Meesho has always had a different model from Flipkart and Amazon. It focuses on low prices and mostly unbranded products, sold largely to buyers in smaller towns, and charges sellers nothing to list.
Its September-quarter results show progress, though not yet profitability.
The company reported a consolidated net loss of ₹132.45 crore, down 68% from ₹411.36 crore a year earlier. Revenue from operations rose 34% to ₹4,131.58 crore, while expenses grew a slower 24% to ₹4,382 crore. Over the first half, revenue grew 41% to ₹7,844 crore and the loss narrowed 62% to ₹265 crore.
The shares rose about 2% on Thursday.
What matters
The most important number in Meesho’s results is its contribution margin, which measures what the company earns on each order after the direct costs of handling it. This quarter it rose to 6% of net merchandise value, a multi-quarter high, up from 4.6% in the June quarter.
That improvement came mostly from logistics. Meesho cited fewer returns to origin (orders customers refuse or return before delivery), higher order density in delivery areas and a redesigned delivery network. Valmo, its in-house logistics platform, has helped lower the cost of delivering each order. For a company whose average order is small, saving even a few rupees per delivery makes a big difference.
Advertising is the other driver. Meesho earns most of its revenue from sellers paying to promote their products. As the platform grows, those placements become more valuable. Marketplace revenue, which includes ads and logistics fees, rose 34% to ₹4,120 crore.
Some caution
Not every measure improved. The loss was almost unchanged from the June quarter, at about ₹132 crore in both, so the improvement has slowed sequentially. Adjusted EBITDA was still a loss of ₹170 crore. Other income from cash investments fell 30%, so the company earned less from its reserves.
Order growth was also slower than revenue growth. Meesho handled 819 million orders in the quarter, up 17%, and net merchandise value grew 23% to ₹12,911 crore. Revenue is growing faster than orders, which means Meesho is earning more per order, but order growth has slowed.
There is a timing issue, too. Last year’s Mega Blockbuster Sale fell in the September quarter, while this year’s was held in the December quarter. That makes the September comparison look weaker. Meesho said that comparing the 90 days leading up to Dussehra in each year, merchandise value grew 33%.
Consumer update
Meesho’s results add to what other companies have reported this season. Companies selling to price-sensitive consumers have had mixed results: Vishal Mega Mart reported slowing same-store sales and Tata Consumer reported flat tea volumes. Meesho’s 17% order growth suggests that spending on low-cost products online is holding up better than spending in stores.
A low-price marketplace may also benefit from tighter household budgets, as some shoppers move to cheaper options when inflation rises.
What now
Meesho has not said when it expects to become profitable, but the direction is clear. Higher contribution margins, faster revenue growth than costs and a much smaller loss all point that way. The December quarter, which includes the main festive sale and Diwali, will be the key test. If margins keep improving through peak demand, a profitable quarter could come within a year.
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