Ladies and gentlemen, good day and welcome to the Meesho Q4 FY 2026 earnings call. As a reminder, all participants line will be in the listen-only mode, and there will be an opportunity for you to ask questions. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Nilisha Barbara from Citi. Thank you, and over to you, ma'am. Thank you. On behalf of Citigroup, I would like to welcome all the participants to the Q4 FY 2026 conference call of Meesho Limited. I would like to inform you that the call is being recorded and the audio call and the transcript will be available on the company's website. Joining us today to discuss earnings for the fourth quarter and FY 2026 are Vidit Aatrey, Chairman, Managing Director, and Chief Executive Officer; Sanjeev Barnwal, Full-time Director and Chief Technology Officer; Dhiresh Bansal, Chief Financial Officer; and Karthik Chandrashekar, Head Corporate Development and Investor Relations. We encourage investors and analysts to review the shareholder letter available on Meesho's investor relations website. During this call, management will focus on addressing questions beyond the topics already covered in the letter. Before we begin, please note that certain statements made on this call may be forward-looking in nature and should be considered in conjunction with the risk factors disclosed in the company's filings. With that, we can open the floor for questions. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Sachin Salgaonkar from BofA. Please go ahead. Hi. Thanks for the opportunity. Congrats on the great set of results, Vidit and team. I have a few questions. First question on Valmo. Now that the one-off issues are behind and the network looks optimized, how is management thinking about the mix between insourcing and outsourcing? I think you guys are currently roughly at 50%-55%, in source. Where do you see this number moving in the medium term? Yeah. Hi, this is Vidit. I think we have mentioned before, we do not take a specific goal of how much Valmo share should be. We will continue to give volumes to the player who's the most cost-efficient for every lane. We see third-party logistics partners also compete on this across the board, so we generally don't take a goal. Our goal is more customer backward of continuing to make all our products more and more affordable to them. We believe, like as Valmo has done in the past, it will continue to kind of innovate and improve the cost structure, and as that happens, the share will keep increasing. We do not take a specific goal in terms of what Valmo OC share should be in the short to midterm. Got it. When we look at some of the global operators, be it Mercado Libre or Shopee, all of them have taken a conscious call of focus on insourcing because they could benefit on the back of batching. Is there some kind of a thought process in similar lines for you guys? Which is already happening in Valmo. I think one of the big reasons we have started, because in many places we get much better cost efficiencies working with Valmo as compared to any other player, and that is across the board. I think consolidation/batching, what you mean, even that happened, that we've been scaling, but many other cost efficiencies come into our supply chain as we have scaled it. I think we take the same POV actually. Wherever we are able to get the best ROI, we end up basically using that particular partner, and we'll continue to work with third-party logistics partners on this. Got it. Very clear. Second question, as we head into next fiscal, how should we think about your investments in new user acquisition? This is pretty high in FY 2026, now that your voice AI shopping agent is running well and there are other AI-led investments to acquire customers, should we expect this acquisition investment to meaningfully come down? Actually, we do not, again, take a specific goal on what should be the advertising spend. Historically, we've always taken as long as our investments meet a certain return threshold, we continue to invest. Like, we continue to basically do innovation so that our return on investment on marketing continues to improve. We saw that with Vaani, we were able to convert more rural customers on our platform, and because of that, our CAC went down, and we plan to basically invest a lot more in acquiring rural customers over the next one year. I think that's basically the approach we take. Overall, I don't think that approach will change at all. We will continue to decide what should be the return on investment threshold for marketing at all points in time. As long as we're meeting it, we will continue to invest. If you look at overall, we also mentioned in the letter, India is, like, quite low in terms of number of people who are transacting online as a percentage of smartphone users. Even in other emerging markets, that number is north of 80%. I'm not even comparing with the Western markets. India is closer to 30%. That's why even at a large base, we are able to grow our annual transacting user base at 33% Y-o-Y. We believe there's a large growth there. As we keep innovating on our product and our return on investment continues to be attractive, we will keep acquiring these new users aggressively. Pretty clear on that. Third question. Given the fact that we saw a sharp margin improvement and ad as a percentage of NMV continues to improve, would management look to give some kind of a guidance when the company could be EBITDA breakeven? Because directly one looks like, you know, it is not far off from you guys being EBITDA breakeven. Separately, same comments on free cash flow. Last year, you know, looked one-off in terms of your investments, which had gone into logistics network. Now with most of these issues behind, is it fair to assume Meesho will be free cash flow positive this fiscal? Yeah. Hi, this is Dhiresh here, Sachin. In terms of, I think, guidances short term, we don't have any specific guidances to share at this point on EBITDA. I think LTM FCF, which you rightly kind of pointed, has been the guiding sort of item there. We'll have impact