MercadoLibre reported earnings today of $5.15 which is up 57% yoy vs $4.13 expected, and Revenues are up 57% YOY to $3.4B.
Total payment volume using its payment app increased to $ 30.2B, up 89% YOY
Total Payment Volume $42.1B, up 96.6% YOY
Credit portfolio $3.3B up 21% YOY. The profitability increasing and bad loans stable
Gross Merchandize Volume $10.5B
58% of their growth came from Mexico and Brazil. IMO, reasons for the growth is that geopolitically, these are better countries to do business with than China, Latin America has growing populations, internet penetration is low compared to other parts of the world, and large unbanked populations. The internet penetration for Mexico is about 66% and Brazil is about 67%. The unbanked population of Mexico is about 63% and Brazil is about 30%.
MELI provided strong results throughout the pandemic, but I experienced significant pain with MELI the last two years. In '21 I was down 24% and in '22 I the stock was down an additional 22%. I did well with MELI in '22 through the judicious use of options, but switched to holding the shares of the stock in '23. MercadoLibre is up about 47% on the year and 10.4% today.
MercadoLibre has been punished historically because of fears of Amazon and SEA Limited competition as well as post pandemic drops in business. Those fears have never materialized as business problems, and MercadoLibre remains as strong as ever. For these reasons, you can buy this stock for a price to sales ratio of 5.2. It’s PE is 95, BUT it’s margins are steadily increasing, and it’s PEG is about 1.7. These are high due to investments needed to build out the businesses. Those ratios are expected to rapidly improve.
Maybe you should consider investing with me in MELI, it’s now my largest holding at about 20.1%.
Agreed MercadoLibre has proved a solid performer and has bounced after its results back to near its 12 month high, (which is still 35% down from its Covid-19 peak).
eCommerce growth continues to be resilient and the fintech growth maintains its LatAM penetration on and off the commerce platform.
The major story in the Q2 results beyond the hyper growth in revenues of 57% (FX neutral terms) was clearly the massive move in operating margin up to 16.3% margin from 11.2%. Advertising grew 70% to 1.6% of GMV as an added bonus.
MercadoLibre is a 4% holding for me (up 200% since initial purchase).
Ant
In other news - Pedro Arnt, the CFO and probably the most prominent member of the MercadoLibre C-suite, left and has joined the other Uruguay/Buenos Ares neighbourhood fintech player dLocal as Co-CEO. He had 24 years of tenure at MercadoLibre and was highly respected.
It is good validation of dLocal which itself is still in hyper growth and all but removes the concerns surrounding the short attack allegations and Argentina regulatory friction. Results and the announcement of the appointment sent the shares up 35%. Pedro Arnt talked at length of the “diligence” he performed on the company before taking the position. He’s there to “scale” the business.
I’m sure MELI will continue to do fine without him but he was a CEO in waiting so some leadership rethink will be required over the medium term I guess as well as adjustments in the Finance area.
MercadoLibre (MELI) just released their Q3 results last night and they killed it yet again with growth actually re-accelerating.
Headline results:-
Q3 GAAP EPS of $7.18 beats by $1.35.
Revenue of $3.8B (+41.3% Y/Y) beats by $250M, (up 69.1% year-over-year on an FX neutral basis)
Income from operations of $685 million, with an 18.2% margin;
$47.3 billion Total Payment Volume, up 121.2% year-over-year on an FX neutral basis;
$11.4 billion Gross Merchandise Volume, up 59.3% year-over-year on an FX neutral basis.
Investments in logistics, free shipping offers, loyalty programs and key growth markets of Mexico and Brazil together with their emerging Advertising business (up 70%) all paid off.
Hi Ant,
Nice report to be sure. Revenues have been growing in the 30% - 40% (USD). Not stunning, but solid. Currency neutral numbers are significantly higher.
Even though revenue growth might not seem exciting to some, they are turning increasing amounts to revenue to profits.
I calculated
PE = 67
PS = 4.3
Trailing earnings growing at 264% (adding this quarter with the prior 3 quarters to smooth out the seasonality and comparing it to a year ago).
PEG ~ 0.25 (using the trailing numbers)
What’s the driver for the earnings growth? The operating margin during the last four quarters is: 11.6%, 11.2%, 16.3%, 18.2%. Their investments in their infrastructure are paying off.
Historically, PS in 2019 was 16.88 (obscenely high in my opinion). Several quarters it was in the 12-14 range. With a PS at 4.3 and a low PEG, there should be a lot of room for expansion while still keeping a reasonable valuation.
MELI headlines my few TMF style LTBH holdings. I have held since Covid, adding some along the way. This port is now back to +50% YTD.
By contrast, my indefinite investing port is trying to climb out to 0–and this is after a nice +30% boost from ROKU and 8% overall today. This port used to be the larger one.
So much for active investing when the Fed is actively cooling off financial conditions, including stock prices (just read Powell’s statement from yesterday and a bunch of what various Fed officials said in 2022 about stocks).
I just wanted to highlight some of these incredible numbers because I feel like MercadoLibre does not get the love it deserves. All figures are in USD.
Revenue was $3.76B, up 40%, from $2.69B a year go. That is an increase of over $1B YoY! And accelerating, up from 31% last quarter
Gross margin was 53%, up from 50% a year ago
Net income margin was 9.5%, up from 4.8% a year ago
Diluted EPS was $7.16 per share, up from $2.56 a year ago!! MercadoLibre produced $9.54 per share all of last year!
Unique active users were 120M, up 36%, from 88M a year ago
Number of items sold was 357M, up 26% from 284M a year ago
GMV was $11.4B, up 32%, from $8.6B a year ago
TPV was $47.3B, up 47%, from $32.2B a year ago
Total payment transactions were 2.5B, up 74%, from 1.4B a year ago
Nearly every single metric is accelerating. And they are close to a $16B run rate. Their forward EPS stands at about ~50, but this should fall rapidly seeing as they are growing EPS by almost 200% YoY. I find it remarkable growth is able to hold up so well at this scale. All while profitability is expanding rapidly no less.
No other company I am aware of is performing so well at such a size, save for NVDA. I’d encourage others to take a closer look at this company.
