Meesho, an Indian e-commerce startup, could launch an initial public offer next year, a top executive told after a surge in revenues and cost cuts took the SoftBank-backed company to its first ever profit in July. Chief Financial Officer Dhiresh Bansal said Meesho will focus on staying in the black in coming quarters, which is crucial to making it an attractive stock for investors. Meesho clocked revenues of $400 million between January and June, 40% more than the corresponding period last year.

Meesho raised about $1 billion from investors including Prosus, B Capital and Fidelity on the promise of winning over online shoppers in small Indian cities where value conscious buyers are often overlooked by Amazon and Flipkart. To take on the bigger rivals, Meesho scrapped the commission it charged sellers on order value to attract more of them to its digital marketplace. Instead, it charges sellers a fee for logistics services and advertisements on its app, similar to that of Alibaba and Pinduoduo in China.

Meesho's valuation peaked at $5 billion during its last fundraising in September of 2021. Around that time, when capital was abundantly available, Meesho burned through about $40 million a month, while it's gross monthly sales hovered around $400 million. But its aggressive expansion slowed amid a dearth of funding that kicked in last year. Meesho also began wooing big brands, including consumer goods behemoths ITC and Marico and personal care company Mamaearth, all of which are charged up to 5% of the order value as commission. Small merchants continue to sell on Meesho without commissions.

Bansal said such initiatives have helped Meesho turn profitable "a quarter or two ahead of the timeline," but declined to divulge details on the amount of profits and the company's gross sales. Meesho, where fashion and lifestyle products largely drive sales, continues to face stiff competition. Flipkart has launched a "zero-commission" platform called Shopsy to rival Meesho, while billionaire Mukesh Ambani's Reliance Industries is partnering with Chinese fashion brand Shein to launch cheap fashion lines in India. Additionally, Reliance is reportedly planning a zero-commission marketplace for cheap fashion products.

Bansal said Meesho's biggest challenger is not rival online business but brick and mortar stores which are still immensely popular in the small cities where Meesho's potential customers live. "The competition is from offline alternatives and how people think about changing their buying habits," said Bansal. "Our aim is to offer a value proposition to our customers which is better than offline."