over a 12-month period. Anything which we had, for instance, in Q2 and Q3 of FY 2026 will continue to last for some time, and hence, there will be consequential impact of that being carried over for the next few quarters as well. From a trajectory standpoint, both with the improvement in margin that we are seeing as well as growth that we are seeing, our FCF overall, you know, on a quarterly basis should keep on kind of improving. Got it. My last question is based on one of your comments from shareholder letter where you guys mentioned about macro environment when it is uncertain, consumers focus more towards value. I guess this is equally true from mid to high-end users also. Is there a bit more focus from you guys to focus on brands on the Meesho Mall, more to target more affluent users apart from the value commerce users? Yes. I think we are scaling Meesho Mall for affordable brands, or I would say value brands or value packs of all the brands that you know. And we've made a lot of progress over the last one year. A lot of national brands that are popular in India have scaled their selection on Meesho, and they find that they're able to reach a customer for the first time that they could not reach earlier and sell selection online for the first time that they could not sell earlier. Everyone is seeing a lot of potential there. It's gonna be a big focus for us. Meesho Mall is not just focused on the premium customer. I think it's gonna be focused on anyone who cares about value. It's gonna be mass India. We still believe the large opportunity is, like, serving brands for 1 billion people eventually. It's not just for the big cities. I think there are a lot of people who want to get access to national known brands, regional brands, new upcoming D2C challenger brands, and all of them have generally struggled to reach these consumers in mass India because the typical distribution networks were Kirana, GT that were hard to access for majority of brands in India. We are basically offering that proposition, and a lot of people are excited. We are gonna continue to focus on Mall for mass India, not just on premium customers, and so far we are seeing very, very good signs there. Super clear. Thanks a lot, and all the best. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, we request you to please limit your question to three per participant. The next question is from the line of Gaurav Malhotra from Axis. Please go ahead. Hi, thanks for the opportunity and congrats on a good set of numbers. Just a few questions. One is, in the shareholder letter you mentioned about the COD being almost having reduced to a good extent. Just wanted to get some sense on the BNPL initiatives and how much is that helping the reduction in COD. Yeah. I think, Gaurav, BNPL is still fairly early in its life cycle. I think right now the key initiatives that we have had within our prepaid kind of product, which is payment before delivery, I think the cost of prepaid orders kind of coming down and bypassing consequentially, some of them back to our consumers, with better prepaid discounts, et cetera, have been the driving force so far in terms of cash on delivery share coming down or prepaid share increasing. Going forward, as we kind of continue to invest behind BNPL and we're seeing, good sort of early signs there, that will become a driver, but at this point in time it is more direct prepaid share kind of increasing. Understood. In terms of the ad spends, you mentioned that in the letter that there's a decline in, at least, the inferences, there's a decline in CAC. Is it because, like you mentioned, in the previous comments that is it because there are more rural customers coming on board which is helping with the reduced CAC, or there's something more to it? I think the CAC reduction is happening due to the investments that we had done historically in terms of technology, in terms of improving the value proposition from a price perspective as well. Versus kind of rural users. In fact, I think as you go deeper into India, on a like-for-like basis, CACs only go up because you have to convince a certain user more in order to transact. With the improvements in products that we have made through AI and otherwise, that barrier threshold has come down. Vaani, for instance, our voice agent or other investments that we've done in terms of algorithms as well, have reduced that friction between a user installing the app and placing their first order. That's the reason why CAC continues to be fairly limited as well. In terms of logistics cost, you know, obviously there's a long term of them declining. If you can give us some sense on any near-term initiatives where you're seeing something, you know, something which can be measured, which is actually leading to some significant or meaningful reduction from wherever we are today. Yeah. I think, there's no quantitative sense that we'd be able to provide. Broadly speaking, I think if I have to kind of share some of the key drivers there, one, I think, which we briefly touched upon, the movement from cash on delivery to prepaid transactions has been improving the cost structure that we have. Again, given both the cost of serving a cash on delivery model itself is higher, with cash handling charges, but also the delivery rates for prepaid orders are better, and that kind of leads to better total cost optimization for prepaid orders. Second, as our volumes increase in the ecosystem, that density increase across the board, be it last mile, middle-mile, all the legs, also leads to cost improvement. Again, this happens both for us, in Valmo as well as with our 3PL partners, where we are able to see cost improvements. In addition, I think we are kind of doing multiple innovations within Valmo, which we continue to kind of roll out, and those over a period of time will give us cost goodness. At this point, we will not be able to quantify, but in the coming quarters, maybe we will. Thank you. Just last one small quick question. You gave us some sense on the salience of NMV across the various cohorts. In the top