In the third quarter of 2023, MercadoLibre (MELI) reported earnings of $7.16 per share, surpassing the Zacks Consensus Estimate by 22.39%. This represented a significant increase from the $2.56 per share reported in the same quarter last year. Revenues for the quarter stood at $3.76 billion, a 39.8% increase compared to the previous year (69.1% on a FX-neutral basis). The company’s top line exceeded the Zacks Consensus Estimate by 5.22%. The strong performance was driven by the accelerating commerce and fintech revenues, which grew by 45% and 33% year over year, respectively. Additionally, revenues from MELI’s advertising services grew by over 70% on an FX-neutral basis and accounted for nearly 1.7% of gross merchandise volume (GMV) at the end of the quarter.
Key Metrics and Regional Performance
In terms of key metrics, GMV reached $11.36 billion, a 59.3% increase on a FX-neutral basis compared to the previous year. The number of successful items sold rose by 25.7% year over year to 357 million, while the number of successful items shipped increased by 26.8% to 350 million. Total payment volume (TPV) surged by 121% on a FX-neutral basis to $47.3 billion, driven by the strong performance of Mercado Pago. Unique active users totaled 120 million, a 36.4% increase compared to the previous year.
Looking at the regional performance, Brazil accounted for 53.4% of total revenues, generating $2 billion in the third quarter, a 40.2% year-over-year increase. Argentina’s market generated $825 million (21.9% of the top line), reflecting a growth of 22.2% compared to the previous year. Mexico’s net revenues soared by 66% year over year to $772 million, accounting for 20.5% of total revenues. Revenues from other countries reached $157 million, a 31.9% increase and representing 4.2% of total revenues.
Operational Details and Financial Position
The gross margin for the third quarter stood at 53.1%, an expansion of 295 basis points (bps) compared to the previous year. Operating expenses amounted to $1.31 billion, a 24.5% increase year over year. As a percentage of revenues, operating expenses represented 34.8%, a decline of 430 bps compared to the same quarter last year. The operating margin expanded to 18.2%, an increase of 724 bps year over year. As of September 30, 2023, MercadoLibre had $2.17 billion in cash and cash equivalents, up from $1.86 billion as of June 30, 2023. Short-term investments reached $3.32 billion, up from $2.8 billion in the previous quarter.
Conclusion and Stocks to Consider
MercadoLibre’s impressive third-quarter performance indicates a strong growth trajectory. The company’s robust commerce and fintech revenues, increasing GMV, and strong payment volume contribute to its continued success. With a growing customer base and favorable market conditions, MercadoLibre is well positioned for future growth.
However, it is important to note that MercadoLibre currently has a Zacks Rank #4 (Sell). Investors interested in the Retail-Wholesale sector may consider alternative options, such as The Gap (GPS), Groupon (GRPN), and Walmart (WMT). The Gap currently holds a Zacks Rank #1 (Strong Buy), while Groupon and Walmart have a Zacks Rank #2 (Buy). These stocks offer potential investment opportunities within the sector. Please refer to the provided links for more detailed analysis and stock information.
As always, investors are encouraged to conduct thorough research and consult with financial professionals before making any investment decisions.
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