Good evening, everyone, and welcome to Urban Company's Q2 FY 2027 earnings call. Ladies and gentlemen, we have now completed one full year as a listed company, and it has been a year of strong growth and solid execution. Every segment of our business has scaled well, growth has stepped up, and Q2 only saw that momentum continuing further. On a consolidated basis, net transaction value grew 39.1% year-on-year to reach INR 1,432.3 crore, and revenue from operations grew 41.4% year-on-year to reach INR 537.3 crore. Our orders delivered more than doubled year-on-year to reach 15.1 million, and annual transacting users grew 34.5% to reach almost 10 million. Adjusted EBITDA loss recorded was INR 144 crore, but this reflected INR 174 crore investment in InstaHelp. Excluding InstaHelp, adjusted EBITDA was INR 30 crore positive, up 213% year-on-year.
For the purposes of this call, we want to share three key messages with the investor and analyst community. First, our growth has stepped up structurally, and every business has a very long runway for growth. Consolidated NTV has grown by almost 40% for three straight quarters, well ahead of our pre-listing trend. That growth comes from faster new user acquisition, which has been up 46.3% over this period. Better repeat behavior, which keeps us compounding, and densification of our micro-markets that make our services faster, cheaper, and better. India Consumer Services, our core business, grew 26.3% year-on-year in the current quarter, Q2. I might remind our listeners that this growth has come off of a tougher base, and Q2 last year was 900 basis points higher in year-on-year growth compared to Q1 last year.
Further, festive season this year is falling entirely into Q3, so we are quite happy with the 26.3% year-on-year growth. More importantly, in the India Consumer Services business, we feel that our penetration runway is very long. For our largest categories in our top eight cities, penetration continues to be well below 10%, and our Tier Two cities are now growing much faster and becoming a strong second engine for growth. Coming to our international markets, we grew at 66.2% year-on-year. U.A.E. is a very large market for us, and despite the war, it has continued to grow very well and all concerns around growth in that market now are well and truly behind us. Native recorded another strong quarter of growth with 35.4% year-on-year growth. This was despite the festive sales moving completely to Q3.
We expect the overall year-on-year growth of Q2 and Q3 put together to be in the range of 50%-55%. In InstaHelp, we continue to be aggressive. Orders grew 63% quarter-on-quarter to reach 6.23 million. In the micro-markets of InstaHelp, which run alongside our core business, about 45% of all new users to the platform now come through InstaHelp. So that was the first point, which is that growth has materially stepped up. It is structural, and every business, in our view, has now got a long runway for growth. Second, the growth is driving operating leverage. The core is now profitable with expanding margins year-on-year, and we are investing aggressively in InstaHelp by choice. Adjusted EBITDA excluding InstaHelp was at INR 30 crore this quarter, up 213% year-on-year, and INR 119 crore for the past three quarters, up 175% year-on-year.
During Q2 FY 2027, India Consumer Services saw a marginal improvement of 110 basis points year-on-year to reach 3.5%. International saw 190 basis points marginal improvement year-on-year to reach 2% of NTV, and Native's loss margin narrowed by 220 basis points year-on-year. Even in InstaHelp, where we continue to make meaningful investments as a deliberate choice to cement our market leadership, the unit economics improved with density and loss per order fell 19% quarter-on-quarter from INR 346 to INR 279. That is the second point which we want to iterate, which is that our core businesses are now getting more profitable with expanding margins. This is driven by the operating leverage that growth provides, and we are investing aggressively in InstaHelp by choice.
The third and last point is that we are firmly on track to achieving the targets that we had set out for ourselves, and we are raising capital for strategic flexibility. We closed the quarter with INR 1,901 crore of cash and treasury investments on our balance sheet and a core business that generated INR 119 crore of adjusted EBITDA over the past three quarters. Our businesses now are materially larger than they were at the time of listing. Growth has stepped up, and we now operate three businesses at scale with proven economics. The proposed raise of up to INR 2,500 crore is about flexibility. It lets us invest with conviction across each of these business lines, cement our leadership in InstaHelp, and pursue inorganic opportunities selectively without trading off one for the other.