cohort, if you can give us some sense on the frequency as well versus the 10 which is there at an aggregate level for the business. Sorry, could you clarify the question? What do you mean by the top? In the sense you have given us some numbers in terms of, you know, how much is the NMV salient across, you know, users who have been in the system for FY 2024 and before, and FY 2025. Also let's say the top cohort, say FY 2024 and before, what kind of frequency or the frequency would they be having, say, versus system average? Yeah. I don't have the specific number of frequency off the top of my head. In general, I think as users kind of mature on the platform, their frequency in almost a three-year time period starts going up to 15 times or more. I would suspect, I think for the FY 2024 and before cohorts, it will be a similar number. Thank you so much. Thank you. The next question is from the line of Gaurav Rateria from Morgan Stanley. Please go ahead. Hi. Thanks for taking my question. Congratulations on good performance on EBITDA. I have couple of questions. Let me just read out all of them in order to just be more efficient. My first question is on monetization. When I look at the revenue number on the marketplace and look at it on a per order basis, it doesn't seem to have moved on a quarter-on-quarter basis, whereas the NMV has grown. Why monetization has come down, whereas our ads contribution should have increased during the quarter? The second is on your comment on 145 basis point one-time impact. Should one assume that this is not gonna be there next year and hence it will be a straight flow through to the EBITDA numbers from next year profitability perspective? The third is the logistics issues that you talked about, which kind of, you know, impacted your performance. What have you done or what are the initiatives that you're thinking in order to make sure that the business does not see any such issues in future and become more resilient? Thank you. Thanks, Gaurav, for the questions. I'll pick up in the order itself. The first question was why has monetization come down or has there been any change in the trajectory of ad revenue? I think broadly, we've seen uptick in terms of overall ad revenue as percentage of NMV within this quarter versus the previous quarter. There has been a change in terms of how reported revenues are kind of being accounted for. Earlier we used to provide the revenue gross of discounts for the first orders and then have the cost within the sales marketing expenses, which is kind of now being netted off against revenue. And the second one is around the prepaid mix or share, which has also kind of been increasing. Typically, prepaid orders will have lower revenue but also lower cost. From a contribution margin perspective, they will be net neutral, but from a revenue line item perspective, it might impact some of the Q-o-Q trends. That's, I think, the primary reason. Apart from that, I think if I kind of specifically look at ad revenues itself, that has been on an upward journey. The second question, I think, was around the 145 basis points mentioned in the letter around one-time logistics headwinds. Just to kind of recap, most of this headwind was during the Q2 and Q3 period of FY 2026, from where we have kind of recovered. That one-time logistics disruption is kind of behind us and hence going forward, the baseline from contribution margin perspective is a 4% Q4 exit rate that we have. I think the third one was around logistics issues. Like we had mentioned, the impact that we had during Q2 and Q3 of FY 2026 was transient in nature, primarily caused by some amount of capacity disruption that happened once when there was 3PL consolidation that happened somewhere around May last year. In order to ensure that our customer experience doesn't suffer and consumers are continuing to get their orders, we ended up doing some short-term kind of capacity building at slightly higher rates. Most of that capacity has been unwinded and more optimum cost structures have been put in place, both in Valmo as well as other 3PL partners. That's the reason why this is kind of structural in nature and should be a one-time kind of issue. Thank you. All the best. Thank you. The next question is from the line of Pratik Maheshwari from HSBC Securities. Please go ahead. Thank you so much for the opportunity. I've got three questions. First one is on frequency. As you said, probably the cohort which are from FY 2024 or before are around, have frequency of around 15 times, right? That would make that probably the new users are coming at frequency of five or below, or probably the mid 50% of the users are at frequencies five to eight times, right? We just want to understand that as the platform is growing, right, you guys are probably reaching users more rural or hinterlands, right? The general assumption is that the frequency probably of these users will be lower versus the users that you would have initially taken up in the platform. Would that be right? In that context, how much do you think the frequency can go up to probably when you look at little more midterm, three to five years perspective? That's my first question. Sure. Actually counterintuitively and, again, because of all the changes that we have been doing in terms of pricing, assortment, the technology innovations that our team has been doing, first-year frequency has been on an increasing trend for the last three years now. New users which get acquired on the platform start from a higher baseline now versus what they were at, say, three years ago. Almost, a doubling of frequency has happened from a baseline perspective, in the last three years. That is a trend which is more than offsetting any potential, let's say, socioeconomic impact that we might see, when it comes to us going into deeper parts of India. Just to kind of zoom out, again, we are still a very small proportion of consumption of consumers in India. If you look at frequencies of comparable sort of value-focused e-commerce companies in China, those would be closer to almost 100 times. I