Urban Company Limited ($URBANCO)

Good evening, everyone. Welcome to Urban Company Limited's Q4 and FY 2026 Earnings Conference Call. [Operator Instructions]. Please note that this call is being recorded. On behalf of Kotak Institutional Equities, I welcome the Urban Company management to discuss earnings for the fourth quarter and year ended 31st March 2026. I welcome Mr. Abhiraj Singh Bhal, Co-Founder and CEO; and Mr. Abhay Mathur, CFO. The results and investor letter have been uploaded to the stock exchanges and are available on the company's Investor Relations website. Before we begin, I'd like to remind you that certain statements made on this call may be forward-looking in nature and should be viewed in conjunction with the risk factors disclosed in the company's filings. With that, I'll hand the call over to Abhiraj to share the key highlights of the quarter.

Thank you very much, Garima. Good evening, ladies and gentlemen, and welcome to Urban Company's Q4 FY '26 Earnings Call. Let me start by saying that Q4 was amongst the strongest quarters that we've ever had in the history of Urban Company in what I believe was a defining year for the company, our first as a listed company. We delivered our highest ever consolidated NTV growth in 15 quarters. crossed 10 million orders for the first time in the single quarter and meaningfully improved the profitability of our core businesses, and I'll walk through each of these one by one. Let me start with the headlines. On a consolidated basis, Q4 net transaction value grew 42% year-on-year to reach INR 1,148 crores and revenue grew 43% year-on-year to reach INR 426 crores. For the full financial year FY '26, consolidated LTV reached INR 4,290 crores, which is up 33% year-on-year, excluding the impact of Saudi consolidation. Our transacting user base also grew by a healthy 24% to reach 8.4 million unique annual transacting users. And today, 83% of our net transaction value comes from retained users. Now 4 very important points that I want to talk about before we get into Q&A, our simple but powerful points, which, in our view, help capture the story of Urban Company, where is it today and where is it heading. Let me start with the core business, India core Consumer Services ex-Insta Health. In our view, the core is accelerating with structurally improving margins. If I look at India Consumer Services, ex of Insta Health, we grew by 26% in Q4 for NTV to reach INR 808 crores. This was our fastest growth in 11 quarters. Our adjusted EBITDA margin also improved from 1.6% of NTV a year ago to 3.3% of NTV. And as a result, for the full financial year, the business delivered INR 131 crores of adjusted EBITDA or 4.1% of NTV, which was about 80 basis points ahead of the initial view that we had at the beginning of the year. To put things in context, this core business was loss-making as recently as FY '24. That's the first. The second point is international. I want to highlight for investors that international is now scaling rapidly and is profitable. Our UAE and Singapore businesses delivered 84% NTV growth in Q4 to reach INR 211 crores of NTV, and this was despite some demand headwind in UAE in the month of March because of the escalation of the Middle East conflict. For the full financial year, international NTV grew 75% to reach INR 700 crores, and the business turned adjusted EBITDA positive, INR 6 crores for the entire financial year. This business for us is now 4x larger than it was 4 years back. Third, I want to talk about a business that we started barely 2 to 3 years back has now become meaningful in scale with a clear path to profitability. NTV grew 67% in Q4 to reach INR 89 crores and it reached INR 345 crores for the full financial year, up 122% over the previous year. The adjusted EBITDA loss narrowed from INR 39 crores in FY '25 to INR 31 crores in FY '26, even as the business scaled more than 100%. And margin trajectory improved from negative 25.1% of NTV to negative 8.9% of -- what's even more encouraging is that the earliest cohort of users who have completed 2 years, almost 75% of them have come back to us and gotten the replacement and renewal cycle through Urban Company. That number is almost 4x over the industry averages. It's a strong signal of consumer stickiness, and this number will only compound further as the installed base grows. Last, but by no means least is in, our most significant investment rate and one where we are leaning in heavily. This business did not exist a year back. And in the fourth quarter of FY '26, it delivered 2.7 million orders with as many as 1.1 million plus orders in March alone and INR 40 crores of -- this business did incur a meaningful loss, INR 119 crores of adjusted EBITDA loss in the last quarter. And this loss reflects the cost of building the market, consumer acquisition, network density subsidies and supply onboard. We are very clear that we are investing to win here, and we intend to stay ahead and cement our market leadership. Given the competitive dynamics in this space, we have shared everything we will be able to share earnings in the shareholders letter. We won't be going beyond that in this earnings call. I hope you all understand why. Finally, a little bit of a housekeeping point. The consolidated P&L for this quarter was negative INR 160 crores of loss. However, adjusted EBITDA was only INR 98 crores. The delta was going to a reversal of DTA of about INR 61 crores, the details of which are there in the shareholders' letter. Overall, we believe we are in a very confident position. Our businesses are accelerating as far as growth is concerned. Excluding the investments in InstaHealth, our businesses are profitable with the core delivering about INR 22 crores of adjusted EBITDA profit in the last quarter and INR 106 crores for the full financial year '26. We ended the financial year with INR 2,021 crores of cash in the balance sheet. So we believe we are well positioned both from a balance sheet cash perspective as well as the core generating increasingly larger profits to fund Insta Health's growth journey while maintaining a decent balance sheet. We retain our target of consolidated adjusted EBITDA breakeven by Q3 FY '28 and INR 1,000 crores of adjusted EBITDA by FY '21. With that, I will hand it back to Garima for Q&A.

