Summary
Meesho Limited - Q3 FY 2026 Earnings Call Summary Friday, January 30, 2026, 5:00 PM IST
Event Participants
Executives 4 Dhiresh Bansal (CFO), Karthik Chandrashekar (Head of Corp Dev & IR), Sanjeev Kumar (CTO), Vidit Aatrey (Chairman, MD & CEO)
Analysts 6 Abhisek Banerjee (ICICI Securities), Aditya Suresh (Macquarie), Garima Mishra (Kotak Securities), Gaurav Malhotra (Axis), Gaurav Rateria (Morgan Stanley), Sachin Dixon (JM Financial), Sachin Salgaonkar (BofA), Vijit Jain (Citi)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Annual Transacting Users (ATU) | 25.1 crore (251 million) | +34% YoY; crossed the 250 million milestone for the first time. |
| Annual Transacting Sellers | 8.46 lakh | +81% YoY; growth driven by onboarding of non-GST sellers. |
| Net Merchandise Value (NMV) | ₹10,995 crore | +26% YoY; growth impacted by festive demand shifting into Q2. |
| NMV (9M FY26) | Not Disclosed (Absolute) | +37% YoY; management views Nine-Month figures as a more accurate growth gauge. |
| Contribution Margin | 2.3% | Impacted by rapid, high-cost Valmo capacity scale-up following a partner exit. |
| NMV to GMV Ratio | ~60% | Improvement from 57% due to lower RTOs and reduced cancellations. |
| Fulfillment Expenses | 27.5% (as % of NMB) | Comprises over 90% of direct variable costs. |
| Cash Balance | ₹7,277 crore | Includes LTM Free Cash Flow of ₹56 crore. |
Geographic & Segment Commentary
- Meesho Mall: This segment focuses on branded products (e.g., P&G, Nivea) and grew 70% YoY, outpacing the overall platform. It serves as a strategic entry point for personal care and branded electronics, coexisting with the unbranded marketplace to fulfill specific trust-based use cases.
- Tier 1 & Rural Markets: Approximately 2.5 crore (25 million) users are from the top 6 cities, while growth continues to penetrate deeper into rural areas. Management notes that customer acquisition costs (CAC) are actually lower in rural areas due to limited competition from other digital platforms.
- Categories: Beyond apparel, the platform is seeing rapid growth in Home & Kitchen (due to low AOV suitability) and Beauty/Personal Care. The strategy is to expand into every category required by the mass-market consumer.
Company-Specific & Strategic Commentary
- Valmo Logistics Evolution: Meesho is transitionary Valmo into a separate subsidiary to improve financial transparency. While capacity was scaled rapidly (and expensively) this quarter to fill a gap left by a defunct 3PL partner, the long-term goal remains an asset-light, technology-heavy orchestration model.
- Ad Monetization: Ad revenue is targeted to reach 5.5%–6% of NMV (global benchmark for value commerce). The ad engine is purely self-serve and AI-driven, seeing a 50% increase in seller ROI over the past year without the need for a manual sales force.
- Non-GST Seller Growth: Meesho was the first to enable non-GST sellers (following regulatory changes), contributing to the 81% YoY surge in the seller base. These sellers act as a funnel, eventually graduating to GST registration as they scale.
- Prepaid Mix: Increasing the share of prepaid transactions is a core lever for reducing RTO (Return to Origin) rates and improving the NMV/GMV realization ratio.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Bottom Line / Margins | Recovery to Q1 FY26 levels by Q1 FY27 | Recovery driven by unwinding expensive short-term logistics contracts and operating leverage. |
| Adjusted EBITDA | Peaked in Q3 FY26 | Management expects losses to decline sequentially from this peak. |
| Growth Strategy | 1-2 Year Horizon | Growth will continue to be driven more by ATU addition than transaction frequency in the near term. |
| Logistics Margin | 2% - 2.5% of NMV | Long-term target range; efficiency gains will be passed to users/sellers rather than retained as profit. |
Risks & Constraints
| Risk | Context |
|---|---|
| Logistics Partner Dependency | The exit of a major 3PL partner forced Meesho into expensive short-term contracts this quarter. While management claims better preparedness now, sudden capacity shifts remain a margin risk. |
| Regulatory (Gig Worker Code) | New laws regarding gig worker benefits and classifications could impact last-mile delivery costs. Management is currently studying state vs. central law nuances but remains optimistic about offsetting costs via density. |
| Delivery Speed Constraints | Due to a pure marketplace model without inventory housing, delivery times (5-7 days) are unlikely to match “quick commerce” speeds of 1-2 days. |
Q&A Highlights
Logistics & Valmo
- Question: What caused the margin dip and will Valmo open to third parties? (Sachin Salgaonkar)
- Answer: Margins dipped because we had to build Valmo capacity at a “very fast pace” at “inferior cost” after a partner ceased operations. The new subsidiary is for financial clarity only; there is no plan to open Valmo to third parties as it remains a captive orchestration tool (Vidit Aatrey, Dhiresh Bansal).
Ad Engine Differentiation
- Question: How does your ad product differ from other e-commerce peers? (Sachin Salgaonkar)
- Answer: Unlike branded platforms focusing on keywords, our sellers are small/unbranded. We use AI to automate targeting so even a seller with a tiny budget can achieve high ROI without knowing what keywords to target (Vidit Aatrey).
Growth Drivers
- Question: Will growth come from more users or more frequency? (Garima Mishra)
- Answer: For the next 1-2 years, ATU growth will lead. Currently, the top quartile of users transacts 20+ times a year, showing high maturity potential for newer cohorts (Dhiresh Bansal).
Asset-Light Philosophy
- Question: Will you invest in physical assets like trucks or warehouses? (Vijit Jain)
- Answer: No. We invest in technology (software, automation, robotics). Physical assets like warehouses have lower ROI, and we prefer partnering with those who specialize in them (Vidit Aatrey).
Key Takeaway
Meesho reported a robust Q3 FY26 with ATUs reaching 25.1 crore and 9M NMV growth at 37% YoY. While contribution margins compressed to 2.3% this quarter, this was a deliberate trade-off to maintain service levels by rapidly scaling Valmo logistics capacity after a 3PL partner’s exit. Strategically, the company is doubling down on its AI-led, self-serve ad platform and the expansion of “Meesho Mall” to capture branded demand, which grew 70% YoY. Management confirmed that bottom-line losses peaked this quarter and expects a return to Q1 FY26 margin profiles within the next six months. The long-term outlook remains focused on deep rural penetration and category expansion, supported by a strong cash balance of ₹7,277 crore, while maintaining an asset-light technological approach to logistics.
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