MEESHO

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.

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.

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.

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).

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.

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.

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.