[Operator Instructions] First question from Manish Adukia.

Congratulations on a great set of numbers, growth really, really strong. And also wanted to commend the team on the extensive disclosures in the shareholder letter. They're really helpful. I have a few questions. Please feel free to stop me, and I'm happy to jump back in the queue. So first one is on just the growth bit, and I know you've talked about it in the shareholder letter in a fair bit of detail as to what drove the growth. But if I look at just the India Consumer Services ex Insta Health, even the top 10 cities, despite no category expansion, you've delivered 25% growth. Now one, wanted to understand, have you seen this kind of acceleration in your business in the past as well? What I mean by that is the core consumer services is not a new category for you. You've been doing this for a long time. And has this time's growth acceleration been different in the past? And why has it been different? Like what is driving this acceleration versus what you may have seen in the past? And how much of a contributor is the instant delivery of services that is leading to growth? That will be just helpful to understand. And maybe a follow-on as to -- I know you talked about durability will need to be tested over a few quarters, but any color on your sense on visibility of how long this could sustain? That's my first question, please.

That's a great question, Manish. So Manish, just for the listeners to understand India Consumer Services, this is a -- it's a very large and complex business. We have 60-plus service categories spread across 47 cities in hundreds of micro markets. And across each and every service category and micro market, one has to carefully build supply and demand density while ensuring quality control, training, consistency of service and the whole 9 yards. So we've been hard at work for many years now doing that. We believe that many of our categories and micro markets are hitting an inflection point from a densification standpoint, which is driving the simple flywheel, what we've talked about in our shareholders let grow faster, cheaper, better. I'll spend a minute talking about this. Now once you cross threshold density in a category in a micro market, what ends up happening is that service professionals start getting utilized much better. Consequently, their earnings go up and the cost to serve for the entire business comes down. Some of these benefits can also be enjoyed by the customer in terms of better value. Also travel distances come down, job packing efficiencies move up. And therefore, service professionals are spending more time inside the consumers' homes, delivering orders and less time either waiting for orders or traveling towards orders. And therefore, customers also start to enjoy what we call faster, which is faster fulfillment. We have started to roll out UC Instant where you will get the service within 30 to 60 minutes. And we're in the early innings of UC Instant getting rolled out and the goodness of UC Instant playing across the marketplace. And then better because service professionals are more dependent on the platform, they're seeing higher earnings. We see better retention. their propensity to follow, you see SOPs, you see quality protocols, et cetera, all that improves, and that translates into better service for the end consumers. And simply put a professional who's earning more and traveling less is generally more likely to deliver a service to you this mile. And we've always maintained that happy professionals lead to happy customers. So that thctor of faster, cheaper, better, which is -- seems like a simple playbook, but it's very hard to execute across so many services and so many micro markets. When it starts to get going, that acceleration is possible. Now why are we not yet want to call it a long-term trend and want to observe for a few quarters because we're just getting started on this. Yes, NTD growth has been accelerating in Q2 FY '26, it was 19% to jumped to 21% in Q3 and 2% in Q4. As prudent management, we want to wait and watch, see another 2, 3, 4 quarters and then see if we believe that the acceleration means that from a 5-year lens vis-a-vis what we had imagined earlier, this business can be much larger.

Very helpful, Abhiraj, for that. One, I was just curious that you operate in like multiple cities, let's say, if we talk about your top 10 cities. I'm just surprised that all of them are seeing acceleration at the same time. I may have thought that some cities would be in different places on the curve where some would have seen acceleration 2 years ago, some may see 2 years later. So is there like a common thread as to why they are all seeing acceleration at the same time? Or have you seen some cities already, let's say, peak in terms of growth and some that are accelerating a lot? Like just any dynamics you can share that.

I would say for the last few months, we've seen very broad-based demand acceleration to the point where internally, we feel that the real challenge is building high-quality supply across these cities and categories and micro markets. And we know that we've left demand on the table across cities and categories.