I want to underscore that we believe we are firmly on track to achieving our adjusted EBITDA break-even goal by Q3 FY 2028, and we are very confident now, more than ever before, of achieving the INR 1,000 crore adjusted EBITDA goal that we set out for FY 2031. With that, we would be happy to take questions from the analyst community. Thank you.
Thank you, Abhiraj. We will now wait for the question queue to assemble. As a reminder, if you wish to ask a question, please use the raise hand feature available on your Zoom dashboard.
We will announce your name on the call and unmute your line, post which you can proceed with your questions. The first question is from the line of Mr. Gaurav Rateria from Morgan Stanley. Please go ahead.
Hi. Hope I am audible.
Yes, Gaurav. Good evening.
Hi. Congrats on a great execution. I have a couple of questions. For the India Consumer Services/UC Instant proposition has really helped, probably to get better repeat, higher frequency and lower churn. What is driving the higher pace of the new customer acquisition and how sustainable it is? My second question is on average spend per customer, which historically has grown at 6%, 7% year-on-year. It has come out a tad slower in the current quarter at 3%. Is there anything to read in this number? The last question is, on your foray into the residential AC segment. It will be great to get a little bit of thought on our edge and right to win as far as the product is concerned, as far as the distribution capabilities are concerned. Thank you.
Thank you, Gaurav, for your questions. Let me start with India core. You are right, the growth has continued to remain very healthy, and it is driven in large part by both new user acquisition as well as our cohorts and repeat base compounding well. I think on the new user acquisition side, it is a combination of three things, Gaurav. One is, of course, the proposition itself has become stronger for customers. With densification, what we are able to do is deliver our services faster UC Instant. And increasingly now, consumers are able to see in the top seven, eight cities, services available within the hour and very often within 30 minutes or so. Secondly, we have continued to make meaningful investments in training, in SOPs, in tooling, and quality control via AI.
That compounds the word of mouth faster, which is the biggest source of acquisition for us from a new user standpoint. And third is that in pockets, we have also leveraged the utilization improvements that we have driven to give more value to users in terms of better pricing. So I think the underlying proposition has strengthened, and that has helped us. The second factor that is driving acceleration for new users is Tier Two markets. As we have mentioned in the letter as well, Tier Two is now growing much faster. And I think it is a function of Tier Two users essentially getting these services. A wider assortment of services are now available to them. And our own focus on Tier Two markets in the past few quarters has increased, and we have started to double down, and we will continue to do that for the coming years ahead.
Finally, we have stepped up on customer marketing as well. And that would have been visible in the India core P&L that we have drawn out. So a combination of all the three things has stepped up new users. We are very confident of this trajectory continuing. We see a long road runway, as I mentioned at the start of the call as well. On average spend, I think it is nothing material to talk about. I think it is a combination of some mix change, a little bit of the festive season moving further along this year and, in pockets, as I mentioned, we have passed on the benefits of densification to consumers. On the residential AC side, our view is that we have now operated in the segment of air conditioning, servicing, and repair for close to 11, 12 years, ever since the inception of the company.
There is a lot of data and knowledge that we have gathered on what are the consumer pain points and what are some of the unmet needs of the consumers. Based on those data points and our own understanding of the market and the unmet needs, we have been quietly working on creating an innovative, cutting-edge product. We will be very calibrated and measured in terms of this particular endeavor and the rollout of this. We expect the next year or two to be more about learning. Mostly from a channel standpoint as well, I think we will limit it largely to our app. So the idea is to learn in the first year or two to get feedback from consumers.
We believe we are on track to launching an air conditioner device that will be very innovative and much like all our other products in Native, will bring a breath of fresh air to the category. But at the same time, we want to be very calibrated and measured in the way we approach. Native has been doing very well. Growth has been strong and margins have been improving. We now believe we are in touching distance of profitability in Native, and we would like that trajectory to continue, essentially. Our foray into AC should not materially change that trajectory.
