The low price e-commerce platform, Meesho has managed to turn profitable on a profit after tax (PAT) basis in July 2023, said the company’s CFO Dhiresh Bansal, in a media interview.
As per reports coming in, Meesho can launch an IPO in next 12-18 months.
Meesho Turned Profitable In July
The ecommerce platform could achieve this with the help of lower customer acquisition costs (CACs), better monetisation efforts, among others, Bansal said.
Meesho has undertaken several measures to cut costs and improve its financial health, from the beginning of this year.
The company had to let go of 251 employees from the company’s core unit, In its second round of layoffs.
Besides this, the ecommerce platform had even brought down its cloud expenses by around 50 percent.
This may have propelled the Bengaluru-based startup further in the direction of profitability.
Bumpy Road Ahead In Future
Although Bansal did not comment on specific numbers, the Meesho’s PAT was a low single digit (Rs crore) in July, as per the media report.
Basically, it was on the back of revenues worth around $400 million (around Rs 3,280 crore) that Meesho generated between January and June.
This indicates that the path to profitability is still likely to be a bumpy one.
Further Bansal said, “The largest efficiency has come from reducing our CACs by almost 70 percent. Two years ago, our CAC was roughly Rs 250, it has now come down to around Rs 50-60. Even as we reduce our market expenses, we have been getting a similar level of throughput.”
It appears that the reduction in CAC is especially important because Meesho’s average order value (AOV) is much lower at around Rs 400-450, when compared to about Rs 1,100-1,400 for larger players like Flipkart, as per analysts.
According to Bansal, apart from reduction in CACs, the company’s revenue grew 54 percent, while its order volumes registered a 43 percent increase, on a year-on-year (YoY) basis.
Moving ahead, he said that the growth rate was not massive like in the past but attributed the moderation to Meesho’s maturity as a business and a difficult macroeconomic climate.
The performance is likely to hold steady for the remaining months this year, Bansal said.
There are still chances Meesho does not end FY24 in the black, largely because the monthly PAT numbers may not total to a large amount given Meesho’s scale.