Very clear. Second question is just on Insta Health. And I appreciate, Abhiraj, you mentioned you won't be able to share too much detail, but still trying my luck. I mean when you say losses remaining elevated for the foreseeable future, are you expecting potentially losses to also increase from these levels? And when you say elevated for a prolonged period of time, are we talking about like 4 quarters, 8 quarters, longer than that? Any color you can share, that will be helpful. And also maybe a related question, average order value continues to get lower, my concern there is, would it be that much more difficult for you to recover AOV if they keep getting lower and thus maybe take you further away from whatever your steady-state margin expectations are in that business?

Yes. So thanks for that question, Manish. So I'd say I'll just take a little bit of a step back. One of our messages to the investor community is that at this stage of our company building journey, we believe the investor community should hold us very much accountable to disciplined high-quality execution in our core India services business. in international and even in native, which means continued growth and compounding improving margins year after year. Some quarters will work, some quarters they'll go down, but a consistent margin upward trajectory every year and cash generation. For In, we believe that right now, the most important thing is market leadership. We believe we have a strong balance sheet. We believe we have cash core business. And we've given 2 clear guidelines that we will hold as guardrails for ourselves, which is a consolidated breakeven at an adjusted EBITDA level by Q3 FY '28 and INR 1,000 crores of adjusted EBITDA by FY -- and we're committed to sticking to those overall guardrails. Within that, the rest of it, I think the management needs the maneuverability. It's a dynamic market. Some quarters, AOVs will move up, some quarters will move down. It will be a combination of tactics and strategy. We're very much focused on seeing that this shapes up well in the medium term. We have our eyes on all of those numbers that you spoke about. We believe right now, the most important thing for us is continuing to cement our market leadership and staying ahead of the game, while long, making sure that loss per order keeps coming down and over a period of time, losses come down. How much time it will take, et cetera, is something we will continue to gather.

Very clear. Just maybe last question for me before I jump back in the queue. I know you have an answer or a question around artificial intelligence, but if you can just maybe help summarize for us both on the demand side and maybe also on the cost side, what are, let's say, the changes that we can expect from an AI perspective in terms of revenue levers or cost levers that would be helpful.

Manish, I'll take that question, and thank you for asking it. I think this is an area which is full of potential for us, and we've taken initial steps. So to start with, we've actually built a solid layer of AI on top of our core platform, which is now embedded in everyday operations. I'll call out a few areas where we've made progress and we're excited about for the future. I think the first one really is on quality. So we are leveraging AI extensively in proof of work. We are already 100% of images, which are shared during the job, also running diagnostics in some more repair and hand categories. We made a fair amount of progress in customer and partner support, where 55% of all partner support queries are now handled effectively through AI, and this is helping us deliver a low cost as well. We're also generating top of funnel for partners through AI by asking existing partners to refer jobs that were done by people earlier. We've always been using AI for demand forecasting. AI has only made our demand forecasting and trend line simpler and more accurate. We've started deploying it in a couple of areas for revenue as well. So for native, for example, if your filter life is about to expire, you will get a call from urban companies reminding you to refresh it. We are visualizing interior spaces for our revamp using AI, which helps make decision-making much simpler. So these are early steps in revenue generation. On code, I think this is the area where you've seen the maximum progress. Conservatively, more than 90% of our code is being shipped by GenAI. And this was not the case some time ago. So a lot of the basic work is being done leveraging AI we're also using fraud detection. So I think we're just getting started. This is a space with a lot of potential. We're actually driving usage within the organization, and we'll keep updating investors progress.

Next question from Sachin Salgaonkar.

I have 3 sets of questions. First question on native. Your losses have expanded on a Y-o-Y and Q-o-Q basis. Anything specific happening out there? And Abhiraj, any specific time lines that we could have from a native breakeven point of view?

Yes. Nothing specific as such to call out, Sachin, I think the business trajectory has grown well. business has grown by 7% on an LTV basis, even faster on net revenue. And the margins have improved. So same time last year, the margin trajectory was negative 14.7% of NTV and now it's negative 9.9%. So margins have improved. We are fairly confident, I would say, on the trajectory from here on to achieve breakeven. We don't want to give a time line yet, but it should happen in the next few quarters.

Got it. And this breakeven will happen despite launch of new products in the native category?

Yes. We believe so. It should happen despite any new products that we launch. Some of the elevated losses are on account of R&D for new products. So our core is actually already approaching close to [indiscernible].

