Where’s Meesho Losing Money? Breaking Down the Real Story Behind Its Losses

Meesho’s IPO will open on December 3, 2025, with shares priced between ₹105 and ₹111. The full IPO will raise ₹5,421.2 crore, including ₹4,250 crore from new shares and ₹1,171 crore from existing shareholders selling shares. At the top price, the company’s market cap will be about ₹50,100 crore, and its shares are expected to begin trading by December 10, 2025.

While these numbers show Meesho’s market value and fundraising plans, it’s also important to understand the company's financial performance, especially its reported losses. Meesho is a major player in India’s budget e-commerce sector that is focused on rapid growth by adding more users and orders. This fast growth requires heavy spending, which leads to losses. However, when you dig deeper into the numbers, you see that the core business is much closer to breaking even than the headline losses suggest.

Financial Performance: Growth and Spending from FY23 to H1 FY26

Meesho has spent a lot to grow its user base and order volume, which shows in its financial numbers:

Source: RHP

Revenue and Growth: Revenue has consistently increased, growing from ₹5,734.5 crore in FY23 to ₹9,390 crore in FY25, driven by a massive increase in Placed Orders and Annual Transacting Users (ATUs).

Major costs driving these numbers include:

• Logistics and fulfillment, Meesho’s biggest expense, climbed from ₹4,817 crore in FY23 to ₹7,352 crore in FY25. This reflects the sharp rise in orders. In H1 FY26, it rose further by about 35% to ₹4,429 crore.
• Advertising and sales promotion costs fell almost in half from ₹928 crore in FY23 to ₹459 crore in FY24, showing better efficiency in gaining customers. But they increased again to ₹644 crore in FY25 and surged 86% year-over-year in H1 FY26 to ₹606 crore as Meesho invested heavily in brand building and content marketing.
• Server and software tool expenses steadily rose from ₹567 crore in FY23 to ₹620 crore in FY25, then jumped nearly 61% to ₹437 crore in H1 FY26 to support scaling technology and AI systems.​

The losses show a massive reduction from FY23 (Loss: ₹1,671.90 crore) to FY24 (Loss: ₹327.64 crore), indicating substantial operational efficiency, which, however, again surged to ₹3,941.7 crore in FY25, which is primarily due to special one-time events, which we explore next.

Net Loss vs "Actual Loss": The Effect of Exceptional Items

A company's reported net loss can be heavily skewed by "Exceptional Items", which are large, non-recurring financial events like corporate restructuring or major tax provisions.

The true operational loss is reflected in the loss before exceptional items and tax:

Source: RHP

Why Exceptional Items Changed the Picture:

Meesho’s reported net loss in FY25 ballooned to ₹3,942 crore mainly because of one-time exceptional costs related to corporate restructuring. These include:

1. A tax charge of ₹2,487 crore for the business combination of Meesho Inc. into Meesho Limited.
2. Exceptional costs of ₹1,346 crore due to reorganization, accelerated vesting of employee stock options for promoters, and related taxes.

When you remove these one-time expenses, the real operational loss for FY25 was only ₹108 crore, showing the main business was almost breaking even before these costs. In H1 FY26, the operational loss grew to ₹433 crore due to increased spending on marketing and technology for growth.​

For complete information, visit Meesho’s official IPO page at INDmoney.

How Much Meesho Lost Per-Order in FY25

Looking at each completed order (on average, 1.83 billion orders in FY25), here is where Meesho earns and spends:

Source: RHP, internal calculations

Despite the small loss per order, Meesho has a positive contribution margin of ₹8.09 per order, meaning the money from the product sale covers the main direct costs like shipping and payment fees.

However, the overall business reports a loss because this margin is currently insufficient to cover the high fixed and semi-fixed costs necessary for growth, namely:

1. Marketing: Acquiring users and building the brand (Advertising and Sales Promotion).

2. Technology: Paying for cloud infrastructure (servers) and the high salaries of its Machine Learning and AI teams.

3. General Administration: Employee benefits expense (non-direct) and general operations.

Final Takeaways

• Operational Health is Improving: The primary Marketplace business achieved a positive contribution margin of ₹8.09 per order in FY25, confirming the viability of its core unit economics.
• Massive Losses Were One-Time: The dramatic reported loss of ₹3,941.70 crore in FY25 was primarily due to one-time, non-cash, and tax-related expenses (like ₹2,486.84 crore for tax on business combination) related to corporate reorganization, not failure in the day-to-day operations.
• Scaling Costs Drive Actual Loss: The actual operational loss (₹108.42 crore in FY25) comes from high fixed-cost investments in technology (cloud expenses) and aggressively increasing marketing spend to grow the user base.
• Cash Flow is Positive: Despite accounting losses, its Last Twelve Months Free Cash Flow (LTM FCF) was positive at ₹591.23 crore in FY25, validating its capital-efficient model and ability to generate cash from operations.

Essentially, Meesho is building a big, efficient system. Each order runs profitably, but the overall cost to build and grow the business (investments in marketing and tech) is still higher than the profits until it achieves full scale.

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