think there is a lot of space to play. We continue to make our price proposition better, our relevance algorithms better, and hence, users are able to discover lot better things in their first sort of year itself versus what they were doing earlier. Again, with propositions around Meesho Mall, content commerce, et cetera, also getting introduced and leading to more transactions, that also leads to higher frequency in the first year itself. Thank you. The second question that I had was on some of the, some of the announcements, some of the comments that probably the end-to-end logistics partners that they make, right? Basically, there's been some consolidation in this year, the past one year, and now the focus from them seems to be more on margins rather than probably chasing volume and probably offering better rates, right? In that context, and since also probably if they do not offer you, more capacity or better rates, probably Valmo will keep scaling up, right? In that context, do you see the firm making probably investment into middle-mile as well, probably in sorting centers? Because what will happen is when you look at the smaller participants in your Valmo network, right, probably they will not have the capacity to make large investments to improve the middle-mile costs, right? In that context, if Valmo keeps scaling up, do you think yourself to be making those investments in sorting and tracking CapEx? That's my second question. Yeah. Good to hear. I think just splitting both. First, we believe that all our third-party logistics partners make money when they serve our volumes. I don't think there's any incentive for anyone to not work with us. Historically, that's always been the case. We work very closely with all our partners, and it's always been a win-win relationship. Now, second, within Valmo, will we bring a lot more automation with it within sort centers? I think the answer is yes. That's a big focus area for us. We're already, like for example, experimenting with it in several places, and our goal is in the next few years to basically bring state-of-the-art automation within all our sort centers. I think that we will do, and that will lead to a lot of efficiency for us in the coming years. That's gonna happen irrespective. Right. With last question is on the ad spend. As you said, right, Vaani helped you guys reduce the CAC, right? Should we assume you said probably this year would have the trend of larger additions on the [inaudible], right? From that perspective, should we see the Q4 NMV number as a rebase line where we should think about the NMV spend for this year? Probably is there any other reason to think probably that could increase? I think as Vidit had mentioned earlier, like the way we kind of approach sales and marketing spend is not look at it as a budget in terms of percentage of NMV. We look at what is the return that the spend is generating, and as long as that spend is generating above our sort of hurdle rate returns, then we kind of continue to invest in terms of growing our market. Because we're still at a very nascent stage of the market. The investment philosophy is on that basis. Where we are today is as our base of NMV will keep growing, the user spend may not kind of scale at that same amount, but that is a longer term trend I would say versus specific quarterly kind of trends, where it might scale up or down depending on the opportunities that we are seeing. Okay. Thank you so much. Thank you. The next question is from the line of Aditya Suresh from Macquarie. Please go ahead. Thank you. Good evening. Two questions. The first is on contribution. You've seen that sequential 130 basis points improvement in contribution margin. A lot of that is down to logistics, down about 110 basis points. Has this come as you scale back your insourcing push? I guess the real question is that if free cash flow is your North Star, then why not say, for example, further push down insourcing? To say from 50% down towards 30%, with the objective of further expanding CM free cash flow, et cetera. That's the first question. The second question is on cash flow from operations, particularly. In absolute basis, the scale of that negative number has expanded Q-o-Q for the past three quarters now. Even if I kind of zoom into this specific quarter, you've seen that cash flow operations further go negative even as you've seen that margin improvement, whether it be at a CM level or that adjusted EBITDA margin level. Can you just like square that for me, please? Thank you. Sure. I think on the first question, which is in relation to, hey, should we kind of change the insourcing mix further? I think, again, we are optimizing for overall cost. There are improvements that we keep doing, innovations that we keep doing in Valmo. As also other 3PL partners keep kind of competing to give better pricing as their volumes go up, et cetera. I don't think there is a specific number that we aim for. At this point in time, at 50%, or at around that mark, we were the most optimized in terms of cost structure. Our belief is as things keep kind of changing, we'll keep kind of adjusting, basis the cost reality that we're seeing. I think on your second question, cash flow from operations. Again, the trends that you're looking at may include certain one-offs that have been kind of there from past periods or within past periods. If I kind of look at the overall EBITDA trend as well as the credit period or negative working capital cycle that we've had, we have been on an improvement trajectory overall on our CFO basis as well. Maybe separately we can share a reconciliation on what changes are. Yeah, that'll be fantastic. Thank you. Thank you. The next question is from the line of Ayush Garg from CLSA India Private Limited. Please go ahead. Hi, good evening. This is Aditya. Just one question for me actually, a follow on from. I'm sorry to interrupt you, Mr. Garg. We are unable to hear you clearly, sir. Hello? Yes. Yeah. Can you hear me now? Go ahead. Hi. This is Aditya from CLSA. Just a quick one. Following on from the previous