Thank you. All the best.
Thank you.
Thank you. Next question is from the line of Mr. Manish Adukia from Goldman Sachs. Please go ahead.
Hi. Good evening. Thank you for taking my questions. I also have three questions. My first question would be on the use of proceeds from the announced potential capital raise. When you mentioned that you may also potentially look at some acquisitions or inorganic opportunities, can you maybe provide some color in which part of your business or segment would you need to build capability through M&A? Second, when you think about M&A, could these be bolt-on acquisitions? How are you thinking about the range of scale of what kind of target you may look to acquire? That is my first question.
Manish, so as I mentioned in the opening remarks, the purpose of this fundraise is predominantly to ensure that we have strategic flexibility over the next 5-10 years. We have a strong balance sheet to execute on our vision, which is to build a much, much larger company than we are today. In fact, we still believe we're a very small company in the scheme of things. Our mission is to go beyond being just a home services company and eventually become the trusted home platform for Indian consumers, almost the operating system for the Indian home. Given that ambition, we want the strategic flexibility over the next few years to invest in all our areas of business, whether it's India core, international, Native, and InstaHelp. Each of them play a distinctly important role.
We think that this fundraise, which is up to INR 2,500 crore, will significantly strengthen the balance sheet and give us that flexibility. We've talked about inorganic opportunities as well. I would say in India core, Native, and our international markets, the ecosystem around us has evolved. There is nothing imminent, but we will always be open and look out for the right opportunities. If there is an attractive opportunity at the right valuation that we believe can be meaningfully additive to the company and create long-term shareholder value, we are very much open to doing that. So that I think is our current thought process.
Thank you, Abhiraj. If I may just ask a follow-on on that one. Just on your India core services, where you are by far the market leader or probably you are the only player that is out there, you are a multi-category platform. Could there be any possibility of acquisition in that vertical? I'm just trying to think that what might you need through M&A in your core services where you already have multi-categories. So I'm just trying to get some flavor, even if qualitatively, as to what kind of capabilities you would want to build through M&A, if at all you're able to share that.
Yeah. It's a good question, and I think maybe I'll clip the question one level higher and answer at a more framework level. I think the framework we will use is either an M&A should allow us to consolidate a particular market that we find ourselves in, or it should allow us to enter a new category/market. Now, given that we've explicitly said in the past as well that we don't look to enter any new countries. For India core, if at all we do an M&A, it would be to add- on categories that we don't operate in today, where we feel that the decision of build versus buy may be tilting in favor of buy, provided things are, from a valuation standpoint, accretive. I would say that's the sort of broad framework that we would look at.
We would look at a similar framework within our other lines of businesses as well.
Very clear. Thank you, Abhiraj. My second question, of course, when you look at InstaHelp as a business, the order value or net order value continues to come down right now. I'm assuming that versus what you would have thought two or three quarters ago, the competitive intensity probably has remained elevated for a prolonged period of time. But despite that, like you said, you remain confident of delivering on your break-even target of third quarter next fiscal year. Is that a function of your core businesses, including international and Native, doing that much better versus your own expectations in terms of profitability, and that's why you still remain confident of delivering breakeven at a company level? Or you think, how things evolve in InstaHelp in the next one or two quarters will actually determine whether you get there or not?
Or just trying to get a sense, despite that, could you still deliver breakeven if competition remains high in InstaHelp?
Yes. Manish, I think why we remain confident on achieving the Q3 FY 2028 break-even goal at a consolidated level is a function of two things. One, I think the growth trajectory and the operating leverage that that growth brings to our three main businesses, India core, international, and Native, is strong. Certainly much stronger and much ahead of what our expectations were a year back at the time of the IPO, and in the first earnings call when we set out these targets. So that gives us significant additional cushion, I would say, and not just incremental additional cushion. Two, in InstaHelp, and I want to reiterate this point, I don't think the losses are high because of competitive intensity.
