E-commerce platform Meesho is aiming to achieve profitability in FY24 as it looks to increase revenue and optimise costs, according to a senior company official.
Backed by SoftBank, the company also plans to surpass a revenue of Rs 10,000 crore by FY25. While the possibility of an IPO in FY24 is being considered, it will only happen if the company becomes profitable.
The comments hold significance after Fidelity Investments, one of Meesho's investors, reduced the company's valuation by 10 percent to $4.4 billion.
"Our expectation is to achieve profitability within the current fiscal year, FY24. In FY23, we experienced a 50 percent increase in revenues and reduced losses by two-thirds through cost optimisation measures. Cash burn has also decreased by 90 percent," Meesho CFO Dhiresh Bansal said.
Bansal mentioned that it is difficult to share specific numbers as the audit for the current fiscal has not yet concluded. However, the revenue run rate for Q4 FY23 was $800 million on an annualised basis.
Regarding the link between profitability and an IPO, Bansal stated, "The motivation for an IPO is not just to be listed publicly. We want to generate returns for our investors. One of the unsaid rules we have established is to achieve profitability before approaching the public market".
"We expect to become profitable within the current fiscal year, and after that, we will consider going public based on market conditions." He clarified that the profitability referred to is at the net level and not EBITDA, at least during the second half of the year.
In FY22, Meesho recorded losses of around Rs 3,251 crore on a revenue of nearly Rs 3,232 crore.
Bansal expressed confidence that with cost optimisation strategies and growth projections, the company will exceed Rs 10,000 crore in revenue by FY25. Since 2021, the Gross Merchandise Value (GMV) has increased by 20 times to $4.6 billion.
Responding to the 10 percent valuation reduction, Bansal clarified that the actual cut is six percent, with the remaining four percent accounting for adjustments related to Esops.
According to him, the company's growth roadmap has not been affected by the valuation cut.
It is due to global funding winter and high-interest rates that such things are part of market dynamics, he said.
Regarding the government's ONDC (Open Network for Digital Commerce), a Meesho official stated that the company has a protocol for integration and believes it will facilitate sectoral growth. The company is currently testing its integration with the network in beta mode.
Meesho boasts 11 lakh sellers, with a significant number of them being women entrepreneurs. It is the only e-commerce platform that does not charge a commission for selling on its platform. Bansal affirmed that they will continue with this model and instead charge for value-added services to support small entrepreneurs during onboarding.
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