question, we also saw a reduction in the cash balance in the quarter. The cash balance has come down by about INR 300 crores. Two questions on this. One, why has the cash balance reduced so much when the margins improved? And second, I think there's some reclassification of the cash itself, where I think income tax assets were moved from the cash balance. Again, if you can just throw some more light on this. Sure. I think the cash balance movement typically happens because of end of quarter NMV numbers. Let's say in a quarter where there is more, I would say, sale or NMV which is coming in the last sort of 15-20 days of the quarter versus let's say a subsequent quarter, then we see this kind of volatility that typically happens in terms of cash flow for the quarter. Hence we have kind of always maintained that in our business looking at LTM FCF or last 12 months FCF is a better way to kind of judge the trajectory versus looking at quarterly cash flows. For instance, if in a quarter we have a sale event, during the last 15 days, our NMV will increase and the cash balance will kind of go up significantly versus if that event is kind of in earlier part of the month. Some of this volatility gets smoothened out when we look at LTM FCF trends. I think in terms of taxes, some of the taxes that have been kind of paid out in terms of cash payout, those we expect to be refunded back based on the trajectory of our sort of overall profit and PBT, and hence that's been kind of adjusted off from a net cash balance perspective. All right. Yeah, that's clear. Thank you so much. That's it for me. Thank you. The next question is from the line of Garima Mishra from Kotak Securities. Please go ahead. Hi, thank you so much for the opportunity. I have one question on your revenue line itself, right? If I just compute a revenue per order, this number has declined from let's say INR 57 odd in FY 2024 to INR 47 odd in FY 2026. A lot of the decline is I think explainable by the decline in your logistics cost, plus, you know, some of the accounting changes that you highlighted earlier. My question is, going forward, as you try and focus more on getting more income from advertising, should this number sort of stabilize from here on or at least the decline should not be as much as what we have seen in the past? Is that the right way to think about it? Sure, Garima. I think from our business standpoint, the right number to consider from a trajectory standpoint is contribution margin. Because as I was explaining earlier, for instance, things like prepaid versus cash on delivery orders. Now, if you start getting a higher mix of prepaid orders, which is fundamentally good for the platform, you would see that the revenue per order would kind of decline, but the contribution margin would sort of remain the same because again, the lower cost of serving a prepaid order is what we kind of pass back to our consumers in the form of lower pricing. Hence, looking at revenue per order as that trend line may not be quite instructive versus looking at contribution margin. There, because ad revenues largely kind of do not have significant cost associated with that, as our ad revenue will keep improving, the revenue, or the contribution margin would also kind of mimic similar trends across. I think the only difference we had in FY 2026 was some of the margin that we make on our fulfillment came down, which we are now sort of restoring back. Got it. Understood. My only point was that I completely take your point that versus the logistics revenue, there's also a logistics cost and if both go down, the revenue line optically will look weaker, which is fine. If revenue monetization from ads goes up, you know, that's straightaway an addition to the revenue line, right? Just from optics perspective, that should kind of make good any large revenue decline that happens on account of logistics, I think. That is what my understanding is. Given ad revenue is a very high gross margin business versus logistics is a sort of lower margin, lower gross margin business, they are quite different when it comes to just simple sort of revenue addition. It may not be true that, let's say. In fact, what might be true is that the logistics revenue might come down sharper versus kind of ad revenues increasing. On a contribution margin line, you would continue to see improvement. Sure. Understood. Maybe last question from me, again on advertisements. Could you just highlight what is the kind of response you're seeing from your merchant partners? What is the kind of ROAS and the ad loads on the platform that you are seeing, any other efforts to improve ad monetization that are underway? Thank you. That's it from me. Sure. I think we spoke about it last call as well. Our trends here continue to be encouraging. A lot more of our sellers continue to get activated on our new ad product, which kind of is ROAS backwards. Our return on ad spend continues to be one of the industry best, in fact, multiples of what other e-commerce players kind of offer in India or anywhere else in the globe. From a seller adoption point of view, the number of catalogs or products which are now live on kind of ads has improved significantly on a Y-o-Y basis, more than kind of 40%, but even on a Q-o-Q basis continues to see improvement. That is the key input that eventually goes into lot more kind of competition in terms of ads and hence higher ad revenues for us. That trend continues to be on a positive uptake. Albeit I think again, we are measured about how quickly we want to kind of ramp some of this up. Thank you. The next question is from the line of Abhisek Banerjee from ICICI Securities. Please go ahead. Hey, guys. Thanks for the opportunity. Just a couple of quick questions from me. First, I think you mentioned that you want to do more automation in the middle-mile. Just wanted to understand, does that mean you will actually spend on CapEx or how do you kind of plan to do that? I think we haven't, let's say, pinned down a specific model. We continue to kind of see pretty good encouraging results from some