Got it. Second question is on Insta Health. And I completely get in terms of management having the flexibility. It's a new business. But what we are actually seeing is both your competitors raised money in pockets, one could see competition getting irrational. So any guardrails you want to indicate to the analysts and investor community, these are some of the things like, for example, on a loss per order basis, there is no intention to become much higher than that because I understand your medium-term and longer-term targets in terms of EBITDA breakeven as well as where you want to have an EBITDA, but I mean, on a quarter-to-quarter basis, losses are expecting, we do expect some comfort in terms of this is a threshold where one could get a sense that competitive intensity is getting completely irrational and perhaps it's okay to let go a bit of a market share just in case because things are a bit bad. So again, wanted to understand any color you could give. And of course, a follow-up is what would -- because this is relatively new business and it is not there in most of the countries across the globe, how could one think about any range for a steady-state economic -- unit economics or EBITDA margin in the medium term?

Yes. No, both fair questions, and I appreciate where you're coming from Sachin. I think we've been doing this now for close to 12 years, 11.5 years, Sachin, and we've seen various cycles of competition and irrationality. So it's nothing new to us. I'd say the level of competitive intensity that we are seeing and rationality that we are seeing right now is pretty manageable. We are not perturbed by it. If anything, we're very clear that we are playing to win and not playing to look. And sometimes in the short run, either you can optimize for market share or you can optimize for on relevance. And we're not optimizing for relevance. We're optimizing to win, we're optimizing for market share. And which means that we have to be ational from time to time, we should be willing to be rational as well. So I don't worry about competition too much. I think our eyes are on the customer and the service professional, and we're playing to win.

Got it. Related question on the Insta Health is there are adjacencies and potential new services also one could look to explore. For example, cokes, drivers, help for elderly and so on and so forth. Are these some of the areas or are there any adjacencies you guys are experimenting and looking to expand into?

We keep experimenting Sachin. But strategically, right now, we think all our energy and resources and focus should actually go into densifying and winning in the core segments. We know that some of our competitors are experimenting with some of these adjacencies, but we are focused on core. We believe the player that will win the core segment is the core micro markets, will -- that's essentially the turf to be. And that's all our attention and focus right now. And we have limited resources as a company, monetary and people, and we want to focus all of them towards being the main segment in the main micro markets.

Very clear. And lastly, Middle East clearly is now seeing some signs of recovery. How is your business? Are we back to square one in terms of recovery or it's still a gradual recovery?

No, more or less back to square one. In fact, the dip for us also was not -- I mean, it was there, but we are far more resilient than most other businesses, and that's visible in the numbers that you would have seen that we put out there on the month-on-month trajectory. So there was a dip, but the year-on-year growth continued to be pretty healthy. And the business now is almost back to full recovery.

Maybe I'll go next. I also had a few questions. First, on the core business, right, the acceleration in NPV growth is very encouraging. Very near term, do you think there could be some hiccup in this accelerated growth, not because of lack of demand but because of lack of supply, right, due to elections and the resultant temporary workplace displacement?

This is Abhay. I'll answer that. So in the last quarter, we didn't really see any disruption. I think in the month which has gone by, we are seeing some level of demand loss but nothing unusual. I think we had seen some of this coming and we had kept advance. We have onboarded more and more professionals. So I think for a services business like ours, this is a BAU problem, and there's nothing which we are really concerned about.

Got it. Okay. Good to talk. Second question that I had was on native. Now you've given a target of quadrupling net revenue of this business. Could you give us some sense of the pipeline of products you are building that would enable you to achieve this target?

So the large part, we believe this will have to come from the current 2 products that we have, which is water purifiers and smart electronic locks. We've not put a time line to it deliberately because we don't know how long it will take. But we believe that those 2 segments should be meaningful enough over a period of time to get us there. And a little bit of the revenue -- and this is also because it's not just the revenue from product sales as in water purifiers, the installed base increases very much. The service revenues also start to kick in. And over time, they can be quite meaningful, especially given that our retention -- early retention signs are very, very healthy and a meaningful multiplier of what the industry average is. Some of that number could also come from new products that we launch. But for the large part, I think it will be the existing categories.

Got it. Very clear. Third piece of the question on Insta Health. In your view, what could be the potential market structure here, say, 2, 3 years out? Do you think 2 or more players can coexist? And a related question here is with some competitors raising money, in fact, some of them very, very recently, do you think they might want to diversify into what is your core business?

Very hard to say how large this market is and what the end state structure could look like. Generally speaking, I'm of the view that in businesses of trust, it's a winner take all. And this is a business of trust. So I really don't see any reason why there should be multiple players over time. And that's at least the mindset with which we are approaching this market. In our core business, we have lion's share of the market, and we'd like something similar to play out here as well. But of course, we are mindful that in order to achieve that, we have to deliver a superior service to the end consumer, win on execution. And there are other funded competitive players who are also attacking the market. So I think this will eventually boil down to execution over a period of time, which other services they will launch and honestly, beyond point, we are -- it's not something that we worry about because our core business is very, very large. We're still scratching the surface. We're probably sub 1% to 2% of the total market -- addressable market. So we're focused on what we have to do there.

