Indian home services startup Urban Company reported its first full-year profit for FY25, with a net profit of 239.8 crore rupee (US$27.8 million).

This marks a turnaround from a 92.7 crore rupee (US$10.7 million) loss in FY24.

Revenue from operations rose 38.2% year-on-year to 1,144.5 crore rupee (US$132.5 million), while other income increased to 116.21 crore rupee (US$13.5 million).

Total expenses climbed 19.86% to 1,223.47 crore rupee (US$141.7 million).

The platform served 6.8 million annual transacting users and 48,000 monthly active service partners.

The company became a public limited entity in February 2025 and filed for a 1,900 crore rupee (US$220 million) IPO in April.

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🔗 Source: YourStory

🧠 Food for thought

1️⃣ Deferred tax credits: The hidden profit booster in startup journeys

Urban Company’s reported profit of Rs 240 crore is largely attributable to a one-time deferred tax gain of Rs 211 crore, with actual profit before tax at just Rs 28.6 crore1.

This accounting mechanism allows companies to recognize previous accumulated losses as future tax benefits, significantly enhancing their financial position before going public.

Without this tax credit, Urban Company’s profitability picture would be substantially different, considering its history of consecutive losses: Rs 92.7 crore in FY24, Rs 228.6 crore in FY23, and Rs 308.5 crore in FY221.

Similar patterns have emerged with other tech companies approaching IPOs, where accounting adjustments create profitability milestones that satisfy investor expectations while masking the underlying unit economics.

The company’s DRHP itself acknowledges this reality, cautioning that “future profitability is not guaranteed due to competitive pressures”1, signaling that sustainable operating profits remain a work in progress.

2️⃣ Service marketplace evolution: From growth-at-all-costs to profitable scaling

Urban Company’s trajectory reflects a broader shift in service marketplaces, with the company scaling back its IPO size from an initial target of ₹3,000 crore to a more modest range amid changing investor sentiment2.

This pivot from valuation-driven to profitability-driven growth mirrors the maturing business strategies of marketplace platforms globally, where initial hypergrowth gives way to sustainable business models.

The company has successfully demonstrated marketplace fundamentals with 82% of transactions coming from repeat users and a high customer rating of 4.81/51, indicating strong retention metrics that reduce costly customer acquisition spending.

Urban Company’s focus on service partner earnings (averaging Rs 26,400 monthly, up 16% YoY)1 shows how quality control and provider economics have become central to marketplace sustainability.

The company’s investments in over 220 training centers across 15 cities3 represent a significant departure from pure marketplace approaches, showing how vertical integration has become necessary to ensure service quality and differentiation in competitive service categories.

3️⃣ The international expansion challenge for service marketplaces

Urban Company’s international revenue grew 63.9% year-on-year to Rs 147 crore1, but its experience across markets reveals the complex challenges of globalizing service marketplaces.

The company’s strategic shift in Saudi Arabia—transitioning from direct operations to a 50:50 joint venture with SMASCO in January 20251—demonstrates how service marketplaces must adapt their models to local market conditions, unlike digital products that scale more uniformly.

While the UAE business achieved profitability with an adjusted EBITDA of Rs 1.7 crore1, the company has faced significant challenges in other international markets, highlighting how service quality standards, cultural expectations, and labor regulations vary dramatically across regions.

The home services market is projected to reach $97.4 billion globally by 20294, but Urban Company’s mixed international results illustrate that capturing this opportunity requires market-specific strategies rather than uniform expansion.

This pattern of uneven international success mirrors other service marketplaces that have found domestic dominance easier to achieve than global scale, as service businesses face more complex localization challenges than pure software platforms.

Recent Urban Company developments

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