Mercado Libre beats revenue estimates and gains market share in Brazil

RIO DE JANEIRO, BRAZIL – Latin American e-commerce retailer Mercado Libre Inc. (MELI) increased revenue more than expected and gained market share in Brazil, even as Asian players strengthened their footprint in its largest market.

Mercado Libre posted fourth-quarter net revenue of US$2.1 billion, up 61% from a year earlier and slightly above analysts’ estimate of US$2 billion, according to a statement on Tuesday, February 22. The company reported a gross merchandise volume of US$8 billion, roughly in line with expectations, driven by growth in Brazil, where companies such as e-commerce platform Shopee of Sea Ltd. (SE) have been building their local operations.

“We have gained share in Brazil, even with Asian players,” said Andre Chaves, senior vice president of the Buenos Aires-based company. “We look carefully at the competition and try to learn, but that shouldn’t change our strategy. Everything in the quarter points to a sustainable growth path.”

Despite solid revenue, Mercado Libre posted a net loss per share of US$0.92, below analysts’ expectations for earnings of US$0.73 per share. “The results reflect that the fourth quarter is a time of year that concentrates high sales volume but also high expenses, such as marketing, discounting, and markdowns,” Chaves said.

“We share that with our vendors, but we have to put some of the investment in ourselves.”

The firm’s loan portfolio grew to more than US$1.7 billion in the third quarter, up from US$1.1 billion in the previous three months, while delinquencies improved at a time when investors are concerned about the possible deterioration of credit quality in Brazil amid rising inflation and rates.

The company acquired Brazilian logistics firm Kangu last year and recently announced the purchase of stakes in two cryptocurrencies. Chaves declined to comment on possible merger targets and how the company might incorporate more crypto functionality into its back-end or user-facing products.

Mercado Libre shares are down 55% since peaking in January 2021, battered by the prospect of U.S. interest rate hikes and fears of fierce competition. According to data compiled by Bloomberg, Mercado Libre has 24 “buy” recommendations from analysts, five “hold”, and no sell.

With information from Bloomberg

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