Got it. And you raised this important point of building a trustworthy service. So any 1 or 2 points you want to highlight, particularly on the Insta Health business, which sort of differentiates your service beyond the availability part compared to whatever else is available in the market?

I think our view is that this is a service of trust. It's a service where the quality of the service professional, the training the efforts that you put into selection, onboarding, the details that you go into SOPs, et cetera. These are the things that matter. They will compound slower than discounts and instantaneous availability and throwing money at the problem, but they will compound in the long run. And that's what we're focused on. We actually do not dilute our quality selection and onboarding and training processes for this business vis-a-vis our core. That playbook that we have developed on the core business over the last 10 years is something that we have extrapolated to Insta Health as well. We talked about average ratings in Insta Health, which are at 4.7, very close to where the core is and we believe materially better than the rest of the industry. We also believe our repeat rates and retention rates are, to the best of our knowledge, industry-leading at this point in time. And that's part of the reason why we are the clear market leaders today. So in our view, it will eventually come down to quality of service, quality of the supply side. And like our core, this will be a supply first business and whoever wins the supply side of the market will be the winner.

Our next question from Gaurav Rateria.

Congrats on great execution. My first question is on the densification that you talked about. Have you seen any impact of competition in the -- those micro markets. My sense is that there will be a meaningful difference in the consumer experience because of the instant service that you are launching versus what competition would have been doing in select categories. And therefore, there will be years behind to catch up. So there would have been some consolidation in those micro markets. Any anecdotal evidence if you can share on that?

This is with reference to India core, right?

Yes, India core business.

Yes. To be honest, in India core, Gaurav, like we don't spend a lot of time looking at or tracking competition. Part of the reason could be that the competition is very distributed across categories and micro markets. I think much of this growth is actually just driven by internal factors. around what I refer to as faster, cheaper, better. And as I mentioned, like we feel we left demand on the table because we were supply constrained for most of the quarter. So I think that's really where our effort is. It's on the supply side. It's on making sure that quality of our supply side of our service professionals, training, SOPs are top notch. And we continue to drive densification and consequently roll out instant. And I think the goodness of that, in our view, those are strong inputs. The service is available faster, it's better value for the end consumer and the quality of service is improving. In our view, that should translate into...

Got it. Secondly, on the -- is there a sensitivity to AOV from demand perspective? I know that for a lot of the basic categories, the AOVs would have remained largely similar across the last couple of years. And if there is an inflation-related problem, even if it is a transient one, there could be some impact on the AOVs. And I'm just trying to understand based on your historical experience, have you seen any sensitivity or it doesn't really matter?

I would say in the core, the sensitivity is low. A, of course, is very high. But in the core, we have -- there's always some sensitivity, but it's very much manageable.

Okay. Last question on your outlook on consolidated breakeven, nothing has changed, right? While external environment on Insta category has changed in terms of potential fundraising, et cetera. Is it coming from greater confidence in the core business given that you have executed or outexecuted your own expectations in fiscal '26, which gives you a very strong confidence that even if the investments were to remain higher than what you would have thought through Insta, you would be more than able to offset that with better profitability in the core business? So -- or is it your view that the external environment could change fast?

It's the former. I think we're -- we feel that the way we're executing on the core, will give us enough buffer and cushion even if the external environment for to deteriorate. Yes.

The next question is from the line of Pranav Kshatriya.

First question is regarding...

Pranav, your voice is unclear.

My question is regarding the volatility in the margin for the India core business. So while the EBITDA margin structurally sort of trended up in this quarter, as you said that this supply constrain and one would have expected the margins to sort of go up, but that has not really happened. So what exactly led to that situation? And my second question is that, what kind of cohort are we getting? Is it the same cohort, which was sort of using other services is now coming through or there is a new set of customers who are coming? And is there any of those customers [indiscernible].

Thanks for the question Pranav. On the India Consumer Services adjusted EBITDA margin as a percentage of LTV, we've mentioned this in the past that the right way to think about this is year-on-year versus quarter-on-quarter. And that's because there are multiple factors every quarter around seasonality, et cetera. And therefore, Q1 and Q3 in every year are structurally better quarters than Q2 and Q4. Why is that the case? It's because Q1 and Q3 are seasonally stronger quarters. Therefore, a lot of the marketing supply ramp-up, et cetera, for us happens in the preceding quarters, which is Q2 and Q4. also happens to be the quarter where we have our annual appraisals. So for a variety of factors, if we look at this business on a quarter-on-quarter basis from a margin standpoint, we'll not be able to fully understand and appreciate. Now that we have 8 quarters of trajectory, we can actually compare year-on-year. And that's what we've always told investors that don't look at it quarter-on-quarter, look at it year-on-year. Year-on-year Q4 has gone from 1.6% in Q4 FY '25 to 3.3% in Q4 FY '26. And also the entire India Consumer Services business has gone from 3.3% to 4.1%. That trajectory, we believe should continue. And eventually, this business should get to about 10% adjusted EBITDA as a percentage of ATV over a longer period of time. And every year, there will be margin expansion. Some years, it will be faster, some years it will be slow the right way to think about it is -- so that's the first question. Second question on Instant Health. I think both existing cohorts of company consumers adopt it, but we're also seeing newer cohorts and newer customers first time to the platform adopt that extent is also helping us expand the [indiscernible].

