Ads to drive Meesho’s next leg of margin expansion, says management ahead of IPO

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Meesho expects revenue realized through ad placements from sellers to become the primary driver of margin expansion over the next few years, Vidit Aatrey, and Sanjeev Kumar told Moneycontrol, ahead of its IPO opening on December 3.

Vidit Aatrey, Co-founder, Chairman, MD and CEO, and Sanjeev Kumar, Co-founder, Whole-time Director and CTO, say the “next leg of profitability” will be led by the ad engine, which remains at a relatively early stage of monetisation.

“Going forward, the larger share of margin growth will come from ads because ads are still in a relatively early stage,” the management said.

According to the disclosures in the RHP, which show that Marketplace Contribution Margin stood at Rs 733 crore in H1FY26, or 3.82% of NMV, supported by rising seller monetisation and platform efficiencies. Marketplace operations also generated positive free cash flow of Rs 581 crore on a last-twelve-month basis.

The company, which has built its model around ultra-affordable, unbranded commerce, highlighted that order volumes grew 52% and normalized NMV rose 44% in H1FY26. The RHP corroborates this momentum, noting a sharp expansion in the seller ecosystem, deeper penetration across categories, and improving engagement metrics.

The management said its seller base rose from ~5 lakh last year to ~7 lakh in FY26, and NMV per seller grew about 17%, indicating stronger throughput and improved assortment quality.

Categories such as home and kitchen have nearly doubled their share over two years — from 10% to close to 20% — strengthening Meesho’s non-fashion mix and improving blended margins.

Management said Meesho Mall (its branded storefront) and Meesho Gold (its premium tier) continue to grow faster than the core marketplace, although from a smaller base. Both verticals are margin-accretive and form a part of Meesho’s evolving monetisation flywheel alongside ads, logistics, and seller services.

The strategy is consistent with the company’s RHP commentary that new initiatives will be scaled in a “disciplined, capital-efficient manner,” with sharp focus on unit economics.

RHP also highlights a widening consolidated loss, driven largely by tax provisions while the core marketplace is increasingly cash-generating, Meesho remains loss-making at the consolidated level.

The company reported a restated net loss of Rs 7,007 crore in H1FY26, compared with Rs 2,512 crore a year earlier — a spike mainly attributed to tax provisions and accounting adjustments under the restated financials.

Operational losses remain elevated but more stable: restated loss before exceptional items and tax stood at Rs 4,332 crore, versus a near break-even number last year.

Meesho says it will continue investing selectively in new initiatives, logistics infrastructure, and platform safety while scaling ads and seller monetisation to drive margins.

Marketplace-first model remains central to cost advantage

The company reiterated that it remains a pure-play marketplace and does not run private labels, does not compete with sellers, and does not hold inventory — a structure it says delivers structurally lower costs and makes the platform’s affordability proposition defensible.

The RHP underscores this, noting that ~99.9% of Meesho’s revenue in H1FY26 came from Marketplace operations, with New Initiatives still at an experimental phase contributing negligible revenue.