The losses are high because we are choosing to keep them high, and we are choosing to invest from a position of strength because we have a certain view on the TAM, the opportunity, and how we would like to play it. Since the beginning of this year, we have been executing on a certain plan with deliberation. That plan, we have drawn out pretty much all the way for the next six to eight quarters. Now, you're obviously in a competitive environment reacting tactically to ongoing situations. But at the highest level, I think it's not that we are reacting to competitive intensity. If anything, our aggression is what the others have to keep up with. So we have a certain plan in place.
We are executing on that plan, and we believe that that plan will fructify into both us achieving the targets that we've set out to achieve, as well as cementing our leadership position in InstaHelp.
Thank you, Abhiraj. Very clear. My last question is a follow-on to your response to Gaurav's question earlier on the potential foray in air conditioner, and thank you for providing color the next one to two years would be like a learning phase. But again, still trying to understand when you look at, let's say, your various businesses and all of them are doing really well from a growth perspective. India core, like you said, is accelerating. Tier Two is seeing good traction there. InstaHelp, of course, is competitive and you're also investing there. International has again accelerated.
All businesses are doing well and in that waterfall, when Native is yet not profitable, yes it is getting there, but still not profitable, and other businesses also maybe potentially require some growth investments and they are doing well, why choose a new category to enter into when so many other parts of the business are doing well and may do even better if you continue to invest there? Just trying to understand from a capital allocation waterfall perspective, how does air conditioning take, let us say, a priority or where does that fit in terms of amount of allocation that we see?
Yeah. In our view, Native is well and truly on track to achieve its profitability goals. I think it will actually happen pretty soon. That is part of the reason why we think from a timing perspective it is the right time as well. From a capital allocation standpoint, our own view is that we want to be fairly disciplined in the buildup of AC. Like I said, once Native is profitable, we want that trajectory to continue. We do not want a foray into AC to, in any which way deviate from that trajectory. In fact, we mentioned in the letter as well that R&D expenses in Native are today bulk of the EBITDA losses. From that one can derive where the underlying profitability already is tracking.
See, finally, an entry into any new category is a function of one does not think about just the next few quarters, but very long term, takes a long-term view. In the long term, we believe that this is a very attractive category for Native. We do almost 10 x more air conditioner servicing, repair and installation orders compared to water purifiers. The category is also perhaps 10 x larger in terms of TAM. There are genuine pain points, which over the last 10, 12 years of building this category from a servicing standpoint, we have seen consumers experience. We will be very calibrated, measured, learn, go slow, and set this business up for long-term success. I do not think we are looking at any immediate numbers in the first one or two years.
I think it is all about keeping things in a learning phase, and thinking about how do we succeed over the next five, 10 years. From that long-term picture perspective, I would say it is a fairly strong pillar for Native.
Thank you, Abhiraj. Really appreciate your responses and insight. All the best.
Thank you, Manish.
Thank you, Manish. Our next question is from the line of Mr. Sachin Salgaonkar from Bank of America. Please go ahead.
Hi. Thank you for the opportunity. Abhiraj, really a big picture question to think about, and this is what I'm trying to grapple out for. You guys had always maintained a stance that you, as Urban Company, don't need cash. You have a good amount of cash on your balance sheet. Trying to understand what has now changed, which is now leading to dilution to shareholders. Understand from your comments today that competition at InstaHelp has not changed. While it is intense, it has not increased. I also understand the growth has stepped up and there is an operational leverage which is coming up on the back of it. Yet, when I look at your FY 2031 target, it's unchanged, right? How to think about the capital being raised. Will it be invested for growth and hence should we see upside to that FY 2031 EBITDA target?
Good question, Sachin. We are very clear that this capital is being raised for strategic flexibility and predominantly for growth. From a build-out of our existing organic businesses as well as InstaHelp, to be honest, the trajectory that we are on, the current balance sheet is more than sufficient. If it was not, we would have changed the short to medium-term targets, but those remain unchanged. We believe that the additional capital is not necessarily to fund the losses in InstaHelp, or for the short-term needs that the other businesses might have, but more from a longer-term perspective to provide strategic cushion. Definitely to look at any interesting inorganic opportunities, which, given where InstaHelp's trajectory is, the current balance sheet does not provide that level of strategic flexibility.