Next question is from Srinath V.

Congrats on the good set of numbers. First, I wanted to understand as we go into FY '27, how do we look at between adding new micro markets and deepening our supply in Insta Health? How many new micro markets are we looking to open or cities are we looking to open? Because, for example, in our office, more than 50% of the staff don't have access to Insta Health. So how -- when would our top 3 cities get fully covered for us across, say, Bangalore, NCR and Mumbai, for example?

Yes. Good question, Srinath. I think Hard to give a precise time line, but what I'd say is that our leaning is always towards densification and going deeper and penetrating existing micro markets. We'll continue to expand coverage in a calibrated fashion. But we do believe that the most important micro markets have to be won. And therefore, densifying and penetrating them deeper will be priority over proliferation.

Perfect. And any broad thoughts on getting full coverage in the top cities?

I think full coverage may not happen even for a long period of time because in certain parts of the city, it might -- there might not be adequate density for me to be able to have effective cost to serve. So micro markets that we're prioritizing are the micro markets which we believe that as we densify, we can eventually get those micro markets to breakeven and eventually become profitable, even if in the interim, they are loss-making. There will be some parts of the city where just the demand density is so spread out that at least so far, we haven't cracked the model to serve them. Our work on that will continue to happen. But if you think about how demand density and cost to serve plays out in Insta, it is actually far more hyperlocal than quick commerce. And so to that extent, the prioritization playbook here is even more Yes.

Perfect. On the strong India services growth, would it be fair to assume that some of the Insta Health flywheel is playing out? Any qualitative comments on how cross-sell is playing out with customers who are Insta Health customers as the app moves to the front page of the phone, are we seeing any higher repeat usage for those particular cohort of customers that could be helping the strong growth in India services?

Too early to form a view there, Srinath. But if anything [indiscernible], we think the growth is in there.

Got it. And the last question would be, given that some level of marketing activity has also started for Insta Health, the losses that we are posting, not necessarily all of these losses are coming from a CM level of MG and consumer subsidies. Would there be some amount of spends on performance marketing or advertising in a way, fixed cost of Insta Health?

Yes, absolutely. And we've mentioned that in the letter as well that this quarter saw elevated marketing to acquire new users and build the brand, including for the Cricket World Cup. And actually, all other metrics which form part of the loss per order moved in the right direction and moved positively. It was only largely on account of this one metric that the loss per order in the reverse direction. But everything else actually moved in the right direction.

So to be clear, contribution loss per order was actually down, but it was largely losses from fixed cost.

Yes.

Next question is from the line of Abhishek Pathak.

Congrats on a great quarter. So my question was kind of a follow-up on the Insta Health offering. Is it fair to assume that as compared to other services, which require densification, the degree of densification required here is far higher because I mean, the maize, et cetera, they might not really have modes of transport. And from that perspective, the TAM would probably be even more constrained considering it requires hyper densification. In that context, considering we've got, let's say, 2 to 3 players attacking this particular sort of TAM in a very irrational way. How long -- or rather what are the kind of criteria we set ourselves to in the sense that when does this market -- if it becomes irrational for too long, do we choose to kind of pare back sort of our investments? Or do we double down here considering Insta help can be a funnel to our other offerings, which may be slightly sort of -- which may have slightly higher TAM?

Sure. Answer to that question is -- you're right. InstantHealths density is far more granular compared to core or perhaps any other consumer Internet business to the best of our knowledge. Does that constrain the TAM? Maybe. And maybe playbooks can evolve to serve medium density micro markets as well. So I think that's to be seen. How large -- as a consequence of that, how large is the TAM and the size of the price we don't know and honestly, we don't -- beyond a point, like that's not the most important thing we're worried about today. Whatever it is, we want to win it. That's how we think about it. I think we don't have a choice. We have to win and we have to win big. It's a very large TAM great. If it's a medium-sized TAM, that's also good for us because we have other businesses that we live and eat our bread of. So this business only helps accelerate those and it plays a certain role in terms of frequency and engagement in the app. We have discussed and debated this internally. And our view is whether it's a midsized TAM or a very large TAM right now, from our perspective, strategically, the only thing that makes sense is to attack it aggressively and win. But that's how we are thinking about it actually thinking about it pretty simply rather than trying to overcomplete. Whatever the size of the TAM we have to win.

