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Mercadolibre (MELI) Incurs Loss in Q1, Beats on Revenues

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·5-min read
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MercadoLibre, Inc. MELI reported a first-quarter 2021 loss of 68 cents per share, which lagged the Zacks Consensus Estimate for earnings of 27 cents per share. Notably, the company reported a loss of 44 cents per share in the year-ago quarter.

Its revenues surged 111.4% on a year-over-year basis (158.4% on an FX-neutral basis) to $1.38 billion. Further, the top line surpassed the Zacks Consensus Estimate of $1.19 billion.

Revenues were driven by accelerating commerce and fintech revenues, which grew 139.2% and 72.4% year over year to $910.6 million and $467.8 million, respectively.

Further, the e-commerce boom continued to act as a major tailwind.

Further, increasing total payments volume (TPV), courtesy of a robust Mercado Pago and the mobile-point-of-sale (MPOS) business,contributed well. Moreover, a solid momentum across Mobile Wallet benefited the results.

Moreover, the company’s rising gross merchandise volume (GMV), led by an accelerating mobile GMV, contributed 72.9% to the total GMV. Also, mobile GMV soared 215.7% year over year.

Also, strong shipment growth via MercadoEnvios in the reported quarter was another positive. The growing penetration of managed networks was also a tailwind.

Additionally, strengthening momentum acrossMercado Fondo and Mercado Credito benefited the company.

MercadoLibre, Inc. Price, Consensus and EPS Surprise

MercadoLibre, Inc. Price, Consensus and EPS Surprise
MercadoLibre, Inc. Price, Consensus and EPS Surprise

MercadoLibre, Inc. price-consensus-eps-surprise-chart | MercadoLibre, Inc. Quote

Quarter in Detail

Brazil: Net revenues in the firstquarter were $768.7 million (55.8% of total revenues), up 93% year over year.

Argentina:The market generated revenues of $297.2 million (21.6% of the top line), which soared 124% year over year.

Mexico: Net revenues in the reported quarter were $230.5 million (16.7% of revenues), up 143% year over year.

Other countries:The markets generated revenues of $81.9 million (5.9% of total revenues), climbing 203.5% on a year-over-year basis.

Key Metrics

GMV of $6.1 billion jumped 77.4% year over year and 114.3% on a reported basis and a FX-neutral basis, respectively.

The number of successful items sold was 222 million, up 110% year over year. Moreover, the number of successful items shipped surged 130.7% year over year to 208.1 million. This can be attributed to the sturdy performance of MercadoEnvios.

TPV was up 81.8% on a year-over-year basis to $14.7 billion, driven by a strong performance of MercadoPago. Further, off-platform payment volume (online-to-offline) was $8.5 billion, up 82.5% from the year-ago quarter.

Additionally, the MPOS business witnessed year-over-year TPV growth of 90.2%. Further, the rapid adoption of MercadoLibre’s Mobile Wallet generated $2.9billion in transactions, up 192% year over year.

TPV on marketplace was $5.8 billion, up 82.3% year over year. Further, total payment transactions skyrocketed 116.7% year over year to 630.1 million.

Unique active userstotaled69.8 million, up 61.6% year over year.

Operating Details

For the first quarter, the gross margin was 42.9%, contracting 510 basis points year over year.

Operating expenses were $500.5 million, which increased 46% year over year. However, as a percentage of revenues, the figure contracted to 36.3% from 52.5% in the year-ago quarter.

The company reported $90.8 million of income from operations in the first quarter against the year-ago quarter’s loss of $29.7 million.

Balance Sheet

As of Mar 31, 2021, cash and cash equivalents were $862.7 million, down from $1.9 billion as of Dec 31, 2020.

Short-term investments were $980.1 million in the first quarter, down from $1.2 billion in the previous quarter.

Accounts receivable amounted to $64.8 million, up from $49.7 million in the fourth quarter of 2020. Further, the inventory level at the end of the first quarter was $131.5 million, up from $118.1 million at the end of the prior quarter.

Zacks Rank & Stocks to Consider

MercadoLibre currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader sector worth consideration are Agilent Technologies A, Pure Storage PSTG and NVIDIA NVDA. All the stocks carry a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rate of Pure Storage, NVIDIA and Agilent, is pegged at 52.21%, 15.05% and 9%, respectively.

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