Meesho beats Q1 revenue estimates as marketplace growth narrows loss

E-commerce company Meesho Ltd on Thursday reported a narrower-than-expected quarterly loss as strong marketplace growth and improving profitability offset investments in artificial intelligence (AI), logistics and newer businesses.

The Bengaluru-based company reported consolidated revenue from operations of ₹3,712.8 crore for the quarter ended 30 June, higher than Bloomberg's consensus estimate of ₹3,601.5 crore based on seven analyst forecasts.

Consolidated net loss stood at ₹132.8 crore, compared with Bloomberg's estimated loss of ₹135.2 crore, as the company continued investing in growth initiatives amid intensifying competition in the e-commerce sector.

Its operating performance remained robust. Net merchandise value (NMV), the total value of successfully delivered orders placed on its platform, grew 34% year-on-year to ₹11,614 crore. Its annual transacting user base rose 29% to 274 million, while quarterly orders increased 29% to 725 million, reflecting steady customer additions and higher repeat purchases.

The number of annual transacting sellers jumped 81% to 1.04 million, supported by AI-powered tools that help merchants create product catalogues, understand demand trends and communicate with customers in regional languages.

The shareholder letter also highlighted improving profitability despite continued investments. Contribution margin, a measure of earnings after direct operating costs such as logistics and payment expenses, expanded to 4.6% of NMV from 4% in the previous quarter, driven by lower logistics costs, improved monetization and fewer cancelled and returned orders.

Revenue from the marketplace business rose 48% on-year to ₹3,707 crore, while the marketplace's adjusted Ebitda improved to a loss of ₹139 crore from ₹198 crore in the previous quarter. The company ended the quarter with a cash balance of ₹6,521 crore.

Beyond its core marketplace, the company said Meesho Mall, its branded products platform, now hosts over 1,200 brands and recorded about 93% on-year growth in NMV. Its creator-led shopping business, Content Commerce, posted 141% growth in NMV, with the number of active order-generating content pieces rising to 1.7 million during the quarter.

Shares of Meesho closed at ₹188.95 apiece on the National Stock Exchange on Thursday, down 0.48% from the previous close.

Looking ahead, the company said it expects spending on marketing and customer acquisition to increase from the second quarter as it prepares for the festive shopping season.

It also said that second-quarter NMV growth may appear weaker on a year-on-year basis because its flagship Meesho Mega Blockbuster Sale has been shifted from the second quarter last year to the third quarter this year, making the comparison less meaningful.

In June, Meesho agreed to acquire the community-led business-to-business commerce platform Kirana Club for about ₹202 crore in an all-cash deal, marking its entry into the B2B retail. The transaction is expected to be completed in three tranches by 31 March 2027.

Earlier this week, proxy advisory firm InGovern Research Services urged the Securities and Exchange Board of India (Sebi) to examine whether Meesho had adequately disclosed potential investor risks arising from the goods and services tax (GST) treatment adopted by its logistics arm, Valmo Transportation.

InGovern alleged that Valmo's classification as a goods transport agency (GTA), a category that attracts different GST treatment for freight services, may have reduced its tax outgoings and improved Meesho's economics.

Meesho rejected the allegations, saying it had not received any communication from Sebi or tax authorities, remained fully compliant with applicable tax and disclosure laws, and that InGovern's representation did not reflect any regulatory finding.