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Mercadolibre (MELI) Incurs Loss in Q4, Beats on Revenues

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MercadoLibre, Inc. (MELI - Free Report) reported a fourth-quarter 2020 loss of $1.02 per share, which lagged the Zacks Consensus Estimate for earnings of 39 cents per share. Notably, the company reported a loss of $1.11 per share in the year-ago quarter.

Revenues surged 96.9% on a year-over-year basis (148.5% on an FX-neutral basis) to $1.33 billion. Further, the top line surpassed the Zacks Consensus Estimate of $1.23 billion.

Revenues were driven by accelerating commerce and fintech revenues, which grew 124.2% and 59.5% year over year to $872.9 million and $454.4 million, respectively.

Further, the e-commerce boom continued to act as a major tailwind. The solid performance of the company in Mexico also contributed well to top-line growth in the reported quarter.

Further, increasing total payments volume (TPV), courtesy of a robust Mercado Pago and the mobile-point-of-sale (MPOS) business,contributed well. Moreover, a solid momentum across Mobile Wallet benefited the results.

Moreover, the company’s rising gross merchandise volume (GMV), led by an accelerating mobile GMV, contributed 72.1% to the total GMV. Also, mobile GMV soared 271.4% year over year.

Also, strong shipment growth via MercadoEnvios in the reported quarter was another positive. The growing penetration of managed networks was also a tailwind.

Additionally, strengthening momentum across Mercado Fondo and Mercado Credito benefited the company.

However, the reopening of traditional retailers posed challenges to MercadoLibre in the reported quarter. Further, mounting expenses were concerning.

MercadoLibre, Inc. Price, Consensus and EPS Surprise

 

MercadoLibre, Inc. Price, Consensus and EPS Surprise

MercadoLibre, Inc. price-consensus-eps-surprise-chart | MercadoLibre, Inc. Quote

Quarter in Detail

Brazil: Net revenues in the fourthquarter were $720.6 million (54.3% of total revenues), up 68% year over year. This can be attributed to GMV in the country, which improved 84% year over year. Notably, the company witnessed growing penetration of its MecadoEnvios’ managed network in the particular country in the reported quarter.

Argentina: The market generated revenues of $323.5 million (24.4% of the top line), which soared 144% year over year. The growing adoption of managed networks remained a boon.

Mexico: Net revenues in the reported quarter were $204.1 million (15.4% of revenues), up 141% year over year. This primarily came on the back of a robust GMV in the fourth quarter, which exceeded the mark of $1 billion for the first time.

Other countries: These markets generated revenues of $79.2 million (5.9% of total revenues), climbing 176.1% on a year-over-year basis. Notably, strong momentum across Colombia and Chile contributed well to top-line growth in other countries.

Key Metrics

GMV of $6.6 billion jumped 69.6% year over year and 109.7% on a FX-neutral basis.

New confirmed registered users in the period were 10.7 million, decreasing 26.7% on a year-over-year basis.

The number of successful items sold was 229.4million, up 109.5% year over year. Moreover, the number of successful items shipped surged 131.2% year over year to 214million. This can be attributed to the sturdy performance of MercadoEnvios.

TPV was up 83.9% on a year-over-year basis to $15.9billion, driven by a strong performance of MercadoPago. Further, off-platform payments volume (online-to-offline) was $9.2 billion, up93.3% from the year-ago quarter.

Additionally, MPOS business witnessed year-over-year TPV growth of 87.4%. Further, the rapid adoption of MercadoLibre’s Mobile Wallet generated $3.3 billion in transactions, up 246.9% year over year. The growing momentum across QR payments, which accounted for 20% of wallet TPV, remained a positive.

TPV on marketplace was $6.34 billion, up 73.2% year over year. Further, total payment transactions skyrocketed 130.9% year over year to 659.3 million.

Unique active users totalled 74 million, up 71.3% year over year.

Operating Details

For the fourth quarter, the gross margin was 36.8%, contracting 890 basis points year over year.

Operating expenses were $514.2 million, which increased 36% year over year.

The company reported $25.1 million of loss from operations in the fourth quarter compared with the year-ago quarter’s loss of $68.9 million.

Balance Sheet

As of Dec 31, 2020, cash and cash equivalents were $1.9 billion, up from $1.14 billion as of Sep 30, 2020.

Short-term investments were $1.2 billion in the fourth quarter, down from $2.2 billion in the previous quarter.

Accounts receivable amounted to $49.7 million, up from $40.9 million in the third quarter. Further, the inventory level at the end of the fourth quarter was $118.1 million, up from $46.6 million at the end of the prior quarter.

Zacks Rank & Stocks to Consider

MercadoLibre currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the retail-wholesale sector are JD.com, Inc. (JD - Free Report) , eBay Inc. (EBAY - Free Report) and Target Corporation (TGT - Free Report) , all currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rates for JD.com, eBay and Target are currently pegged at 51.2%, 15.36% and 10.21%, respectively.

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