On Monday, Meesho, the ecommerce firm, said that it had turned profitable in July for the first time on a consolidated profit after tax (PAT) level. Also, according to Vidit Aatrey, chief executive of the company, it expects to continue widening its profit pool hereon in the coming months and quarters.
Aatrey said, “The idea is not to record this profit but expand on it and you will see us investing that back in the business after being conservative for the last few months. The caveat is that we will invest while being profitable and it will go in areas like growing categories on the platform,”
Aatrey also mentioned that the firm had a PAT in “single-digit crore rupees” for July, without disclosing a specific number. He outlined some of his plans to the Meesho team as well on Monday.
CFO Dhiresh Bansal said, “The trends (on profitability) have been secular for the last few months and we expect them to continue in the coming quarters… there is a big jump in scale expected in the quarter ended November due to the festive season, and we expect the increase in revenue to make up for our sale offers and other costs.”
The firm stated that Meesho has seen order volumes surge by about 43% and revenues shot up 54% over the last 12 months.
Meesho has reduced its burn significantly from the peak of 2022, and the ecommerce startup is looking to grow from hereon while maintaining profitability. According to reports, Meesho had slashed its burn by half last year, with CEO Aatrey saying it was at around $5 million that month, and expected to shrink further in the ongoing July-September quarter.
In May, the firm fired 15% of its team in order to reduce operating costs further, in its second round of layoffs since 2022. In a statement, Meesho said it has slashed customer acquisition costs by over 80% on a year-on-year basis while maintaining about 140 million monthly active users (MAU).
Meesho under its newly launched Meesho Mall vertical, earns about 80% of its revenues by offering logistics-related services. The rest comes from advertising.
Bansal said Meesho’s plans to go public remain unchanged. It was looking to go for an initial public offering (IPO) in the next 12 to 18 months.
Meesho last raised $570 million in September 2021, at a valuation of $4.9 billion in a round led by Fidelity and B Capital Group. In total, it has raised $1.06 billion to date from the likes of Prosus, SoftBank, B Capital and Peak XV Partners (formerly Sequoia Capital India & SEA), as per data from Tracxn.
According to Bansal, the firm’s grocery vertical was still at an “experimentation phase”, and that further expansion was dependent on the unit economics of the vertical. He added that it was currently operational only in a few cities.
