Meesho Limited — Q3 FY26 earnings call

Call held 30 Jan 2026

Management summary

Meesho reported a strong Q3 FY26 with significant growth in its annual transacting user base (251 million, +34% YoY) and seller base (846,000, +81% YoY). Net Merchandise Value grew 26% YoY to ₹10,995 crores for the quarter. While contribution margin was 2.3% due to temporary logistics cost spikes, management expects profitability to improve, with EBITDA losses having peaked and margins converging to Q1 FY26 levels within two quarters. The company continues to focus on category expansion, ad monetization, and maintaining an asset-light logistics model.

Highlights

  • Annual Transacting User base crossed 250 million, reaching 251 million with 34% YoY growth, making Meesho India's largest platform by ATU and orders.

  • Annual Transacting Seller base grew significantly by 81% YoY to 846,000 sellers, driven by product improvements and the inclusion of non-GST sellers.

  • Net Merchandise Value (NMV) for Q3 FY26 grew 26% YoY to ₹10,995 crores, with the first nine months of FY26 showing 37% growth, indicating strong underlying momentum.

  • Management stated that absolute adjusted EBITDA losses peaked in Q3 FY26 and expect bottom-line numbers to improve and converge to Q1 FY26 levels within the next two quarters.

  • Customer Acquisition Costs (CAC) have been decreasing over the last few years, driven by product relevance and strong LTV/ROI, particularly in deeper parts of the country.

Concerns

  • Contribution margin for Q3 FY26 was 2.3%, impacted by cost spikes in logistics due to rapid scaling of Valmo with short-term, more expensive contracts after a partner ceased business.

  • The company incurred higher logistics costs in Q2 and Q3 FY26 due to building capacity in Valmo at an accelerated pace, which was not optimized for cost initially.

Key financials

3 periods

Headline

  • Annual Transacting Users
    251 Mn
    YoY +34%
  • Annual Transacting Sellers
    8,46,000 sellers
    YoY +81%
  • Contribution Margin
    2.3%
  • Overall Cash Balance
    ₹7,277 Cr

Q3 FY26

  • NMV
    ₹10,995 Cr
    YoY +26%

First Nine Months FY26

  • NMV
    —
    YoY +37%

What they filed

Q1 FY27: revenue down 16.4%, net profit up 222.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,678 2,399 2,504 1,391 1,579 −41%1,379 −43%2,093 −16%
EBITDA-123 -226 -264 -30 -42 +66%-27 +88%-92 +65%
Net profit-30 -1,384 -289 22 734 +2547%320 +123%354 +222%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Liquidity Cash ₹7,277 Cr The company reported an overall cash balance of ₹7,277 crores.
    Our LTM free cash flow for the last 12 months was at Rs. 56 crores and free cash flow to equity was at Rs. 437 crores, taking our overall cash balance to Rs. 7,277 crores.

Guidance & targets

Profitability

  • Contribution Margin Profitability · next two quarters · High confidence converge to Q1 FY26 levels
    This should basically go in the next two quarters. We have also mentioned the timeline that some of our margin numbers will converge back to where we were in 1st Quarter of FY 2026 in the next two quarters.

    — Vidit Aatrey

  • EBITDA Losses Profitability · next two quarters · High confidence decline to Q1 FY26 levels
    Yes. So, I think going forward, all these numbers on bottom line peaked in this quarter. And as I said, in the next two quarters, you should start to see them come back to where they were at the beginning of this year.

    — Vidit Aatrey

  • Logistics Margin as % of NMB Profitability · long term · High confidence 2-2.5%
    we tend to keep the logistics margin in a certain range. Now, obviously, last couple of quarters were different, but if you look at the historical trajectory as well as what we intend to do going forward, we keep the logistics margin in a certain trajectory, which is about 2% - 2.5% of NMB from a contribution perspective.

    — Dhiresh Bansal

Revenue

  • Ad Monetization as % of GMV Revenue · long term · Medium confidence 5.5-6%
    state we have in general shared that like 5.5% to 6% is something that a lot of value commerce platforms globally kind of at least get to and we also believe we should get there.

    — Vidit Aatrey

Growth

  • ATU vs. Frequency Growth Growth · next one year to two years · High confidence ATU growth faster than frequency growth
    But I think for the next one year to two years, the growth would come more from kind of addition to annual transacting use of these than frequency.