Absolutely, as and when we do invest, these investments will be growth investments and they should result in a higher trajectory of top line and bottom line, in the medium to long term. This is one of the reasons why I underscored that we remain extremely confident of that long-term target of INR 1,000 crore by FY 2031. If I am saying that out in the earnings call, then obviously internally, our assumptions will be much, much higher.
Yeah. Sorry to stick onto this point, but the question I am trying to get at is why now? Because you are saying that you needed capital, let us say, from 10-year point of view, where your core consumer business is clearly EBITDA is increasing, and there is that guidance of roughly 100 basis points improvement in margin every quarter. Clearly with the accelerated growth as well as things improving, you do see that incremental cash which is coming. On Native, you are saying that the company, despite the foray into ACs, will be in the profitable trajectory. International is also increasing. InstaHelp is what you guys are looking to choose to invest. I am trying to understand that, in that context, clearly you do have that flexibility. What do you mean by incremental flexibility? What you want? Why now from a capital raise point of view?
Yeah. No, that is a good question, Sachin. I think, see, there is never a perfect time to do these things. The very definition of flexibility is that the sooner you do it, the more flexibility you have. I think today, for instance, I would not say that we enjoy a lot of flexibility from the current balance sheet standpoint, given where InstaHelp's losses are, and the other requirements. At this point in time, the current balance sheet allows us to execute precisely on the plan that we have laid out for ourselves in an organic fashion. I think the incremental capital allows us to be more aggressive, see newer opportunities that may come along, look at inorganic acquisitions more closely.
In the worst-case scenario, if the TAM for InstaHelp is significantly larger than we are envisaging and the competitive intensity dramatically increases, it gives us the option to play on the front foot without being defensive. That is about it.
Got it. Last question from my side is, when you say you are open for acquisitions, ideally, should we also think about a potential acquisition into the InstaHelp category? Where, let us say, the interest rates in U.S. are, it is not easy for anyone to raise incremental capital. With you guys sitting in on that, let us say, good amount of cash. Is that an M&A opportunity you guys are also open to explore?
Sachin, never say never, but highly unlikely.
Cool. All right. Thank you.
Thank you.
Thank you. Our next question is from the line of Mr. Abhishek Pathak from Motilal Oswal. Please go ahead.
Yeah. Hi, am I audible?
Yes, Abhishek. Please go ahead.
Hi. Hi, Abhiraj. Congrats on another good quarter. My question is from perspective of supply of experts as well as Helps. On the InstaHelp side, do you think in the near to the medium term, the supply or the recruitment of Helps becomes a rate limiter on growth? To that effect, should somebody choose to invest, or should somebody come in and offer slightly better take rates to our experts and our Helps, how do we safeguard against that? Does that impact growth in any way? The second question, again, on the InstaHelp side is, do we have a working unit economics steady-state picture that we have in our mind that we are working with, that we aim to achieve in the next two to three years? I understand it may be a high- single-digit EBITDA business.
But in terms of sacrificing those margins for the next three to four years, do we believe that more interventions would lead to outsized growth? Because the TAM that we have put out still limits the ceiling to which InstaHelp can grow. How does investments pan into that whole situation? Thank you.
Yeah. Abhishek, in terms of the availability of supply, and this answer is true as much for InstaHelp as it is for the rest of our business. I would differentiate between availability of people and the ability to recruit, train, onboard, and retain the right skilled talent from a long-term perspective. People are available. I don't think there's a shortage of that. Especially if the earnings proposition is strong, and we've given out our latest update on the Earnings Index, where you'll see that the earnings proposition on the platform continues to be very strong across InstaHelp and India Consumer Services core. I think people will always want to join, be part of a formal workforce, have a dignified life, have access to middle-class earnings, as well as all the other benefits that we provide in terms of life, health, and accidental insurance, access to credit, upskilling, et cetera.
