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Mercadolibre (MELI) Q3 Earnings & Revenues Beat, Rise Y/Y

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MercadoLibre, Inc. (MELI - Free Report) reported third-quarter 2021 earnings of $1.92 per share, which beat the Zacks Consensus Estimate by 51.2%. Further, the figure rose 40.1% sequentially. It also significantly increased from earnings of 28 cents reported in the year-ago quarter.

Its revenues surged 66.5% on a year-over-year basis (72.9% on an FX-neutral basis) to $1.9 billion. Further, the top line surpassed the Zacks Consensus Estimate by 1.1%.

Revenues were driven by accelerating commerce and fintech revenues, which grew 69% and 61.7% year over year to $1.22 billion and $632.8 million, respectively.

Increasing total payments volume (TPV), owing to strong performance of Mercado Pago, aided the company. Growth in total payment transactions benefited the results.

The company’s rising gross merchandise volume (GMV), thanks to increasing mobile GMV, remained another positive.

Strong shipment growth owing to solid performance of MercadoEnvios in the reported quarter was a tailwind.

Strengthening momentum across Mercado Fondo and Mercado Credito also benefited the company.

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 for the third quarter were $1.06 billion (57% of total revenues), increasing 74% year over year.

Argentina: The market generated revenues of $393.1 million (21% of the top line), which rose 38.1% year over year.

Mexico: Net revenues for the reported quarter were $291.5 million (16% of revenues), jumping 93.8% year over year.

Other countries: Revenues amounted to $110.2 million (6% of total revenues), climbing 57.8% on a year-over-year basis.

Key Metrics

GMV of $7.3 billion jumped 23.9% and 29.7% on a reported and FX-neutral basis, respectively, from the year-ago quarter. Mobile GMV accounted for 74.1% of the total GMV.

The number of successful items sold was 259.8 million, up 26.3% year over year. The number of successful items shipped rose 32.1% year over year to 247.8 million. This can be attributed to the sturdy performance of MercadoEnvios.

TPV increased 43.9% and 59% year over year on a reported and FX-neutral basis, respectively, to $20.9 billion. This was driven by strong performance of MercadoPago. On a reported basis, off-platform payment volume (online-to-offline) was $13.4 billion, up 59% from the year-ago quarter.

TPV on its marketplace was $7.06 billion, up 24.9% year over year. Total payment transactions jumped 54.7% year over year to 865.7 million.

The company further divided TPV into two segments: Acquiring TPV and Digital accounts TPV.

On an FX neutral basis, Acquiring TPV comprising On-Platform, Online Payments, MPoS and QR payments increased 45.5% year over year to 15.4 billion.

On an FX neutral basis, Digital accounts TPV comprising wallet payments, P2P transfers between Mercado Pago accounts and Cards transactions increased 101.1% year over year to 5.5 billion.

Unique active users totaled 78.7 million for the reported quarter, up 3.4% year over year.

Operating Details

For the third quarter, gross margin was 43.4%, expanding 40 basis points (bps) year over year. The increase was driven by an improvement in overall collection fees.

Operating expenses were $646.2 million, which increased 62.7% year over year. As a percentage of revenues, the figure contracted 80 bps from the year-ago quarter to 34.8% for the reported quarter.

The company reported $160.4 million of income from operations for the third quarter, up 93% year over year. Operating margin was 8.6%, which expanded 120 bps year over year.

Balance Sheet

As of Sep 30, 2021, cash and cash equivalents were $987.2 million, down from $1.07 billion on Jun 30, 2021.

Short-term investments were $1.04 billion for the third quarter, up from $898.4 million in the previous quarter.

Accounts receivable amounted to $70.5 million, up from $69.8 million in the second quarter. Inventory level at third quarter-end was $226.7 million, up from $169.4 million at the end of the prior quarter.

Zacks Rank & Stocks to Consider

Currently, MercadoLibre carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the retail-wholesale sector include AutoNation (AN - Free Report) , Conn’s (CONN - Free Report) and Macy’s (M - Free Report) . While AutoNation and Macy’s sport a Zacks Rank #1 (Strong Buy), Conn’s carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rates for Macy’s, AutoNation, and Conns are currently projected at 12%, 19.1%, and 23%, respectively.


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