    — Dhiresh Bansal

What to watch in Q4 FY26

Contribution Margin Convergence

next two quarters
Current 2.3%
Target Converge to Q1 FY26 levels

Why it matters

Indicates the effectiveness of logistics optimization and overall profitability improvement.

This should basically go in the next two quarters. We have also mentioned the timeline that some of our margin numbers will converge back to where we were in 1st Quarter of FY 2026 in the next two quarters.

Risks & concerns

  • Logistics capacity disruption and cost spikes

    medium

    A logistics partner ceasing business in May-June 2025 led to capacity shortages and the need for rapid, more expensive short-term contracts for Valmo, impacting Q2 and Q3 FY26 costs.

    Because a lot of logistics capacity has certain lead times of getting the right node, your partner may do certain investments to get started and so on. And we basically said that, hey, we have invested in our business for the last 10 years, we want to make sure that we retain the trust of our users. So, we built some of this capacity in a very short period of time to service the demand. And because we had to basically do certain short-term contracts, they were more expensive. Now, that basically flowed into the two festive quarters, which is Q2 and Q3.

    Management acknowledged

  • Uncertainty regarding new gig worker code impact on last-mile costs

    low

    The company is still studying the impact of the new gig worker code, noting confusion in state vs. central laws, but expects overall logistics cost reduction from network optimization rather than partner payouts.

    Sure. I think we are still studying the impact of the gig worker code that has kind of come in. I think there is still some degree of confusion that exists on different state versus central kind of laws. Having said that, I think a large expectation that we have in terms of reduction in the cost going forward does not come from any specific reductions on the last mile delivery partner kind of payouts.

    Management acknowledged

Q&A highlights

5 direct
Logistics outsourcing mix and cost impact, Valmo subsidiary strategy Direct
we will fix it and then start to scale up Valmo again. That will bring a lot more goodness in pricing. So, that will continue. In the meantime, we are also like building up capacity with a third-party logistics partner at the right price. So, in the long run, I think we will continue to kind of build a very competitive logistics ecosystem so that prices are reduced everywhere. So, it is not that only in Valmo we continue to improve pricing. We continue to improve pricing even with third-party logistics partner as their business keeps growing on our platform and they also have more operating leverage.

Clarifies the strategy for managing logistics costs and the role of Valmo, indicating future cost optimization.

Asked by Sachin Salgaonkar

Drivers for margin improvement and peak of EBITDA losses Direct
I think it will be both. It will be both and not just these two, I think we will get a lot of operating leverage on all our investments. So, last two years you saw that we invested aggressively to increase our growth rate. So, those investments came in more marketing, came in people, technology investments going up. So, again you will start to see operating leverage on that, that should contribute to margin improvement. As well as, as we like for example, continue to kind of scale our logistics business going forward and make it more optimized, I think that will also lead to improvement in margin. So, it will basically be across the board.

Provides clear drivers for expected margin improvement and confirms that EBITDA losses have peaked, signaling a positive turn for profitability.

Asked by Sachin Salgaonkar

Ad revenue scale-up and differentiation from other e-commerce peers Direct
most of our sellers, these are some of the smallest to medium-sized sellers, may not have known brands, so they are very-very sensitive to return on ad spends, because they want to make money on every single order in the right way. And hence, our product has been built out that smallest to the largest sellers, with very small budgets not knowing what keyword to target should be able to use a simple product and get to the kind of return on ad spends that they want.

Explains Meesho's unique ad product strategy tailored for small sellers and its focus on ROI, aiming for 5.5-6% of GMV.

Asked by Sachin Salgaonkar

Customer acquisition cost (CAC) trends with increasing user base Direct
So, actually by the way we see the opposite, and over the last many years, most of our growth, again, you have to go deeper into the country to get the next 50 - 100 million people. And you realize that there are not a lot of people who are reaching out to those customers apart from us, not many products out there, not many platforms target mass India consumer. So, it is not that there is a lot of competition there and hence the cost of ads are high. It is more around do you have the product, that basically can convert these people and get the right LTV out of them.

Challenges the assumption of rising CAC, stating that costs have decreased due to product relevance and effective LTV management in deeper markets.

