Meesho Claims To Be Profitable As Of July 2023

Ecommerce unicorn Meesho on Monday claimed that it turned profitable and posted a consolidated profit after tax (PAT) as of July 2023.

“The company has attained profitability at a consolidated PAT level, encompassing all costs (including ESOP), across all its divisions and categories. Setting out on its ambitious path to profitability last year, Meesho accomplished this industry-first feat well ahead of the expected timeline, as of July’ 23,” the startup said in a statement.

However, the statement didn’t mention if the startup reported profit only in the month of July or for the April-July period of the ongoing financial year (FY24). Meesho didn’t respond to an email sent by Inc42 but a source aware of the developments said that the company was profitable in the month of July.

In the statement, Meesho said the company experienced “remarkable” growth in the last 12 months, with order volumes soaring 43% to over a billion orders. The startup also said that 85% of its orders during the period came from returning users. Non-fashion categories also surged by over 120% in the last 12 months, Meesho said.

“Contributing to this success, the revenue over the last 12 months surged by an impressive 54%, driven by substantial growth in order volumes and monetisation rate,” the company said.

It is pertinent to note that Meesho reported a net loss stood at INR 3,247.8 in FY22, up 550% year-on-year (YoY). Total revenue stood at INR 3,359.4 Cr during the year, which was a 300% jump from INR 838.6 Cr reported in the prior fiscal. 

Advertising and sales promotion expenses of INR 2,579.3 Cr were one of the biggest contributors to Meesho’s total expenses in FY22. 

The startup is yet to file its financial statements for FY23.

In its latest statement, the Vidit Aatrey-led startup said it reduced customer acquisition cost (CAC) and marketing spending by 80% YoY. Meesho claimed to have also recorded a 60% YoY reduction in tech costs.

Despite lowered CAC, Meesho said it remained the most downloaded shopping app in the country. It said it served over 140 Mn unique transacting users in the last 12 months.

However, it must be noted that as a part of a cost-cutting exercise, Meesho has laid off over 700 employees in multiple rounds since 2022, as per Inc42’s layoff tracker. The latest round of layoffs was undertaken in May this year, when the startup fired 251 employees, or about 15% of its workforce.

Cofounder and CEO Aatrey took to Twitter to announce the development, saying Meesho was the first horizontal Indian ecommerce company to achieve this milestone – “profitability (EBITDA and PAT profitable)”.

Founded in 2015 by Aatrey and Sanjeev Barnwal, Meesho is backed by several marquee investors, including Fidelity Investments, SoftBank, Sequoia Capital, Prosus & Naspers, and Meta. It has raised over $1 Bn till date. 

The startup operates on a 0% commission model and competes with the likes of Flipkart and Amazon.

Like many other Indian startups, Meesho has also seen valuation markdown amid the ongoing funding winter. Earlier this year, Fidelity Investments slashed the fair value of its investment in the unicorn by 9.7% to $2.29 Mn.