of our partners, who would want to kind of invest and set up some of these facilities on our behalf. Again, basis, payback period math and other things, we can take a call if, let's say, any investments are required from our side itself. Again, some of this we'll discover as we kind of go along. Okay. Understood. Second, on the ROAS part. Now, of course, the ROAS numbers that you kind of get is significantly higher than what any of your competitors do. The point is that should actually make it easier for you to kind of push through pricing a little more. Now, I'm just trying to understand here, is there a trade-off which we are kind of operating at? What is the proportion of, you know, ad related listings that you want to get to before you want to push pricing? If you could, you know, just give us some color on that would be really helpful. Yeah. I think the big focus area for us at this point in time, the reason we've been operating at very high ROAS is because we've been focused on activating more and more sellers on our ad product. A big focus area for some time will be just making that happen. Because as soon as, like, a lot of people are becoming advertisers for the first time on our platform, and if they become advertisers and they get very good ROAS, the chances that they will spend more on the platform and put more budgets end up being much, much higher. I think that's the stage we are in. You are right. At some point in time, we will start to take pricing up to grow our revenue. We just want to be sure that we are doing it at the right time so that our steady state ad revenue is much higher than what we have today. Understood. Just one continuation on that. I'm sure you have the ability to kind of single out one seller who has been using advertising for some time now, and you can, you know, kind of make those kind of quartiles and start charging a little on that. Have you tried any of those experiments to kind of see how the propensity to advertise changes with pricing? We can't charge differentially to different sellers for our product. It's a bidding product, people decide. What happens is, a good way to see is, are people putting a large budget? If I get good ROAS, am I putting a much larger budget? We today see that the budget over the last one year for us has grown more than doubled, actually. Much more than doubled over the last one year. More people have put budget. Basically, they want to spend a lot more on the platform. I think that's basically a signal to see whether people really like the product and want to invest over time. As I said, at the right time, we will start to play with pricing and start to grow this revenue. Got it. Thank you. Very helpful, sir. Thank you. The next question is from the line of Tejas Shah from Avendus Spark Institutional Equities. Please go ahead. Hi. Thanks for the opportunity. See, on the runway to add users that you highlighted, if we were to look at this base of 264 million users through a household lens, what would that translate to approximately? I think given, again, in India, people kind of look at our input addresses fairly differently, even people within the same household. It's hard to kind of guess a specific number of how many households are being served. I think, again, zoomed out view here is e-commerce shopping, especially of the kind and categories that we serve, is done more on an individual basis versus kind of household basis. This is less of grocery shopping, but more sort of browse-based shopping, where the feed algorithms that we have, they are personalized for each and every user. Hence, the likely overlap between users kind of using a single sort of device to place orders through Meesho is relatively less. We also see this when we kind of look at other markets, China, Southeast Asia, that the number of e-commerce transactors largely kind of mimics the number of, say, WhatsApp, WeChat, users, et cetera, that are there in those markets. Shopping, e-commerce shopping of our kind is more individual in nature, and hence household is not the right way to kind of think about this, in our view. Yeah. Second and last, the way the macro circumstances are evolving, it seems that we'll see some high inflation after a long time. Just from your past experience, how your consumer, how the user base behave in terms of AOV or frequency because they seem to be much more inflation sensitive than, let's say, the broader market? Yeah. I think typically if you kind of look at times like these, there is a fair amount of history from the seventies till kind of now, where value-focused sort of companies actually tend to gain share during times when inflation goes higher because of course budgets are tighter for people across. I think that potentially is a tailwind. Now, of course, there might be a headwind in terms of, you know, what is the absolute amount that people are spending, et cetera, some of these might kind of act in counter sort of fashion. We'll see how this kind of progresses, high inflationary environments for value-focused players are generally kind of tailwinds versus not. That's all from my side. Thanks. Thank you. The next question is from the line of Aliasgar Shakir from Motilal Oswal Mutual Fund. Please go ahead. Yeah. Thanks for the opportunity. Just wanted to understand the margin a little more detail. You know, what are your levers for the contribution margin? One, of course, is your, you know, ad revenue. But other than that, I mean, you mentioned that, you know, from all the disruption that happened in Q2 and Q3, you are now at the base. Are there any more levers or how should we see contribution margin improving from here, you know, in terms of levers more than, you know, the trajectory? And second is below contribution margin, where do you think are the, you know, relatively lower hanging fruits that can play out in terms of, you know, operating leverage when your growth is strong? Yeah, those are the two questions. Sure. I think when you look at contribution margin specifically, we kind of look at this as a split between two components, which