Asked by Gaurav Rateria

Product profile expansion, new growth categories, and Meesho Mall performance Direct
Yes. So, I think again, you rightly picked, what we are doing is to keep expanding categories. We continue to kind of make our platform conducive to different kinds of products. So, for example, a big focus area for the last few years was to grow categories like beauty, personal care, kids, baby care, that have a lot more branded products and what people buy. And we started Meesho Mall. And we have seen some of those categories grow really fast on the back of Meesho Mall. We have also started to see certain categories in the grocery section also grow within Meesho Mall that are part of that.

Highlights the successful strategy of category expansion, including Meesho Mall's 70% YoY growth, and its contribution to overall platform growth.

Asked by Garima Mishra

Impact of new gig worker code on last-mile delivery costs Partial
Sure. I think we are still studying the impact of the gig worker code that has kind of come in. I think there is still some degree of confusion that exists on different state versus central kind of laws. Having said that, I think a large expectation that we have in terms of reduction in the cost going forward does not come from any specific reductions on the last mile delivery partner kind of payouts. I think in general, as the density of orders in a given time period increase and the earnings potential of those partners increase, there will be opportunities to kind of reduce that cost.

Addresses a potential regulatory risk, indicating ongoing assessment and a focus on network optimization rather than direct payout reductions for cost savings.

Asked by Abhisek Banerjee

3 min read 7 chapters

Detailed narrative

Robust User and Seller Base Expansion

Meesho demonstrated strong growth in its user and seller ecosystem. The annual transacting user base reached 251 million for the first time, marking a significant 34% year-on-year growth. This positions Meesho as India's largest platform by annual transacting users and orders. Concurrently, the annual transacting seller base also expanded impressively by 81% year-on-year, reaching 846,000 sellers, largely attributed to the platform's ability to onboard non-GST registered sellers.

Net Merchandise Value (NMV) Growth and Profitability Outlook

The company reported a Net Merchandise Value (NMV) of ₹10,995 crores for Q3 FY26, representing a 26% year-on-year growth. For the first nine months of FY26, NMV grew by 37%. Despite a current contribution margin of 2.3%, management expressed confidence that absolute adjusted EBITDA losses peaked in Q3. They anticipate that margin numbers will converge back to Q1 FY26 levels within the next two quarters, driven by operating leverage and logistics optimization.

Strategic Logistics Optimization and Valmo's Role

Logistics costs saw temporary spikes in Q2 and Q3 FY26 due to the rapid scaling of Valmo, Meesho's logistics arm, following a partner's exit. This necessitated short-term, more expensive contracts. However, management is focused on optimizing Valmo's operations to improve pricing and maintain an asset-light model, primarily investing in technology and automation rather than extensive CapEx for warehousing. The Valmo subsidiary is intended for financial structuring, not third-party services.

Ad Monetization and Efficient Customer Acquisition

Meesho is actively scaling its ad monetization efforts, aiming for 5.5-6% of GMV, a benchmark seen in global value commerce platforms. The company emphasizes a product-led approach for ads, utilizing AI for targeting to ensure high ROI for its small and medium-sized sellers, without relying on a sales team. Contrary to typical trends, customer acquisition costs have been decreasing, attributed to the product's relevance in rural areas and effective management of customer lifetime value (LTV).

Category Expansion and Meesho Mall Success

The platform continues its strategy of broad category expansion, making its platform conducive for diverse products. Significant growth has been observed in categories like beauty, personal care, kids, baby care, home, kitchen, and grocery. Meesho Mall, which is integrated into the core marketplace, has been a key driver, growing approximately 70% year-on-year and attracting major brands such as P&G and Nivea, demonstrating its ability to serve varied customer needs and income segments.

NMV to GMV Ratio Improvement and Prepaid Share

The Net Merchandise Value (NMV) to Gross Merchandise Value (GMV) ratio has improved, moving from approximately 57% to 60%. This improvement is primarily driven by better Return to Origin (RTO) rates and reduced cancellations. A key factor contributing to this positive trend is the continuous improvement in the prepaid share of transactions, as prepaid orders typically have lower RTO rates compared to cash-on-delivery.

Regulatory Impact on Last-Mile Delivery Costs

Management is currently studying the impact of the new gig worker code, acknowledging some confusion regarding state versus central laws. While direct reductions in last-mile delivery partner payouts are not the primary focus for cost savings, the company expects overall logistics costs to reduce through network optimization, improved network design, increased automation, and innovative delivery models. This indicates a strategic approach to mitigate potential regulatory impacts while still pursuing efficiency gains.

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