E-commerce unicorn Meesho reported a significantly wider loss in its first quarterly results post IPO, as the company increased investments in its logistics arms Valmo and overall user growth, which ate into its margins. Net loss for the third quarter of FY26 was Rs 490.7 crore, compared to a loss of Rs 37.4 crore in the year-ago quarter.
The company said it rapidly expanded Valmo’s logistics network in second and third quarter, in response to a market consolidation of third-party logistics providers (3PL) in Q1.
This rapid expansion resulted in inefficiencies such as under-utilised routes, redundant nodes and longer delivery distances, the company said in its shareholder letter, which impacted contribution margins by 1.1 percentage point in Q2 and another 1 percentage point in Q3.
Shrinking Contribution Margins
Contribution margins for its marketplace business, which forms 99% of its revenue, shrank to 2.3% from 4.3% a year ago. As a result, Meesho recorded a negative adjusted Ebitda of Rs 460 crore in Q3, compared to Rs 21 crore loss in the year-ago period. The bottomline was also hit by an increase in marketing costs and employee-related expenses.
Going ahead, the company expects significant improvement in its adjusted Ebitda margin. Over the next two quarters, it aims to reach near breakeven levels, as it was in Q1. In Q3, Meesho’s adjusted Ebitda margin was a negative 4.2%.
“We have been shedding redundant nodes, refining delivery routes and increasing throughput in the newly scaled nodes — this will drive down per-order cost,” the management said in the letter.
Strong Revenue Growth
Despite the dismal bottomline performance, Meesho’s revenue from operation rose 31% y-o-y to Rs 3,517.6 crore, driven by more customers buying more often. Annual transacting users reached an all-time high of 251 million, pushing net merchandise value (NMV) up 26% year-on-year.
The number of orders placed also jumped 35% to 690 million during the quarter.
The company noted that NVM growth in the quarter needs to also be viewed in the context of festive calendar shifts. Diwali fell in mid-October this year compared to early November last year, shifting some festival shopping from Q3 into Q2.
The company’s free cash flow stood at Rs 56 crore by the end of Q3, while cash balance stood at Rs 7,277 crore, including Rs 4,088 crore raised through its IPO last month.
Meesho’s stock market debut has put a public-market stamp of approval on a business model that has long run counter to the dominant playbook of Indian e-commerce. After listing on December 10 at an issue price of Rs 111, the stock climbed to a peak of Rs 235 within two weeks, more than doubling and marking one of the strongest debuts in recent years.
The rally has drawn attention to Meesho’s value-commerce strategy, which prioritises low prices and cost efficiency over speed and premiumisation. Brokerages have likened the model to platforms such as China’s Pinduoduo and Southeast Asia’s Shopee, which focus on price-sensitive consumers and operate asset-light marketplaces.
Meesho does not charge seller commissions, instead monetising through advertising, logistics, working capital financing and other value-added services.