Meesho shares fall 4% despite strong Q1 results
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Meesho Ltd shares fell nearly 4% on Friday even as the e-commerce company reported robust growth across key operating metrics for the June quarter. The stock had dropped as much as 6% in early trade to an intraday low of ₹177.50 before recovering some of the losses.
The stock remains below its 52-week high of ₹254.40 touched in December last year, but is well above its 52-week low of ₹125.56 hit in March.
The company reported a 34% year-on-year rise in net merchandise value (NMV) to ₹11,614 crore in the quarter ended June 30, driven by higher order volumes and a growing user base. Orders increased 29% to 725 million, while annual transacting users rose 29% to 274 million. Purchase frequency also improved to 10.3 transactions per user on an annualised basis.
Revenue from marketplace operations grew 48% year-on-year to ₹3,707 crore, helped by fewer order cancellations, lower return-to-origin (RTO) rates and better monetisation of the platform.
Margins also strengthened during the quarter. Contribution margin expanded to 4.6% of NMV, up 54 basis points from the previous quarter, while marketplace adjusted EBITDA improved to negative 1.2% of NMV. Meesho also narrowed its last twelve months free cash flow deficit to ₹537 crore from ₹633 crore in the previous quarter, despite higher fuel costs and increases in minimum wages across some states.
"Our Q1 performance reflects the strength of Meesho's operating model. We delivered 34% year-on-year NMV growth, while Contribution Margin expanded to 4.6%, Marketplace Adjusted EBITDA improved to (1.2%) of NMV, and Last Twelve Months Free Cash Flow improved by approximately 15%," said Dhiresh Bansal, Chief Financial Officer at Meesho.
"AI is becoming foundational across every layer of our business, from product discovery and seller growth to logistics and engineering. This quarter alone, Meesho processed nearly 725 million orders, averaging more than 90 orders every second," he added.
The company's seller network continued to expand, with annual transacting sellers rising 81% year-on-year to over 1.04 million. Nearly 45% of them were based in Tier-2 and smaller towns, while the number of sellers from Tier-4 cities grew 125% from a year ago.
Its premium shopping platform, Meesho Mall, crossed 1,200 brands during the quarter, with NMV nearly doubling from a year earlier. Content commerce also continued to gain traction, recording 141% year-on-year growth in NMV. Meesho closed the quarter with a cash balance of ₹6,521 crore.
Separately, the company's board approved changes to its articles of association to grant formal nomination rights to founders Vidit Aatrey and Sanjeev Kumar, subject to shareholder approval. It also approved an additional investment of up to ₹75 crore in Meesho Grocery Pvt. Ltd. and cleared the acquisition of the remaining stake in Meesho Payments Pvt. Ltd., making it a wholly owned subsidiary.