Next in line is Swapnil [indiscernible].

My first question is with respect to Insta Health versus international markets. Now the question out here is like is winning in the Insta Health in India more important than opportunity available in, let's say, some of the other geographies where your services are not available beyond UAE and Singapore today, and there could be a potential TAM available there also and with limited competition compared to what is happening in right now...

Yes. No, good question. And strategically, we mentioned that in the past in a few shareholder letters as well. We've strategically chosen to prioritize India and the 2 overseas markets that we have wholly owned subsidiaries in UAE and Singapore as well as KSA through JV. We are clear not launching any other international markets. I'm sure the opportunity is good in some of these markets. But from our strategic prioritization standpoint, we are focused on India and these 2 markets for now and for the foreseeable future.

So will it be fair to say that till the time you achieve your guidance, the medium-term guidance, any incremental international geography is broadly out of question?

Yes, absolutely. And we said that in one of the past and many [indiscernible] as well.

The second question is with respect to -- is there any seasonality in your customer marketing expenses for the India business? Because it seems from 3Q to 4Q for the last 2 years, these costs have been increased on a quarterly basis.

Yes, there is seasonality in our marketing spend and the cadence there. So typically, as Abhiraj mentioned, Q1 and Q3 are the quarters where we see a lot of consumer activity. And before the beginning of those quarters and to some extent during the quarter, we do increase our marketing spend at that time. Overall, if you -- we have seen consistent operating leverage in our marketing spend over the last couple of years. But yes, in the year, there are spikes depending on.

Next in line is Pranay Jain.

So I have 3 questions. My first question is, could you help us understand how the instant India consumer business works operationally? Like how do you transition from a scheduled services marketplace to an instant service model? Like do you require excess capacity initially in order to do like ensure timely supply? That's my first question, and I'll then follow it up with the other 2.

Yes, great question. And works I won't go into the level of detail here, but it's a reasonable change management that we do in the back end operationally, realigning the micro markets in terms of their size, realigning partner expectations, calendar management, availability, et cetera, et cetera, before we flip a micro market in the category and make the instant proposition available there. We also have to ensure that there is adequate supply and demand and density there. The interesting point here is that -- and we've shown this in our letter as well, we're achieving this with increasing utilization on the supply side and not decreasing utilization. So conventional wisdom would say that in order to offer instant, you have to keep slack and therefore, utilization should fall. What we're experiencing is that utilization is actually improving. That's because we're offering instant in the sweet spot of 30 to 60 minutes. which is -- which doesn't require us to break the back on capacity and utilization. If anything, those orders see fewer cancellation rates vis-ischeduled orders and back-to-back packing and efficiency is better. And consequently, we're actually seeing better utilization as a result of that instant rollout. So it's a real win-win in our view. It helps improve packing efficiency and overall utilization for partners and consequently improve their earnings. It helps bring down time to serve for end consumers, and it's also more profitable for us. Obviously, if we were to take the core marketplace also all the way to 10 minutes, that would be what you're seeing, which is keep us a lot of excess capacity, but we don't think that's needed. We think 30 to 60 minutes is adequate for most of our core services. As long as we can deliver that reliably, consumers are happy with that change.

Got it. Understood. My second question is on the fact that you've spoken about it earlier as well and even in this shareholder letter that there is deep trust that is embedded in the model, given that professionals spend significant time inside the homes of the consumers, customers. But at the same time, we are seeing new instant service platforms also enter, and they are also gaining a reasonable amount of customer acceptance. So do you think the comfort of the customer with allowing service professionals into their home is becoming more standardized over time across platforms?

I think at the end of the day, any player that executes well on quality, on safety, on trust and doesn't take the customers' trust for granted, can eventually gain acceptance. And we don't make any tall claims that we'll be the only player who will enter the homes of the customers. We're certainly one of the trusted players. We also think to be able to do this across 60-plus categories in hundreds of micro markets in categories in our core business where the complexity of the business is much higher in terms of training, in terms of tooling, SOPs, et cetera, is not a mean feat. sometimes easy to execute that in a single category business, but not so much across multiple categories. And therefore, historically, we've also seen competition limited to 1 or 2 verticals rather than the entire horizontal SKU. It's always possible that over time, players emerge in the entire horizontal SKU, which is okay. At the end of the day, competition keeps us honest, keeps us charged up and deliver the best services to the end consumers. So it's a very large market as we've emphasized multiple times in the past, the total market is more than INR 5 lakh crores. We're still a very, very small percentage of that market, sub 1%. And I think if anything, the focus should be on how do we keep growing the pie versus zero sum of how we break a small pie today between players.

