Meesho's first profitable quarter sets up a credible IPO narrative for 2026

Meesho's reported maiden quarter of operating profitability in 2024 is a watershed for a company that spent years being written off as structurally unviable by a corner of the investment community that doubted whether a zero-commission marketplace could ever cover its costs. The Vidit Aatrey and Sanjeev Barnwal-led platform, backed by SoftBank and Prosus among others, has reached this point by methodically improving take rates through value-added services, tightening its logistics cost structure and ruthlessly culling categories where the economics did not work. The platform's model differs fundamentally from Flipkart and Amazon India. Meesho does not charge sellers a commission on transactions - a policy that has attracted millions of small merchants who would otherwise be priced out of mainstream e-commerce. Revenue instead comes from advertising, logistics services and credit products, an architecture that requires high volume to generate meaningful absolute income but, once past a threshold, should exhibit operating leverage. The company reached that threshold during FY24, when its GMV crossed roughly six billion dollars on an annualised basis. The user base that Meesho has assembled is its most durable competitive moat. By focusing on Tier-2 and Tier-3 India - the hundreds of cities and towns that Flipkart and Amazon have historically underserved - the company has onboarded hundreds of millions of users who often use Meesho as their entry point into structured e-commerce. The average order value on Meesho is materially lower than on the premium platforms, but retention and repurchase rates have reportedly been strong, which is what drives the unit economics into positive territory over time. With profitability now demonstrated, investment bankers have reportedly begun early conversations about a domestic IPO timeline. The window being discussed is 2026, subject to macroeconomic conditions and whether SEBI's listing framework continues to evolve in ways favourable to tech companies with non-traditional revenue structures. A listing would give early investors - some of whom have held stakes for over seven years - a much-needed liquidity event and would also put Meesho's financials under the quarterly scrutiny of public markets for the first time. What to watch: whether the profitability trajectory holds through the festive-season spending cycle, how the company manages the tension between maintaining zero-commission pricing and improving monetisation, and whether an IPO filing emerges before or after the company secures one final pre-IPO round. The trajectory of Meesho's advertising revenue per seller will be the clearest leading indicator of whether the profitability is structural or cyclical.

Original source: Inc42