Meesho’s Q3 Loss Jumps to Rs 490.7 Crore

E-commerce unicorn Meesho reported a sharp widening of losses in the third quarter of FY26, its first quarterly result after listing on the stock exchanges. The company posted a net loss of Rs 490.7 crore, driven by higher investments in logistics arm Valmo, increased marketing spends, and employee-related costs, even as revenue and user metrics showed strong growth.

Meesho Q3FY26 Financial Performance

Meesho’s net loss for the third quarter of FY26 stood at Rs 490.7 crore, a steep increase from a loss of Rs 37.4 crore in the year-ago quarter. The company attributed the weaker bottomline to aggressive investments aimed at strengthening long-term scale and infrastructure.

The losses mark a significant contrast to Meesho’s earlier progress toward profitability, especially as the company had reported near breakeven adjusted Ebitda in Q1.

Logistics Expansion Weighs on Margins

Valmo Network Scaling Creates Short-Term Inefficiencies

According to Meesho, the sharp increase in losses was largely due to the rapid expansion of Valmo’s logistics network during the second and third quarters.

The expansion was undertaken in response to market consolidation among third-party logistics (3PL) providers in Q1.

However, the accelerated scale-up resulted in operational inefficiencies such as:

• Under-utilised delivery routes

• Redundant logistics nodes

• Longer average delivery distances

In its shareholder letter, the company said these issues impacted contribution margins by 1.1 percentage points in Q2 and another 1 percentage point in Q3.

Contribution Margins Decline Sharply

Marketplace Business Sees Margin Compression

Contribution margins for Meesho’s marketplace business — which accounts for 99% of its revenue — declined to 2.3% from 4.3% a year ago.

As a result:

• Adjusted Ebitda loss widened to Rs 460 crore in Q3

• Compared with an adjusted Ebitda loss of Rs 21 crore in the year-ago period

The bottomline was further impacted by higher marketing expenditure and employee-related costs, reflecting Meesho’s push to drive user growth and brand visibility.

Management Confident of Margin Recovery

Despite the sharp deterioration in margins, Meesho said it expects a significant improvement in adjusted Ebitda over the next two quarters.

The company aims to return to near breakeven levels, similar to its performance in Q1. In Q3, Meesho’s adjusted Ebitda margin stood at negative 4.2%.

Commenting on cost optimisation efforts, the management said:

“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 and User Growth Cushion the Blow

Revenue Rises 31% Year-on-Year

Despite the weak profitability, Meesho reported strong top-line growth:

• Revenue from operations rose 31% year-on-year to Rs 3,517.6 crore

The growth was driven by higher customer engagement and repeat purchases.

Record Users, Orders and NMV

Key operating metrics showed continued momentum:

• Annual transacting users hit an all-time high of 251 million

• Net merchandise value (NMV) increased 26% year-on-year

• Orders placed jumped 35% to 690 million during the quarter

The company noted that NMV growth in Q3 was influenced by festive calendar shifts, as Diwali fell in mid-October this year, compared to early November last year, moving some festive shopping demand from Q3 to Q2.

Cash Position and IPO Impact

Meesho ended Q3 with:

• Free cash flow of Rs 56 crore

• Cash balance of Rs 7,277 crore

This includes Rs 4,088 crore raised through its IPO last month.

Meesho made its stock market debut on December 10 at an issue price of Rs 111. The stock surged to a peak of Rs 235 within two weeks, more than doubling and marking one of the strongest IPO debuts in recent years.

Investors Back Meesho’s Value-Commerce Model

The rally has renewed focus on Meesho’s value-commerce strategy, which prioritises:

• Low prices

• Cost efficiency

• Asset-light marketplace operations

Brokerages have compared Meesho’s model to China’s Pinduoduo and Southeast Asia’s Shopee, platforms known for serving price-sensitive consumers at scale.

Unlike traditional e-commerce players, Meesho does not charge seller commissions, instead monetising through:

• Advertising

• Logistics services

• Working capital financing

• Other value-added services