Right. Makes sense. Last question is on the international business. Could you elaborate on the competitive landscape across your key markets, given that these markets are relatively more organized and structured, who are your key competitors over here?

Yes. I think in UAE, we have one more competitor, a major -- I mean there are lots of players, but there is a company called -- just Life, who has been around in the market for as long as we have a little bit longer than us. Pretty decent players. We do have respect for them, and we've learned a lot from them and they've learned a lot from us. And we believe that the competition in that market has been quite healthy and both players are growing well. And that market continues to be very attractive from a long-term growth and margin attractiveness standpoint. So I think that's an interesting and exciting market. In Singapore, there are also small players, nobody meaningful to call out. Again, a very, very exciting market, growing well for us profitably. Both the markets, I think the headroom for growth is meaningful. We're growing profitably. Our proposition continues to improve year after year. The same playbook of faster, cheaper vendor is playing out in those markets as well with anything in an accelerated fashion because the demand density operates on steroids in some sense in both these markets. So we're quite excited by how our international business is shaping up across these 2 markets. Saudi, we don't recognize revenue, but that business is also shaping up very well. We've disclosed the numbers. And as you can see, the growth is in the right direction. Margins are improving. We now believe we have a clear line of sight towards profitability in our joint venture in Saudi Arabia as well, and we're quite excited by that.

Next question is from the line of Dipak Saha.

So first of all, congratulations on great set of numbers. My only question I have on the international side. What I understood for the international business, you very beautifully laid out the fact that how your subscription model has played out and meaningfully contributing to the overall numbers there. If you just can lay out what are the drivers that are working well for subscription model there? And how can -- and secondly, how can we apply that model here, if at all, the dynamics allow us to do that? These are the 2 questions I have initially.

Yes, that's a good question. So Dipak, one of the main services for us, a very important service in both UAE and Singapore is cleaning, cleaning of the home. And while some households there have permanent house, as you can imagine, a lot of households don't. And therefore, they rely on platforms like us, all local players, offline players and the larger unorganized market to get weekly, biweekly, fortnightly, monthly or once in a while deep cleaning. We have been able to launch subscription programs that lock in essentially these households and users into more high-frequency deep cleaning. So for example, in UAE, many of our users use our deep cleaning not just once in a while, but maybe on a weekly or fortnightly basis and quite a few of them use it multiple times a week as well. that actually accelerates the growth of the business. Similarly, in Singapore, while the sub weekly use case for our cleaning is not prevalent, many users use us on a weekly or fortnightly basis. And these users get locked into subscription programs and then become sort of an annuity-like business. Some of those learnings will certainly be helpful for us here in India as well. We are toying with and experimenting with cleaning subscriptions. I believe over time, we will experiment with versions of Instant as well. And we also have new programs in India, which take a leap of the playbook in our international markets. So many learnings for us from these 2...

Got it. That's helpful. Just in the same context, when we see Insta Health, you mentioned that for 10% of the users, you have 8x monthly orders and for 1% of the top users, you have 21x, right? So is there a scope? I know it's pretty early days, but is there a scope of enabling any subscription model for Insta Health in India?

I'm sure it's possible.

Super. Fine. And last question on Instant Health side. On the payment side, right, so the payouts that we are doing to our professionals. So just trying to understand because the volume has gained meaningfully, say, 3 months ago and currently, is there any change in the structure of payment as far as fixed payment is concerned and job-specific variables are concerned? Is there any specific change which can improve the cost dynamics depending upon successfully delivered services or jobs?

Yes, we keep experimenting and going with various structures tactically that we believe are sort of best suited to win different micro markets and keep supply engaged and depending upon the supply-demand situation in the particular micro market at a particular point in time, we're quite nimble with some of these changes.

So does it have any fixed component or gradually you're moving to a lower fixed component in that context?

I think there's a per hour payout essentially, but that can vary based on the quality of the service professional and the particular micro market time of the day and time of week. It's quite dynamic.

That's really helpful. Last question from my end. On the user side, so say, Insta Health and consumer services business, right? So are we seeing incrementally any new users coming solely for Insta Health and again, you're able to cross utilize it for consumer or it's the other way around?

It's both.

Okay. Okay. Okay. Any distribution you would like to lay out in terms of proportion, somewhere more? It's the core business, higher proportion leading to Insta Health incrementally or it's the other way?

No, [indiscernible].

That was the last question for today, and we would like to close the call here. Thank you, members of the management and all participants for joining Urban Company's results call. You may now disconnect your lines.

Thank you.