Meesho reported a wider net loss in the December quarter, as higher logistics costs and aggressive spending to onboard new users offset strong growth in orders and users, marking a challenging first earnings report after its stock market debut.

The e-commerce company posted a consolidated net loss of ₹491 crore in Q3 FY26, compared with a loss of ₹37 crore a year earlier. The bottom line was dragged down by a sharp deterioration in operating profitability, with adjusted EBITDA for the marketplace segment slipping to a loss of ₹460 crore, from ₹21 crore in the year-ago quarter. Marketplace margins fell to –4.2% of net merchandise value (NMV), reflecting pressure from both costs and investments.

Contribution margin declined to 2.3% of NMV, down nearly 200 basis points year-on-year, largely due to a rapid scale-up of Meesho’s in-house logistics platform Valmo. The company said consolidation among third-party logistics players forced it to quickly expand capacity during the festive season, leading to under-utilised routes, redundant nodes and longer delivery distances.

“This was a rapid scale-up cost which is temporary, not structural inflation,” founder and CEO Vidit Aatrey said in the shareholder letter. “We absorbed these costs because we have clear line of sight to normalisation,” he added.

Strong growth, weak profitability

Even as losses widened, Meesho continued to post strong operating growth. NMV rose 26% year-on-year to ₹10,995 crore in Q3, while placed orders grew 35% to 690 million. Annual transacting users climbed 34% to 251 million, making Meesho the largest e-commerce platform in India by users and order volumes, according to the company.

Management cautioned that festive calendar shifts distorted quarter-on-quarter comparisons, with Diwali-related shopping moving partly into the September quarter. On a combined basis, NMV for Q2 and Q3 grew 37% year-on-year, which the company said was a more meaningful indicator of underlying demand.

The company also stepped up spending on customer acquisition and technology. Advertising and sales promotion expenses rose to 2.4% of NMV from 1.3% a year earlier, while employee benefit expenses increased as Meesho added engineering and AI talent to improve recommendations, voice search and customer support.

Cash cushion and recovery outlook

Despite the deeper losses, The newly listed e-commerce firm ended the quarter with a cash balance of ₹7,277 crore, supported by ₹4,088 crore raised through its December IPO. Last-twelve-month free cash flow stood at ₹56 crore, reflecting what the company described as the benefits of its asset-light model and negative working capital cycle.

Aatrey said the company was consciously prioritising long-term platform health over short-term profitability. “We will not sacrifice platform health for quarterly optics. We will not pretend that accounting profits are the same as cash generation,” he said.

"Becoming a public company changes how we are accountable, but it does not change what we optimize for, as platform health and disciplined growth remain our priority. Our north star is Free Cash Flow per share, which captures the real cash generated after reinvestment and reflects the long-term economics of our business," he added.

Meesho expects logistics costs to normalise over the next two quarters as redundant capacity is shed and delivery routes are optimised, helping adjusted EBITDA margins recover to earlier levels. Until then, the company appears prepared to tolerate near-term losses to defend growth in India’s value-focused e-commerce market.

On January 30, Meesho’s shares on BSE closed 2.87% higher at Rs 173 apiece.