Latin American e-commerce giant Mercado Livre reports brutal record profit in the 1st quarter of this year

Paulo Nogueira
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05-05-2022 20:07:22
in Economics, Business and Politics
Blonde woman in free market logo Logo Mercado Livre – Source: PNG Itnem




With 6.7 million new users, Mercado Livre's active user base reached 80.8 million at the end of the quarter, up 15.7%.

São Paulo, May 05, 2022 – Free market  (Nasdaq: MELI) — the leading technology company for e-commerce and financial services in Latin America — achieved a new record for total revenue in the first quarter of 2022, surpassing the performance of the fourth quarter of last year. Net revenue reached US$ 2.2 billion in the first quarter of 2022, up 63.1% in USD and 67.4% in constant currency compared to the same period in 2021. Brazil represents 55% of Mercado Livre's total net revenue, reaching US$ 1.2 billion and growth of 54.8% in reais.

The net revenue of the business of commerce increased 40.2% in dollars yoy to US$ 1.3 billion, driven by the approximately 40 million unique buyers in the quarter. Consumers remain active, generating growth in the number of items per buyer compared to last year, even with the effects of the pandemic. The net revenue from fintech grew by 107.9% in dollars, reaching US$ 971.1 million, year on year. In the first quarter, Mercado Pago registered almost 36 million active users, up 31.1%, with growth in all markets in the region, especially in payment services via digital wallet and credit users.

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“We reached a new record in terms of total revenue, reflecting the improvement in profitability in both the commerce and fintech businesses. Our gross margins improved with better operating leverage over our cost base. In line with our objective to grow profitably, we maintained consolidated operating profit margins at similar levels to last year. The performance of the final result was equally strong, delivering record net income for a first quarter”, says André Chaves, Senior Vice President of Strategy and Corporate Development at Mercado Livre. “The growth of the marketplace remained consistent, mainly due to the behavior and growth of the buyer base. The variety of the assortment and the quality of the seller base puts us in a unique position to drive continuous and profitable growth. Mercado Pago also had a very encouraging performance, with the loan portfolio showing consistent profitable growth, as well as growth in the volume of digital account and acquiring payments. We had a very strong start to the year, establishing a solid foundation for the coming months that will be challenging”, he adds.

AND-Commerce

Marketplace sales volume (GMV) reached US$ 7.7 billion in the first quarter, up 26.5% in USD and 31.6% in constant currency. In all, 266.7 million items were sold, which represents an increase of 20.1%. The total volume of ads registered on the platform reached 329 million. THE Brazil stands out in the region with 23.2% growth in GMV, in constant currency, reaching US$ 3.4 billion, and 137 million items sold in the period — with 6.6 items per buyer, the highest level of the historical average for the first quarter.

With Mercado Envios, 254.3 million items were shipped in the region, an increase of 22.2% over the same period last year. There were significant advances in the execution and speed of Mercado Envios, whose penetration reached 98.4% of the entire operation, above the 96.6% recorded in the same quarter of 2021. Of this total, more than 90.5% corresponds to the managed network of Mercado Livre — being 40% of the shipments via the fulfillment model. Of the overall volume of goods, around 80% was delivered within 48 hours and around 54% on the same day or the day after purchase.

The commerce ecosystem services continue to expand, especially Mercado Ads, which has been a consistent highlight in terms of growth and margin. Revenue from the digital advertising business nearly doubled in the first quarter year over year, having consistently invested in technology to expand the ad presence in the ecosystem.

fintech

The loan portfolio reached more than US$ 2.4 billion — it was US$ 1.7 billion at the end of 2021 — showing consistent profitable growth, in line with our expectations. In the period, Mercado Crédito granted more than US$ 1.7 billion in credits, almost triple the amount recorded in the first quarter of 2021.

The total volume of payments (TPV) via Mercado Pago reached US$ 25.3 billion for the first time, an increase of 72.0%, in dollars, and 81.2% in constant currency. The total volume of transactions (TPN) in the period grew by 73.2%, year on year, surpassing around 1.1 billion in the first quarter, the second in a row.

The total volume of payments via Mercado Pago, outside the Mercado Livre platform, also continues to grow, reaching US$ 17.2 billion, an increase of 103.2%, in dollars, and 138.6% in constant currency. Payments outside the Mercado Livre platform are growing a lot in Brazil, where the number of new sellers also increases, mainly due to operations with PIX.

The total payments processed can be divided between the total volume of charges processed and the total volume of digital account transactions. The first includes charges on the Mercado Livre platform, online charges and charges processed through Point card machines and QR devices, which totaled US$ 17.4 billion, growing 46.4% in dollars, year on year, and 52.4% in constant currency. In the first quarter, another 1.1 million machines were sold, an increase of 18.2% year on year, especially in Brazil, Argentina and Mexico.

At the Brazil, the growth in the base of sellers who started to adopt QR devices is still notable, especially micro and small entrepreneurs who already used machines and also adopted this modality. As a result, the total volume of payments via QR code quadrupled in the quarter, year over year.

The volume of transactions through the virtual wallet, which also includes transfers between Mercado Pago users, credit, debit and prepaid card transactions, grew by 178.5% in constant currency, in the annual comparison, totaling almost US$ 8 billion.

At the end of March, more than 22.7 million users had funds invested in the fund, which brings together users of digital accounts with income. The portfolio of savings and investment products maintains its rapid growth, driven by the launch of the cryptocurrency portfolio late last year. In Brazil, the only country where the service currently operates, the cryptocurrency wallet user base continues to grow.

In the period, more than 522 thousand insurance policies were distributed, a volume 6.0% higher than that registered in the first quarter of last year, driven by the greater penetration of products in Argentina, Brazil and Mexico. At the Brazil, the distribution of insurance for cards and payments via PIX reinforce the insurance offer offered by Mercado Pago.

financial performance

Mercado Livre's gross profit was around US$ 1.1 billion, an increase of 81.5% in dollars compared to the same period last year. Gross margins improved year on year, with better operating leverage over cost basis. Operating income was US$ 139 million, growth of 53.5% in dollars, and net income reached US$ 65 million.

The ecosystem's overall active unique user base reached 80.7 million at the end of the quarter, up 15.7% compared to the same period in 2021 — with 6.7 million new users joining in the first quarter of this year alone.

In line with the strategy and investments planned for Latin America, Mercado Livre announced that more than 14,000 new direct employees will be incorporated into the operation, across the entire commerce and fintech ecosystem. With this, the total number of employees will jump from the current 29 thousand employees — at the end of December 2021 — to more than 44 thousand by the end of 2022.

About Free Market

Founded in 1999, Mercado Livre (NASDAQ: Meli) is the leading e-commerce technology and digital financial services company in Latin America, with a presence in 18 countries. It offers a complete ecosystem of solutions so that individuals and companies can buy, sell, advertise, obtain credit and insurance, collect, send money, save and pay for goods and services online and in physical stores. Mercado Livre seeks to democratize trade and financial services in Latin America, a market that offers great opportunities and high growth potential. It applies world-class technology to design intuitive solutions adapted to local culture to transform the lives of millions of people in the region.

More information at http://investor.mercadolibre.com/Via Eldeman

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Paulo Nogueira
With technical training, I worked in the offshore oil and gas market for a few years. Today, my team and I are dedicated to bringing information from the Brazilian energy sector and the world, always with credible and up-to-date sources.