Mercado Libre: Earnings Note

Quick Note: MercadoLibre (MELI): The leading Latin American online commerce platform announced earnings after the close on Wednesday, and the results were good. The company beat revenue and earnings estimates, and the shares were up around 4% in afterhours. Here is a quick update based on key points from the release.

Note: we are currently long shares of MELI in our Blue Harbinger Disciplined Growth Portfolio.

MercadoLibre: Redefining E-commerce and Fintech in the World's Most Dynamic Markets

MercadoLibre's recent Q2’23 results paint a compelling picture of a company poised for impressive growth. Here are a few of the key points from today’s release:

  • Strong Financial Performance: With net revenues up by a remarkable 57.2% YoY on an FX neutral basis, MercadoLibre is demonstrating exceptional financial strength and market resilience.

  • Expanding Market Share: MercadoLibre's impressive year-on-year GMV growth of 47.2% on an FX neutral basis is a testament to its increasing market share and consumer preference. They're rapidly becoming a trusted destination for millions of buyers and sellers.

  • Fintech Momentum: MercadoLibre's fintech arm, Mercado Pago, is gaining significant traction. Their credit products are proving profitable with healthy levels of delinquency. Moreover, their remunerated account and insurance offerings are contributing to a 90% YoY increase in assets under management.

  • Geographical Diversity: As a reminder, MercadoLibre's financial success isn't confined to a single market. Their operations in Brazil, Mexico, and Argentina are all making significant contributions, showcasing a diversified profit base.

  • Strategic Investments: MercadoLibre's strategy involves reinvesting short-term margin gains to strengthen their long-term competitive position. This approach demonstrates their commitment to enhancing user experience and driving future growth.

  • Optimizing for Growth: The company is leveraging its financial model for sustained growth. By extending its leadership in commerce and focusing on high-growth segments like fintech, MercadoLibre is actively positioning itself for market dominance.

In today's rapidly evolving economic landscape, MercadoLibre stands out as a unique investment opportunity with a solid track record and a clear growth trajectory.