Meesho announces ESOP buyback of Rs 200 crore; likely to benefit 1,700 employees

The announcement comes months after Meesho said that it had turned profitable in July 2024.

Meesho, the low price e-commerce platform, announced its fourth and largest Employee Stock Ownership Plan (ESOP) buyback programme of Rs 200 crore (around $25 million) on March 13. The exercise is likely to benefit 1,700 employees across levels from junior positions to senior leaders, including current and past employees.

Until a few years ago ESOPs had little value but a slew of new-age IPOs from Zomato to Paytm to Delhivery and others has changed that perception in employees’ minds. Since 2021, ESOPs have gained traction and ESOP cashouts have led to $1.46 billion of wealth in the hands of startup employees since the beginning of 2021, according to data from Qapita. This was despite a 62 percent drop in cashout events in 2023.

Over the years, an increasing number of new-age companies, like PhonePe, Swiggy and others, have been rewarding employees with ESOPs and buying them back at a lucrative price, which eventually generates wealth for employees, especially the ones who joined an organisation early.

For SoftBank-backed Meesho, this is the fourth ESOP buyback programme. It first started buying back shares from employees in February 2020. While that was a small $1 million exercise, the total amount later increased as the company grew. In November 2020, Meesho bought back shares worth $5 million and then slightly increased the total size to $5.5 million in October 2021, according to data shared by the company.

“(The) ESOP buyback programme…underscores our commitment to rewarding our teams, and we are pleased that despite prevailing macroeconomic conditions, we persist in providing opportunities for wealth creation and nurture a culture of growth within the organisation,” Ashish Kumar Singh, Chief Human Resources Officer (CHRO) at Meesho, said.

The announcement comes months after Meesho turned profitable in July 2023. While its profit after tax (PAT) has been in the single digits, the company says it has been profitable since then and is cashflow positive.

The turnaround was after the Bengaluru-based company reported a rise in revenue and a reduction in losses in FY23. Meesho said its revenue from operations grew 77 percent from Rs 3,232 crore in FY22 to Rs 5,735 crore in FY23, as existing customers transacted more on the platform and monetisation efforts yielded desired results during the year.

While revenues grew, its losses halved from Rs 3,251 crore in FY22 to Rs 1,675 crore in FY23. To be sure, Meesho is yet to file its final results with the Ministry of Corporate Affairs (MCA).