is the ads related sort of margin as well as what we kind of have on the fulfillment side. On the ad side, like we kind of mentioned as well, we continue to see improvements and that revenue update there would largely kind of flow down into contribution margin because cost of serving ads is fairly low. From a fulfillment perspective, now, if you kind of think about the cost headers there are multiple cost headers. You know, it includes things like both the forward cost of serving an order, how many of those orders kind of become failed deliveries, and hence we incur higher cost on those. As you kind of bring down failed delivery percentage, which typically kind of we do through various initiatives, right? Some of those we've mentioned in the letter as well. For instance, during the last couple of quarters, we have improved the amount of orders which used to get misrouted because the geographical accuracy of addresses was sort of lower or the kind of partners we were assigning was based on a more aggregated sort of fashion where we've made improvements, and hence the rate of failed deliveries has come down, which consequently reduces the cost of serving an order on a blended basis. The cost of sort of cash on delivery transactions which is kind of as a proportion reducing and hence improving. So on and so forth, there are multiple drivers within this cost line item. We obviously aggregate it as logistics cost overall. Here the typical trend you would see is we will keep reducing on a long-term basis the cost to serve a customer. We will kind of operate with a certain margin structure from a fulfillment cost perspective. Every other or all other kind of efficiencies that we have, we'll keep passing back to our consumers in the form of lower pricing in order to make our value proposition even stronger on pricing. That should kind of hold us in good stead from a growth perspective as well. Coming to cost line items below the contribution margin, I think we've mentioned a few of them in the letter as well, but especially on kind of technology and infrastructure cost, on kind of people cost, et cetera. Those cost line items will not grow in the same proportion as the NMV growth that we expect. We do expect to see operating leverage from those line items over the short as well as longer term horizon. Got it. This is very useful. Just two quick follow-ups. Below contribution margin, can one assume that, you know, the benefit will be linear in terms of, you know, operating leverage? At the contribution margin level, I mean, you know, you've seen very sharp improvement in this quarter. From here on, should we believe that, you know, by large revenue whatever progress you do should benefit, but beyond that it will be a very slow and gradual heavy lifting that will improve contribution margin? Yeah. I think first of all on below contribution line items, again, I think each of them have different trajectories. The three large cost line items below contribution margin are the new user acquisition investment that we have, which I think as we mentioned, we decide on the basis of return thresholds versus any particular percentage of the NMV number. On people cost, I think generally we will kind of have a operating leverage come through over the course of next few years, again, as the cost growth there will be lower than our NMV growth rate. On technology infrastructure investments, apart from the operating leverage, there are also contract cycles. A large proportion of this cost is in relation to cloud providers, and there we have a certain contract life cycle of two to three years, where we kind of renegotiate some of those contracts. As kind of our scale increases, we start getting larger discounts. That also comes into picture. Hence the sort of trajectory may not be specifically linear, but we're moving these sort of two to three -year contract cycles. Got it. Above contribution, if you can just clarify. Yeah. Above contribution margin, you're right. I think some of the more significant transient impacts that we had had, we've kind of done away with those. I think there is still In addition to ad revenues improving, there is still some scope to increase our fulfillment margins, which might happen over the next few quarters. The delta in contribution margin would be obviously slower than what has happened between Q3 and Q4. Their improvement would come both from ad revenues improving as well as some rental restoration on the fulfillment margin side as well. Got it. This is very useful. Thank you so much for the detailed answer. Thank you. The next question is from the line of Yashowardhan Agarwal from IIFL Capital Asset Management. Please go ahead. Yeah. I think congratulations on those sets of numbers. Just one clarification. The NMV that we report is on the basis of the orders that are shipped instead of the placement. Is that correct? Sorry, could you repeat that question? I think your voice broke off a little. Yeah. Is it better now? Yes. Yeah. The NMV number that we report is on the basis of orders shipped instead of orders placed. Is that correct? NMV is on the basis of orders delivered and not returned. It's not shipped. Basically, GMV is based as number of placed orders, and NMV is based as number of delivered orders. I think we've kind of shared disclosures around this in the data book that we have. Correct. After returns, that number has been 80% since last few years. Has the trend been same in FY 2026 as well? Yeah. I think, roughly the NMV to GMV ratio has been between 58%-60% for the last three years. I think for FY 2026 as well, the number is about 58.8%, to be specific. I'm talking about the numbers of the orders shipped after returns, divided by orders placed. That number has been around 80%. Orders shipped after returns. I don't think we disclose these numbers, so I won't be able to comment. Okay. Okay. I will check it later on. Okay. My other question is on the sellers addition, especially those who are non-GST registered. Maybe little clarification on that. We have been seeing that sellers addition in