Meesho Q2 FY27 Earnings Call: Growth Ahead of 30%, Rules Out Platform Fees

Meesho Ltd held its Q2 FY27 earnings call on October 28, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Strong Quarter, But Margin Quality Needs Context

• Contribution margin of 6% — CFO Dheeraj Bansal cautioned against extrapolating the Q2 FY 2026-2027 CM to coming quarters, citing a lead-lag between gaining efficiencies and passing benefits back via lower pricing; Q2 also absorbed unpassed-through GPU/server costs.
• Growth ahead of 30% — management indicated Q2 FY 2026-2027 growth, adjusted for the festive season shift (September prior year vs October current year), was ahead of 30% even without passing pricing benefits to consumers.
• Contribution per order improved by a little over Rs.3 — ~Rs.4 of benefit from logistics cost, partly offset by a slight decline in revenue per order; part of the decline is carryover from efficiency pass-ons made in Q1 FY 2026-2027.
• Q2 FCF driven by ~Rs.523 crore of working capital benefit — CFO flagged seasonality risk: Q2 FY 2025-2026 saw a similar working capital jump that did not recur over the rest of FY 2025-2026.
• EBITDA loss of ~Rs.2.4 per delivered order — JM Financial's Swapnil computed this from Q2 FY 2026-2027 reported figures and argued a Rs.1-2 platform fee could bridge the gap; management rejected the fee (see Section 05).
• Festive season tracking "better than expectations" — day-one sales highlighted in the October press release were up sharply, traffic hit all-time highs, and many consumers purchased across categories for the first time.

Logistics-Led Margin Gains; Speed Without Cost Trade-Off

• QoQ CM improvement was primarily logistics-led — driven by lower RTO as a% of orders, higher order density, network redesign, and Valmo efficiencies per the CFO; ads performed well on input metrics but were not the QoQ driver, and management declined to quantify ads-as-%-of-NMV.
• Deliveries 15% faster in Q2 FY 2026-2027 — drivers include density gains (line-haul shifts on the same route up from 2 to 3), network design across Meesho and 3PL networks, and LLM-based address-accuracy improvements; improvement expected to continue for Q2+Q3 FY 2026-2027 combined.
• Cost and speed pursued together, not traded off — CFO said rising density improves both in the same direction, and "Geo India" address software reduces failed delivery attempts while speeding deliveries; no quantified cost or speed targets were provided.
• RTO as a% improved QoQ — even with the NMV-to-GMV value ratio broadly unchanged; the CFO attributed the secular blended RTO decline to a rising prepaid mix and software/delivery innovations reducing COD-related RTOs, partially offset by going deeper into the country.
• Valmo share not quantified — after an analyst cited Valmo at early-50s% of orders in Q1 FY 2026-2027, the CFO declined to give the Q2 split citing sensitivity to other players, but said capacity-creation and cost-efficiency progress is reflected in Q2 results.
• Logistics cost commitment reiterated — CEO Vidit Aatrey reaffirmed the IPO commitment to keep reducing logistics costs "every quarter forever," noting progress stalled ~3 quarters ago due to supply chain disruption, now behind the company; levers are automation, middle-mile quality, and software.
• Automation capex expected to be partner-funded — management does not currently expect automation investments to impact free cash flow, expecting the majority of related capex to be funded by Valmo network partners (entrepreneurs).

GPU Costs Inflated Q2; Fixed-Cost Leverage Not Yet Visible

• GPU pre-procurement elevated Q2 server costs — CFO said Meesho pre-procured GPU capacity for the festive season amid a global spike in GPU pricing; mitigation includes multiple providers and regions within existing hyperscaler relationships, procuring only when needed.
• Server costs to normalize by Q4 FY 2026-2027 — expected as a% of NMV (not in absolute terms), returning to baseline within two quarters.
• Fixed-cost leverage questioned — an analyst flagged fixed/indirect costs at 6.3% of NMV in FY 2025-2026 vs ~6.4-6.5% in 1H FY 2026-2027 despite improved contribution margin; the CFO pointed to marketing front-loading (TV ad production, reach-building) landing before the NMV benefit, with operating leverage still expected on a full-year FY 2026-2027 basis.
• Long-run fixed-cost target of ~3% of NMV — per the CFO, with the follow-up exchange indicating ~FY31 (FY 2030-2031), versus the analyst's FY29-30 framing.
• Server cost classification under review — the line is semi-variable (fixed portion tied to conversion improvements; variable portion from heavier browsing and compute-intensive feed-relevance algorithms), reported below contribution margin; management is contemplating how to split it and what portions to move above CM.