There's definitely, across the two segments, the top of the funnel is not the challenge. I think the challenge is, can you identify the right people who have the customer centricity, the sincerity to work with purpose, who see a long-term pathway on the platform? Then do you invest correctly in the training and onboarding and setting them up for success? Then over their life cycle, are you able to support them well so that they get retained and their earnings grow and their overall ratings and reputation on the platform compounds? I think that's what this whole business is about. That's where our focus is. It's easy to add bodies in this business. It's hard to retain the right supply and maintain a very low partner churn. Right? I think some of these things tend to play out in the medium term.
That's where we are focused on. Pay grades, I think, eventually experts care about net income in their hand. That's what they really care about. They look at, "Hey, I'm committing a certain amount of time to the platform. What is my absolute earnings?" It's less about pay grade for services. It's more about absolute earnings. And there we feel we are very competitive as a function of densification, as a function of our brand, as a function of the scale that we have. And we will continue to work harder and harder to ensure that the earnings on the platform remain best in class. On the second point of the steady-state picture of InstaHelp, I think we do have a view and a very clear view there. And we continue to see if our older micro-markets are tracking towards that view.
Without getting into many nitty-gritties of that view at the highest level, as I have mentioned in a few earlier calls as well, we will need the pricing to reach roughly about INR 200 an hour and the net order value to reach roughly about INR 300, given the average order is about 1.5 hours. This is because our view is that even with the best utilization, you need about INR 150 an hour of payout for every utilized hour to the gig worker. And then the remaining INR 50 is essentially all your costs if you run a well-oiled, efficient machinery at scale. We think we will get there. We are very confident. While the current numbers and the current NOVs declining trajectory may raise some concerns amongst the investor and analyst community, we have enough evidence internally.
And if we didn't, we wouldn't be this aggressive. We have that evidence, but it will be a long journey, and we will have to be patient, and that long journey is by choice for us as a company and also a function of the broader market that we find ourselves in. It isn't going to happen in a year or a couple of years. As we've said earlier, our break-even target for InstaHelp is as far out as FY 2031. We're in no rush. We want to invest in this category. We want to see how large it can become. We have a view on the TAM. We've reiterated that view in the current letter as well. Our view remains unchanged. It's a bottom-up view based on very, very granular data points and our understanding of how the customer segment is. Today, the orders are obviously scaling very fast.
But I do want to call out that it is at a very low NOV for the industry. There is a percentage of these orders that are for the industry as a whole being bought. And once pricing fully corrects, we will see a downward correction in the orders as well. That's not something that's hard to imagine. It will still be net incremental to the NTV. But with that overall understanding of where the market will be, with having operated with micro-markets which are less competitive at near full price, and having seen how those micro-markets behave for a longer period of time, and extrapolating the number of such micro-markets, the number of such households in the top 15 cities, we think the market is attractive, but it is range-bound.
It's not one that will throw up either multiple winners or have unbounded growth for a single player as well. It will be a good, attractive, strong category in the long run for Urban Company. More than its own NTV and its own P&L, it will drive a lot of additional benefit for the platform. Because if our vision is to go beyond being a home services company into being the preferred home platform, the trusted home platform for India, then that home platform cannot exist without a frequency layer. That frequency layer is InstaHelp. It's a very fundamental strategic part of that vision, which is why we're investing and building ahead of the curve here.
Thanks, Abhiraj. Just a very quick follow-up on the InstaHelp piece. From your analytics or from the use cases that your customers are using InstaHelp for, are there any surprising use cases which you think may just kind of push that TAM higher or kind of expand that TAM? If yes, which are those categories within InstaHelp that the customers are using these instant services for? Is there an ROI on kind of investing or leaning a bit heavily on these services, so that TAM kind of expands meaningfully with probably slightly lower investments?
