Meesho Q2 Results: Loss Narrows 68%, Is Growth Slowing?

Meesho reported a sharp improvement in its Q2 FY27 results, with its net loss narrowing nearly 68% year-on-year to ₹132 crore, while revenue grew 34% to ₹4,132 crore. The company's marketplace business also became more efficient, supported by higher advertising revenue and lower delivery costs.

However, Meesho's order growth slowed from 55% a year ago to 17%, while net merchandise value growth moderated from 51% to 23%. This raises an important question for investors. Can Meesho maintain its growth while moving towards profitability?

Meesho Q2 FY27 Results: Key Highlights

Meesho reported revenue of ₹4,132 crore, up 34% year-on-year. Its net loss narrowed from ₹411 crore to ₹132 crore, while total expenses increased around 24%, slower than revenue growth.

While the year-on-year improvement was significant, the sequential numbers tell a different story. Compared with Q1 FY27, revenue increased around 11%, but the net loss remained almost unchanged at approximately ₹133 crore.

Is Meesho's Growth Slowing Down?

One of the biggest concerns in Meesho's Q2 results is the moderation in order growth.

Placed orders increased 17% year-on-year to 819 million, compared with 55% growth in the same quarter last year. Similarly, net merchandise value, or NMV, increased 23% to ₹12,911 crore, compared with 51% growth a year ago.

However, the company highlighted an important factor behind this slowdown.

Meesho's Mega Blockbuster Sale took place in Q2 last year, while this year it shifted to Q3 because of changes in the festive calendar. This makes the two quarters less comparable.

When Meesho compared the 90-day period preceding Dussehra in both years, NMV growth was 33%, higher than the reported quarterly growth of 23%.

This suggests that part of the slowdown was due to festive timing rather than weaker demand. For investors, the combined Q2 and Q3 performance will provide a clearer picture of Meesho's underlying growth.

Why Did Meesho's Loss Narrow by 68%?

Meesho's net loss declined from ₹411 crore to ₹132 crore, an improvement of approximately ₹279 crore.

However, part of this reduction came from lower exceptional and tax expenses. The previous year's quarter included ₹45 crore in exceptional expenses and around ₹81 crore in tax expenses, compared with no exceptional expenses and approximately ₹9 crore in tax expenses this year.

Nevertheless, the company also reported meaningful operational improvements. Meesho's contribution margin increased from 3.3% to 6% of NMV. In absolute terms, marketplace contribution more than doubled from ₹349 crore to ₹775 crore.

Two factors supported this improvement.

First, Meesho generated higher advertising revenue as more sellers spent money promoting products on the platform.

Second, improved logistics efficiency helped reduce delivery costs. Higher order volumes, better route planning and improved network density also helped make deliveries approximately 15% faster year-on-year.

As a result, the marketplace adjusted EBITDA loss narrowed from ₹371 crore to ₹130 crore.

However, Meesho has indicated that contribution margins could moderate in the near term as it reinvests some savings into customer acquisition and business expansion.

Meesho's Costs Are Still Rising

Despite improving margins, Meesho continues to increase spending on customer acquisition and technology.

Advertising and sales promotion expenses rose from 2.1% of NMV in Q1 FY27 to 2.9% in Q2 FY27 as the company prepared for the festive season. This spending coincided with a 16% quarter-on-quarter increase in first-time buyers.

Server costs also increased from 1.9% to 2.3% of NMV, mainly due to higher computing capacity reserved for AI applications and festive demand.

While these investments could support future growth, they may also limit the pace of profitability improvement in the coming quarters.

Where Is Meesho's Future Growth Coming From?

While overall marketplace growth moderated, Meesho's newer businesses expanded rapidly.

Meesho Mall, which focuses on branded products, recorded 81% year-on-year NMV growth. Growth in Tier 3 and smaller cities was even higher at 89%, highlighting increasing demand for branded products in smaller markets.

Meanwhile, Content Commerce NMV grew 160% year-on-year as more customers discovered and purchased products through creator-led content.

Although these segments are growing quickly, their individual profitability remains unclear. Their ability to contribute meaningfully to overall earnings will be important for Meesho's long-term growth.

What Should Meesho Investors Watch Next?

Meesho's upcoming results will help determine whether the improvement in profitability can continue without affecting growth. Three developments will be particularly important.

• Order growth: The combined Q2 and Q3 performance will reveal whether the reported slowdown was primarily caused by festive timing or reflects a broader moderation in demand.
• Profitability: Meesho's contribution margin reached 6%, but higher advertising and technology spending could put pressure on margins.
• Cash flow: Despite positive quarterly free cash flow, the trailing twelve-month figure remains negative. Consistent cash generation will be an important indicator of financial progress.

Author's Take

Meesho's Q2 FY27 results show meaningful improvement in operating efficiency. Revenue increased 34%, marketplace contribution more than doubled, and net losses narrowed sharply.

However, slower reported order growth, continued spending on customer acquisition and technology, and negative trailing twelve-month free cash flow suggest that the company is still in the process of establishing sustainable profitability.

The festive-sale shift also makes it difficult to judge Meesho's actual growth momentum from a single quarter.

For investors, the key question is no longer just how quickly Meesho can grow, but whether it can convert that growth into consistent profits and positive cash flow.