Reinvestment Over Near-Term Margin Harvest

• CM reinvestment plan for FY 2026-2027 — CFO said Meesho expects significant CM improvement in FY27 vs FY26 and will restore the logistics-related spread lost in FY26 back to FY25 levels during FY27, framed as the "outer guidance," while retaining flexibility on how much efficiency is passed back vs retained.
• A&P vs ATU divergence flagged — JP Morgan's Ankur Rudra noted A&P spend up almost 50% sequentially in Q2 FY 2026-2027 against LTM ATU additions of just 10 million users QoQ; CEO said CAC alone "may not be the best ideal way" to judge, with CAC and LTV together deciding allocation and internal hurdle-rate guardrails unchanged.
• Marketing to stay at roughly current% of NMV — "maybe increase... maybe reduce... but stay in that zone" for as long as ROI remains healthy; management said pulling back would signal it can no longer add users, which it does not currently see.
• Pricing pass-back won't produce a sudden 10-15% growth bump (period unspecified) — CEO said pricing investments pay off via the flywheel as previously unviable categories become viable, with leading indicators showing impact 2-4 quarters down the line.
• 12-18 month category scaling plan — management has a defined plan to scale specific products and categories over the next 12-18 months, requiring continued flywheel reinvestment despite strong Q2 FY 2026-2027 growth at high CM.
• NMV per seller flattish-to-declining, explained by mix — Axis Capital's Gaurav Malhotra flagged the trend; CEO attributed it to a deliberately diversified seller base (non-GST sellers permitted online only ~2 years ago), saying cohortized data shows large manufacturer-sellers growing healthily YoY and that average sales per seller "may not be the right thing to do" as a metric.

No Platform Fees; Kirana Club Closes; Fintech Kept Under Wraps

• Platform fee ruled out — CEO reaffirmed Meesho will not add platform, convenience or hidden cart-level fees, since surprise fees at checkout erode trust with its mass-market base; if more monetization is needed, Meesho would raise take rate on logistics or ads instead, forgoing short-term revenue for higher customer LTV.
• Kirana Club transaction closed on 28 Oct 2026 — integration begins, but the primarily B2B business will run fairly independently with founders remaining to run it.
• Rs.200 crore annual cap on new initiatives — CFO confirmed the recurring annual capital-allocation cap across all new initiatives, inclusive of Kirana Club; no specific FY stated.
• Financial services showing encouraging signs — both seller-side and consumer-side lending products performing well, with risk rates within internally set pricing norms; lender supply base expanding across NBFCs with exploratory onboarding of bank partners.
• Fintech disclosure gated on graduation — management committed to sharing AUM and other operating parameters, plus medium- and long-term targets, only once financial services moves from the new initiatives bucket into the core marketplace; no sizing or ambition figures were disclosed on this call.

Guidance, FCF Path and Risks

• 25% NMV CAGR toward FY31 maintained — management is comfortable maintaining the 5-year guidance for now and will come back on whether it needs revision as FY 2026-2027 progresses and visibility into FY28 improves; the analyst had framed that holding mid-20s growth would imply deceleration in FY28.
• CM outlook: no full-year number — management expects FY 2026-2027 CM to be "substantially better than FY26," aided by logistics efficiencies; moving into FY28, benefits from ad monetization as a% of NMB will start coming in.
• Positive FCF on an LTM basis expected within a few quarters (period unspecified) — at the current adjusted EBITDA margin of ~-1% and baseline growth of ~30% (Q2 FY 2026-2027 run-rate), the 20-day negative working capital cycle contributes almost +1.5% of NMB as growth continues at that pace.
• FCF volatility caveat — quarterly FCF will always fluctuate due to the last 15 days of NMB in any quarter; the December quarter is typically lean toward year-end (recurring annual pattern), but normalized for daily NMB, quarterly and LTM FCF should improve.
• Take-rate mix shift over the longer term — CFO confirmed absolute logistics revenue may decline slightly while absolute advertising and other monetization revenue increases.
• Demand side confident; supply side strained — CEO sees no macro concern yet in user behavior over a 12-month horizon (healthy traffic and conversion, skew toward utility products), but sellers faced supply chain disruptions from crude price volatility over the past ~20 days tied to Middle East developments; pain points persist on the seller side even as demand remains confident.
• 3PL slab-based pricing: no Q2 movement — volume-linked pricing benefits typically materialize in the festive quarter, i.e., Q3 FY 2026-2027.