• GMV Growth: 34% year-on-year in Brazil, 27% in Mexico.

• Items Sold in Argentina: 16% growth, surpassing 60 million items sold.

• New Buyers: Record addition of almost 7 million new buyers.

• Fulfillment Centers: Six new centers opened, five in Brazil and one in Mexico.

• Fulfillment Penetration: Increased by 4.5 percentage points year-on-year.

• Credit Card TPV Growth: 166% year-on-year.

• Credit Portfolio Growth: 77% year-on-year.

• Revenue Growth: 35% year-on-year.

• EBIT: $557 million with a 10.5% margin.

• Net Income: $397 million, 11% increase year-on-year.

• Warning! GuruFocus has detected 4 Warning Sign with MELI.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• MercadoLibre Inc (NASDAQ:MELI) reported strong GMV growth of 34% in Brazil and 27% in Mexico, indicating robust market share gains.

• The company added a record 7 million new buyers in Argentina, surpassing previous peaks during the pandemic.

• MercadoLibre Inc (NASDAQ:MELI) opened six new fulfillment centers, enhancing logistics capabilities and improving user experience.

• Credit card TPV grew by 166% year-on-year, reflecting successful fintech expansion.

• Revenue growth of 35% year-on-year was achieved despite FX headwinds, showcasing strong operational performance.

Negative Points

• Margin compression was noted, primarily due to strategic investments in credit cards and fulfillment centers.

• The rapid growth of the credit portfolio has put short-term pressure on spreads.

• FX headwinds in Mexico and Brazil negatively impacted financial results.

• General and administrative expenses rose due to non-recurring expenses related to customer refunds.

• The expansion of fulfillment centers may lead to short-term cost pressures as new facilities ramp up.

Q & A Highlights

Q: What drove the acceleration in the credit card portfolio growth, and how does it impact future growth? A: Osvaldo Gimenez, Fintech President, explained that the acceleration was due to increased credit card issuance and larger credit lines, particularly in Brazil and Mexico. The growth is supported by improved risk models and a focus on lower-risk users. This strategy is expected to enhance user engagement and transactionality, both on and off the platform.

Q: Can you provide insights into the shipping investments and their impact on capacity and productivity? A: Ariel Szarfsztejn, Executive Vice President - Commerce, noted that the new fulfillment centers in Brazil and Mexico are crucial for meeting future demand and increasing fulfillment penetration. While there may be short-term cost pressures, these investments are expected to improve delivery speed and user experience, ultimately driving higher GMV.