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Value ecommerce company Meesho, which listed on the bourses in December, has reported a 13-fold year-on-year (YoY) jump in its net loss, at Rs 491 crore, for the October-December period. Its operating revenue increased 31% to Rs 3,517 crore.
Meesho's net loss ballooned primarily on the back of costs rising much faster than margins, driven by the expansion of its logistics arm Valmo, and spending on customer acquisition. The company, however, said it will keep its eyes on its free cash flow as a metric for its performance.
“It captures what accounting metrics often miss: working capital discipline, capital intensity, and the actual cash generated after reinvestment. Our negative working capital cycle and asset-light model create structural cash flow advantages and avoid capital intensity that has historically destroyed returns in consumer-facing businesses,” Meesho founder and CEO Vidit Aatrey said in a letter to shareholders.
Meesho's last twelve months’ free cash flow (LTM FCF) — a metric that indicates how much cash the company generated in the past year after covering operating expenses and reinvesting in it — came in at Rs 56 crore for Q3 compared to Rs 334 crore in the same quarter last year.
Meesho, backed privately by investors such as SoftBank and Elevation Capital, went public following a Rs 5,421 crore IPO.
The company’s shares ended trading 3.4% higher on the BSE, at Rs 173.95. Meesho’s results were announced post market hours.
Also Read: Meesho IPO: There’s no slowdown, India among the least penetrated ecommerce markets globally: CEO Vidit Aatrey
Growth focus
In an earnings call following the results, Aatrey pointed out that margins will continue to improve over the next two to three quarters even as the company’s focus on growth continues.
During the third quarter, Meesho’s annual transacting users jumped 34% YoY to 251 million, while its net merchandise value (NMV) came in at Rs 10,995 crore, up 26%.
“Platform businesses exhibit increasing returns to scale, which is why we prioritise growth today: to build compounding advantages that translate into durable profitability,” Aatrey explained.
In a November interview with ET prior to Meesho’s listing, Aatrey had said that the company will continue to spend on customer acquisition.
“Over the last 18 months, our value proposition improved, prices strengthened, and marketing payback periods became attractive. That’s why our growth rate expansion has been quite large. As a company, we think that as long as the payback period continues to be attractive, we will spend because it’s better to acquire the steady-state annual transacting user in three to five years, than in ten,” he had said.
Bottomline pressures
Meesho’s contribution margin — the metric representing sales minus variable costs — fell to 2.3% (down 198 basis points YoY) after an accelerated expansion of Valmo’s logistics network. This was done on account of third-party logistics (3PL) company Delhivery acquiring Ecom Express last year, which led to temporary inefficiencies and higher per-order costs for Meesho.
“During Q2 and Q3 FY26, we rapidly expanded Valmo’s logistics network resulting in temporary inefficiencies, such as under-utilised routes, redundant nodes, and longer delivery distances, which impacted contribution margins by 1.1 percentage points in Q2 FY26, and a further 1 percentage point in Q3 FY26. This also includes a one-time network restructuring cost of 16 bps (basis points) in Q3 FY26,” Meesho said. It added that it was taking measures to optimise the logistics network and bring down per order costs.
Despite higher logistics costs in the previous quarter, the company did not increase the fulfilment charges for its customers, but absorbed them instead to protect user growth and retention.
“Temporary pricing volatility during the festive season is adverse for long-term retention of consumers… We absorbed these costs because we have a clear line-of-sight to normalisation. If any structural cost changes emerge, we will pass them through to our consumers,” the company said in the letter to shareholders.
Notably, the company’s marketplace losses jumped sharply on-year, with its adjusted Ebitda falling from near breakeven last year to a large deficit this quarter. Its adjusted Ebitda loss for the marketplace business came in at Rs 460 crore in the October-December period, against Rs 21 crore in the same quarter last year.
Meesho's net loss ballooned primarily on the back of costs rising much faster than margins, driven by the expansion of its logistics arm Valmo, and spending on customer acquisition. The company, however, said it will keep its eyes on its free cash flow as a metric for its performance.
“It captures what accounting metrics often miss: working capital discipline, capital intensity, and the actual cash generated after reinvestment. Our negative working capital cycle and asset-light model create structural cash flow advantages and avoid capital intensity that has historically destroyed returns in consumer-facing businesses,” Meesho founder and CEO Vidit Aatrey said in a letter to shareholders.
Meesho's last twelve months’ free cash flow (LTM FCF) — a metric that indicates how much cash the company generated in the past year after covering operating expenses and reinvesting in it — came in at Rs 56 crore for Q3 compared to Rs 334 crore in the same quarter last year.
Meesho, backed privately by investors such as SoftBank and Elevation Capital, went public following a Rs 5,421 crore IPO.
The company’s shares ended trading 3.4% higher on the BSE, at Rs 173.95. Meesho’s results were announced post market hours.
Also Read: Meesho IPO: There’s no slowdown, India among the least penetrated ecommerce markets globally: CEO Vidit Aatrey
Growth focus
In an earnings call following the results, Aatrey pointed out that margins will continue to improve over the next two to three quarters even as the company’s focus on growth continues.
During the third quarter, Meesho’s annual transacting users jumped 34% YoY to 251 million, while its net merchandise value (NMV) came in at Rs 10,995 crore, up 26%.
“Platform businesses exhibit increasing returns to scale, which is why we prioritise growth today: to build compounding advantages that translate into durable profitability,” Aatrey explained.
In a November interview with ET prior to Meesho’s listing, Aatrey had said that the company will continue to spend on customer acquisition.
“Over the last 18 months, our value proposition improved, prices strengthened, and marketing payback periods became attractive. That’s why our growth rate expansion has been quite large. As a company, we think that as long as the payback period continues to be attractive, we will spend because it’s better to acquire the steady-state annual transacting user in three to five years, than in ten,” he had said.
Bottomline pressures
Meesho’s contribution margin — the metric representing sales minus variable costs — fell to 2.3% (down 198 basis points YoY) after an accelerated expansion of Valmo’s logistics network. This was done on account of third-party logistics (3PL) company Delhivery acquiring Ecom Express last year, which led to temporary inefficiencies and higher per-order costs for Meesho.
“During Q2 and Q3 FY26, we rapidly expanded Valmo’s logistics network resulting in temporary inefficiencies, such as under-utilised routes, redundant nodes, and longer delivery distances, which impacted contribution margins by 1.1 percentage points in Q2 FY26, and a further 1 percentage point in Q3 FY26. This also includes a one-time network restructuring cost of 16 bps (basis points) in Q3 FY26,” Meesho said. It added that it was taking measures to optimise the logistics network and bring down per order costs.
Despite higher logistics costs in the previous quarter, the company did not increase the fulfilment charges for its customers, but absorbed them instead to protect user growth and retention.
“Temporary pricing volatility during the festive season is adverse for long-term retention of consumers… We absorbed these costs because we have a clear line-of-sight to normalisation. If any structural cost changes emerge, we will pass them through to our consumers,” the company said in the letter to shareholders.
Notably, the company’s marketplace losses jumped sharply on-year, with its adjusted Ebitda falling from near breakeven last year to a large deficit this quarter. Its adjusted Ebitda loss for the marketplace business came in at Rs 460 crore in the October-December period, against Rs 21 crore in the same quarter last year.