparations: As Urban Company eyes a potential 2025 IPO, its journey will be closely watched by other Indian startups considering public listings, potentially paving the way for more tech IPOs in the country.
Conclusion:
Urban Company’s latest financial results and funding activity mark a significant milestone in its growth story. The company’s ability to narrow losses, achieve profitability in a quarter, and attract investor interest through a secondary sale demonstrates the maturation of its business model. As Urban Company prepares for a potential public listing, its performance will be closely monitored by investors, competitors, and other startups in the Indian ecosystem. The company’s success could serve as a blueprint for other Indian startups aiming to balance growth with profitability in their journey towards public markets.