Within the house help category, the two prominent use cases today are one replacement when your house help is not available. This stretches across both planned leaves as well as longer leaves. That's one big segment. Some of these users are also using InstaHelp for additional help over and above what their house help does. We'll have to wait and watch if that additional help use case expands further. Then there's a segment of younger users, the ones that do not want to commit to a sort of full-time, everyday house help coming to their home. They feel that the home can be cleaned two, three times a week, eight times, 10 times a month, and that's enough. They would want the flexibility to book those on the go whenever they want it. Incidentally, the economics actually works out better for them.
That's a smaller TAM. Again, depending upon how that TAM grows and as that segment and population ages, whether its behavior reverts back to mean or actually continues with the new behavior will determine eventually how large this category will become. At the highest level, for this category to be much larger than what we've painted, even in the last previous letter we had mentioned, the one fundamental assumption that has to change is that it has to go beyond being just replacement to being the primary house help category. We are open to seeing evidence of that. If there is evidence of that playing out, then that'll be exciting. From the looks of it, I don't think over the next three, four, five years it's going to happen.
It may happen over a much longer period of time as India becomes richer and it becomes harder and harder for people to afford having someone come to their house every single day. That's the behavior we see in our other markets. U.A.E., Saudi, and Singapore are all in that behavior. Fundamentally, that's where the country will eventually get to. The question is: will it get there by 2030 or not? I want to reiterate, the TAM picture that we drew was for the next five years in the top 15 cities. Of course, over a much longer period of time, there's no debate that this will be a very, very large and attractive category. That period of time could be much more ahead than we are imagining it to be. We are always open. Our opinions are always strong in the moment, but loosely held.
If evidence points otherwise, there's no reason for us not to acknowledge and accept that.
Thanks so much. Thank you, and all the best.
Thank you, Abhishek.
Thank you. We will extend the call by a few minutes to accommodate a few more questions. The next question is by Swapnil Potdukhe from JM Financial. Please go on.
Hi. Thanks for the opportunity. My first question is related to your professionals growth in the India Consumer Services business. What I see is, in the last two, three quarters, there has been some acceleration on that side. This quarter, the growth was around 16%. Earlier, it was double digits. I go back a couple of years, it was in single digits. First I would like to understand what are the drivers here. Is it more lower churn, densification, micro-markets, or something else? A related question to that is, should a sharp acceleration in the professionals growth eventually translate to better growth than what we are even delivering now? Maybe high teens professionals growth can translate to 30% kind of a growth for your India Consumer Services NTV growth.
Swapnil, this is Abhay, and I'll try and answer that question. The growth in service professionals is a leading indicator of how we see growth in the core business. This quarter's growth has been 16%, whereas the NTV has grown by 26%. As we've shown in our Earnings Index, growth in the top line will come as a function of growth in the number of professionals as well as an improvement in utilization. That's what we're targeting. As the business grows, we will onboard supply ahead of demand. This quarter also has some level of onboarding ahead of the festive season, so that's also a factor. But overall, we see gains from utilization as well as adding more active professionals to the platform as the key to future growth.
So would it be fair to say, Abhay, that 25% is something that one should work with the growth given the increase we have seen in recent quarters? Because earlier the professional additions was mid-single digit kind of numbers.
Swapnil, I wouldn't put a specific number to the growth projections for the future. As Abhiraj has mentioned, the increase in growth has been structural. New user acquisition is growing, retention is improving. As a function of that, we are adding more professionals. We'll wait and watch.
Got it. The other question is with respect to your UC Instant services for consumer services business where you're servicing in 30-60 minutes. Do you charge a premium here to the consumers? If not, will you not today, maybe later tomorrow. Is there any plan on that side? A related question again to that is do you plan to extend this UC Instant services in U.A.E., Singapore as well?
Right now, we don't charge any premium. In the future we're open. It's not a decision that we've taken right now. It'll be a function of many considerations and factors. It's already something that has been rolled out in both U.A.E. and Singapore as well.