last one year has been pretty strong. So how has the return rates have been? Has that increased meaningfully? If yes, then as a platform, what are we doing to now manage the quality control? I'll take this question. Actually, like, the quality of sellers, even in non-GST that we acquire, are pretty good. Our systems have been built over the last 10 years that it takes into account how is the quality of a new seller onboarded on the platform. If their quality is not that great, they do not get visibility or orders. Products that have very good quality continue to scale on the platform. The numbers that we share are of people who are active on the platform, which means they're getting sales on the platform. These are people who have crossed that threshold. Actually, return etc. would not be a problem. We've seen our returns to be quite stable every year, actually only improve in returns. Non-GST sellers impacting that metric is not going to happen because we have quite robust systems built in to take care of it. The reason this number is growing fast, and I think will continue to grow at a fast pace, is because we have said in the past, if you look at total number of businesses in India that deal with products, it's tens of millions, and that number used to be some million for us because non-GST sellers were not allowed to sell on online. Now that has changed. We believe there's going to be a big, a big focus for us as a platform, but even like a large base of sellers who really want to come online and grow their business, and that will keep reflecting in the growth of these businesses on our platform. Got it. That is very clear. My next question is on what would be the average number of SKUs per order, and Amazon Bazaar is trying to be aggressive here by offering shipping fee on second unit from the same seller to the same customer at INR 51, effectively less than INR 60 for two SKUs. What are your views on that, and could that impact Meesho in any way? The way our platform has been built, it is to kind of ensure that users are kind of placing orders as frictionlessly as possible and hence the number of SKUs per order are pretty close to one or sort of slightly higher than one. From a consolidation perspective, again, in our business, because a lot of these orders are shipped from different sellers and their factories directly to consumers, we have been identifying opportunities of consolidation wherever we can within the supply chain. These are not warehouse origin kind of orders, which is typically the case for some of the other players. Hence, I think, our focus is not so much on increasing sort of SKU per order as a metric. Got it. Thank you and best wishes. Thank you. The next question is on the line of Samarth Patel from Equirus Securities. Please go ahead. Thanks for providing me the opportunity, congrats on great set of numbers. My first question is on the advertisement comments that you provided. Like, what percentage of our sellers are currently actively spending on advertisement versus, let's say, total base of 9.6 lakh sellers that we have? Extension of that is, like, given that sellers are ROAS sensitive, what is the minimum ROAS threshold that needs to be provided to these sellers across categories? That's the first question. Sure. I think more than two-thirds of our sellers when weighted by GMV are active on ads. Having said that, I think, again, an important driver is not just kind of looking at number of sellers active on ads, but also how many products are they advertising on. That is the core metric that we kind of consider, which I'd mentioned has grown by about 40% Y-o-Y. Again, we continue to see good progress there. From a minimum ROAS threshold perspective, I think obviously it varies from category to category. There's no sort of specific number that we look to solve for. A lot of this is market dynamics driven, margin structure of those categories, et cetera. We don't kind of control these numbers, and they're more sort of market set. I'd not be able to comment on specific thresholds here. Understood. That's really helpful. Now, my second question is, the Meesho Mall NMV is growing really well for us. Now as you move beyond, let's say, unbranded goods and into, from unbranded goods to FMCG and beauty, how does the contribution margin for mall transactions compare versus our core marketplace business? I think at this point in time, our focus is not on expanding the contribution margin. The contribution margin would be lower than the whole marketplace because we are right now in the investment phase. Our goal is to onboard a lot more brands, a lot more selection across the country, introduce it to more of our consumers. Since it's in the investment stage, our focus is not on maximizing contribution margin. I think that phase will come when the business has more matured. I think that's gonna be The phase for us for the next few years is gonna be the investment phase. We wanna grow this really fast, make sure that every brand considers Meesho Mall a critical part of their distribution. Until then, we are not gonna focus so much on contribution. Understood. That's really helpful. My last question is, you have provided good data around user cohorts. Now, similar to that, if you can just, let's say, talk about how the seller cohorts are evolving and is the seller concentration increasing or it's decreasing? Any flavor around that would be really helpful. Thanks. That's it from my side, yeah. Sure. I think we had provided some of this disclosure as part of our DRHP. In terms of trajectory since then, the concentration on sellers continues to kind of reduce as we have more and more sellers who kind of become active as well as larger on the platform, so that the number of sellers who kind of form the Pareto of the platform continues to kind of increase at a fairly rapid pace as well. Thank you very much. Ladies and gentlemen, we will take that as the last question for today. We thank everyone for the participation. On behalf of Citi, that concludes this conference. You may now disconnect your lines.