Meesho has stood out as the largest Indian social commerce platform backed by the likes of Naspers, Sequoia and Facebook itself, which is the biggest social media platform in India. The company has posted stellar results for the fiscal ended in March 2020, posting annual earnings of nearly Rs 342 crore.
Meesho achieved a 3.8X surge in operating revenue which stood at around Rs 307 crore in FY20 as compared to the Rs 80 crore it earned during FY19. The company collected this income as commission from its claimed one crore resellers in lieu of providing them services including marketing, logistics and platform fees.
Meesho burned through a huge cash pile in its efforts to quadruple the scale of operations, spending north of Rs 657 crore in total during FY20. Its total expenditure ballooned by nearly 254.7% as compared to Rs 185.3 crore it spent during FY19. Simply put, Meesho spent Rs 2.14 to earn a single rupee of operating revenue in FY20.
Logistics and fulfilment costs accounted for the biggest share of the payments, making up 38.6% of the total expenditure incurred by the company during FY20. These costs shot up 3.1X from Rs 81.7 crore in FY19 to Rs 253.6 crore in FY20 as the number of orders processed by the company during the year snowballed.
Meesho also spent heavily on advertising and promotions on several media platforms including TVCs and digital campaigns to push sales and onboard users on its platform. These costs accounted for 33.1% of the total annual costs, growing 4.3X to Rs 217.42 crore in FY20 from Rs 50.3 crore in FY19.
Expenditure related to employee benefits further jumped 3.4X to Rs 107.5 crore as the company had expanded its talent pool to handle the increasing operational scale of the company.
Further, IT and communication expenditure surged 5X to Rs 32.7 crore while legal fees jumped 71X to Rs 11.4 crore in FY20. Another Rs 8.2 crore were paid out as rent, pushing net cash outflow from operations by 4.3X to Rs 310.6 crore during FY20 from the outflows of Rs 72.2 crore in FY19.
Meesho operated with an EBITDA margin of -91.89% in the previous fiscal and saw its annual losses climb 3.1X to Rs 315.4 crore during FY20 from Rs 100.42 crore it lost during FY19.
The five-year-old company has been fueling its pursuit of scale through back to back investment round from existing and new investors. It raised a total of Rs 712.04 crore from allotment of shares during FY20.
Meesho is also in advanced talks to raise up to $150 million in a fresh round at a valuation of $1.5 billion which will see participation from existing investors including Naspers, Facebook and Elevation Capital among others. Entrackr had exclusively reported the development.