Okay. Just a last one. Obviously your contribution margin expanded this quarter partly because of lower customer and partner support cost, refunds, those kind of things. My other question is how much more juice is left for the contribution margin in the India Consumer Services to improve given that we are already at 22%? Yeah. Thanks.
Yeah. Swapnil, yes, the contribution margin has actually been showing an increasing trend. As we explained, it has come from a lot of AI-led cost efficiencies as well as improving profitability in our product business. We will try to improve that further, but as we have said in the past our key lever of getting to the 9%-10% adjusted EBITDA will largely be operating leverage. That is what we will track towards.
Just a related question to that again then. How should we look at the fixed cost, basically? Since what is happening is your employee cost has also increased materially over the last few quarters in this business. Where exactly should we see that operating leverage start playing out?
No. Swapnil, yes the absolute costs have gone up. But if you look at the area in your picture across cost lines, I think other than marketing, we have demonstrated operating leverage across the other lines. Going forward as well, our endeavor is to demonstrate operating leverage across all the three lines, which is salaries, marketing, and G&A. As we mentioned in the letter, we would prefer to invest for growth where possible while improving our margins in a calibrated fashion. That is what you will see play out as we invest in the number of initiatives we have spoken about.
Got it. Good. Thanks a lot, Abhay.
Thank you.
Thank you. Ladies and gentlemen, we will take the next question as our final question. This will be from Mr. Srinath V. from Bellwether. Please go ahead.
Hi, Abhiraj. Am I audible?
Yes, Srinath. Hi. Good evening.
Two set of questions, one on Native. I want to understand how has the experience been. We have now built some level of offline distribution. Have we attracted a new set of customers or a different set of customers? How do you see a pan-India rollout in modern retail? I just wanted to hear your views.
Yeah. Srinath, I think, I would say that the percentage of business that comes from offline is still very small right now, and still very much in the learning phase. The bulk of the business continues to come from e-commerce platforms and our own app. But early response has been good, especially in modern retail. We are learning. It will take some time for us to understand that we also don't want to be in a rush. We want the brand and the product quality to continue to compound. With our new launches, the Native M3 water purifiers that has a three-year, no-questions-asked filter life and comprehensive warranty is truly, in my view, state-of-the-art, best water purifiers out there. The Native Lock Ultra I think we are seeing pull now over time from the offline ecosystem as well.
It will be calibrated and slowly and steadily build out that ecosystem.
Perfect. My second question is on InstaHelp Gold. I want to understand how has been the customer feedback. Any qualitative understanding you can share on how this rollout has played on NPS or on broader customer feedback. Second is, I wanted to understand how many micro-markets have we rolled this out? Have we already rolled it out to all key micro-markets where we already have density? The last one on InstaHelp is, we've seen significant service professional addition in InstaHelp this quarter. Would it be fair to assume we have solved for availability and significant improvement in liquidity coefficient for the category, especially with the festive season coming in, which sees some level of spike in InstaHelp?
Yeah. InstaHelp Gold, I would say it is still early in its rollout. The early results are very promising. Premiumization is something that we have done across all our core categories as well, whether it is with Salon Luxe, men's grooming Salon Royale, et cetera. So we wanted to do that early in the journey of InstaHelp rather than later, and see and learn. I would say it is still in the early phases. We will share more at the right time. But just given the dynamics of the category today, I think what I can share is that it is interesting, exciting, promising. We certainly intend to continue to build on InstaHelp Gold and scale it out. You are right, I think we have been hard at work in aggressively onboarding supply in the last three, four months in the run-up to the festive season, and also to improve the liquidity coefficient.
We have seen an improvement in the liquidity coefficient. It helps that demand continues to be strong and in many pockets demand is running ahead of supply. But I think in the last quarter we have taken big strides towards bridging that gap.
Cool. Thanks a lot, and all the best to you.
Thank you, Srinath.
Thank you, Srinath. Ladies and gentlemen, we will take that as the last question for the evening. Thank you for your participation. You may now disconnect your lines. Enjoy your evening.