IPO-bound Urban Company ramps up sales, ad expenses to maintain brand strength, consumer retention
Urban Company has planned to raise a total of Rs 1,900 crore through the IPO, of which Rs 80 crore will be allocated for marketing activities.
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Home services unicorn Urban Company, which spent Rs 173 crore on advertisement expenditure in the fiscal year (FY) 2024, has planned to allocate 4.21% of the IPO-raised capital for marketing initiatives. According to the recently released draft red herring prospectus (DRHP), Urban Company has planned to raise a total of Rs 1,900 crore through the IPO, of which Rs 80 crore will be allocated for marketing activities. As per the company, of the total Rs 80 crore of net proceeds, Rs 18 crore will be deployed in FY26, Rs 31 crore in FY27, and Rs 31 crore in FY28.
The Gurugram-based services firm ramped up its sales, promotion, and ad expenses in the past three years significantly. In FY22 Urban Company spent Rs167.7 crore on ads, in FY23 Rs189 crore, and in FY24 Rs173 crore. As per the DRHP, Urban Company's ad expenses in the first nine months ended on 31 December 2024 stood at Rs131 crore.
However, UC's ad expenses as a percent of revenue from operation declined yearly, such as 38.34% in FY22; 29.72% in FY23, and 20.92% in FY24, respectively.
In contrast, the sales and promotion expenses increased from Rs15.2 crore in FY22 to Rs26.3 crore in FY24.
Last year, the beauty and home care service firm entered into a "Digital Marketing Agreement" with an agency for availing digital media services, such as media strategy and planning, media buying, optimization and analysis, communication and reporting, consultancy services, delivery, and performance reporting.
The Urban Company's spending commitment under the agreement is- Rs50 crore for calendar year 2025, Rs60 crore for 2026, and Rs70 crore for 2027.
According to the Redseer Report, the home services market in India is expected to grow at a 10-11% CAGR from 2024 to 2029, driven by increasing urbanization and rising income.
Notably, Urban Company has been subject to numerous backlashes related to gig workers. Consequently, the platform said it will continue to enhance its marketing approaches and experiment with new methods to keep pace with industry developments and consumer preferences.
"We may also incur higher marketing costs to maintain our brand strength and retention levels among an increasing pool of consumer and service professionals," according to the Urban Company DRHP.
The company registered 20.3 lakh consumer complaints From January-April 15, 2025. On the other hand, the company resolved 20.1 lakh complaints in the same period. In fiscal year 2024, UC received a total of 43.1 lakh consumer complaints of which the platform resolved 42.7 lakh.
In FY24, Urban Company narrowed its losses to Rs 92.7 crore from Rs 312.4 crore in FY23. The company's revenue from operations surged to Rs 709 crore in FY24--up 24.3% YoY.
