Latin America’s E-Commerce Giant, Mercado Livre, Reports Brutal Record Profit in Q1 This Year

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 5, 2022 – The Mercado Livre  (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, a growth of 63.1% in dollars and 67.4% in constant currency compared to the same period in 2021. Brazil represents 55% of Mercado Livre’s total net revenue, having reached US$ 1.2 billion and a growth of 54.8% in reais.

Net revenue from the commerce business increased by 40.2% in dollars year over year to US$ 1.3 billion, driven by about 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. Meanwhile, the net revenue from fintech grew by 107.9% in dollars, reaching US$ 971.1 million year over year. In the first quarter, Mercado Pago recorded nearly 36 million active users, up 31.1%, with growth in all markets in the region, especially in digital wallet payment services and credit users.

“We achieved a new record in terms of total revenue, reflecting improved profitability in both commerce and fintech businesses. Our gross margins improved with better operational leverage over our cost base. In line with our goal of growing profitably, we maintained consolidated operating profit margins at levels similar to last year. The bottom-line performance 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. “Marketplace growth remained consistent, particularly due to buyer behavior and the growing buyer base. The variety of assortment and the quality of the seller base puts us in a unique position to drive continuous and profitable growth. Mercado Pago also had very encouraging performance, with the credit portfolio showing consistent profitable growth, as well as growth in digital account payment volume and acquiring. We had a very strong start to the year, establishing a solid foundation for the upcoming months that will be challenging,” he adds.

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1

E-Commerce

The sales volume (GMV) of the marketplace reached US$ 7.7 billion in the first quarter, a growth of 26.5% in dollars and 31.6% in constant currency. A total of 266.7 million items were sold, representing a growth of 20.1%. The total number of listings registered on the platform reached 329 million. Brazil stands out in the region with a growth of 23.2% in GMV, in constant currency, reaching US$ 3.4 billion and 137 million items sold during the period — with 6.6 items per buyer, the highest average level for the first quarter historically.

With Mercado Envios, 254.3 million items were shipped in the region, an increase of 22.2% compared to the same period last year. Significant advancements were made in the execution and speed of Mercado Envios, with penetration reaching 98.4% of total operations, 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 — with 40% of shipments via the fulfillment model. From the overall volume of goods, about 80% were delivered within 48 hours, and around 54% on the same day or the day following the purchase.

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

Fintech

The credit portfolio reached over US$ 2.4 billion — up from US$ 1.7 billion at the end of 2021 — presenting consistent profitable growth aligned with our expectations. In the period, Mercado Crédito granted over US$ 1.7 billion in credits, almost three times the amount recorded in the first quarter of 2021.

The total payment volume (TPV) via Mercado Pago reached US$ 25.3 billion for the first time, a growth of 72.0% in dollars and 81.2% in constant currency. The total transaction volume (TPN) in the period grew by 73.2% year over year, surpassing approximately 1.1 billion in the first quarter, the second consecutive.

The total payment volume via Mercado Pago, outside the Mercado Livre platform, 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 significantly in Brazil, where the number of new sellers is also increasing, especially due to operations with PIX.

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

In Brazil, there is also notable growth in the base of sellers who have started using QR devices, especially micro and small entrepreneurs who were already using card machines and have also adopted this modality. As a result, the total payment volume 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 card, debit, and prepaid transactions, grew by 178.5% in constant currency year over year, totaling nearly US$ 8 billion.

By the end of March, more than 22.7 million users had funds invested in the fund, which gathers digital account users with earnings. The portfolio of savings and investment products continues to grow rapidly, driven by the launch of the cryptocurrency wallet at the end of last year. In Brazil, the only country where the service currently operates, the user base of the cryptocurrency wallet continues to grow.

During the period, more than 522 thousand insurance policies were distributed, a volume 6.0% higher than that recorded in the first quarter of last year, driven by greater penetration of products in Argentina, Brazil, and Mexico. In Brazil, the distribution of insurance for cards and for payments via PIX reinforces Mercado Pago’s insurance offering.

Financial Performance

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

The overall active unique user base of the ecosystem reached 80.7 million at the end of the quarter, an increase of 15.7% compared to the same period in 2021 — with 6.7 million new users incorporated 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 thousand new direct employees will be incorporated into the operation across the entire commerce and fintech ecosystem. Consequently, the total number of employees will jump from the current 29 thousand — at the end of December 2021 — to over 44 thousand by the end of 2022.

About Mercado Livre

Founded in 1999, Mercado Livre (NASDAQ: Meli) is the leading company in e-commerce technology and digital financial services in Latin America, with a presence in 18 countries. It offers a complete ecosystem of solutions for individuals and businesses to 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 commerce 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 tailored to the local culture to transform the lives of millions of people in the region.

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