Indian E-Commerce Firm Meesho's Quarterly Loss Spikes as It Ramps Up Marketing

"The firm's consolidated net loss widened 13-fold to 4.91 billion rupees ($53.44 million) for the quarter ended Dec. 31, from a loss of 374.3 million rupees a year ⁠ago. Meesho has carved out a niche for itself by offering low-priced products without charging ⁠sellers a commission, in a space that has majors such as Amazon.com and Walmart-owned Flipkart vying for customers in the world's most populous country."

"The company, backed by Softbank and Peak XV Partners, has been on an expansion spree to onboard more users. Meesho's investment in advertising and sales promotion, as ‍a share of its net merchandise value, nearly doubled to ​2.4 percent in the reporting quarter from 1.3 percent last year. NMV is a key metric for ‍e-commerce platforms that measures the total checkout value of successfully delivered orders. Overall expenses jumped 44 percent to 40.71 ⁠billion rupees, with advertising"

"Meesho also cited ‍the accelerated scaling up of its newly acquired logistics platform Valmo as part of the reason for the jump in expenses, and said it was "expected to normalise in the coming quarters." Revenue rose nearly ‍32 percent to 35.18 billion rupees as India's growing online consumer ‍base looks ‌for cheaper and more convenient ways to shop, fueled by tax cuts and festive-season demand."

Meesho's consolidated net loss for the quarter ended Dec. 31 widened 13-fold to 4.91 billion rupees from 374.3 million rupees a year earlier. Revenue rose nearly 32 percent to 35.18 billion rupees while annual transacting users increased 34 percent to 251 million and NMV climbed 26 percent to 109.95 billion rupees. Overall expenses rose 44 percent to 40.71 billion rupees as advertising and sales promotion spending nearly doubled to 2.4 percent of NMV and costs increased from scaling its newly acquired logistics platform Valmo. Meesho expects logistics cost recovery and operating leverage to improve adjusted core-earnings margin in coming quarters. Stock rose modestly after the results.

Read at The Business of Fashion