MercadoLibre, Inc. Q3 FY2023 Earnings Call

· Earnings call transcript and AI-powered summary

  • Strong Revenue Growth: Consolidated revenues accelerated in Q3 2023. Mexico led with over 60% YoY growth, while Brazil followed with approximately 40% YoY growth, increasing their share of total company revenues.
  • Operational Efficiency: Income from operations more than doubled YoY for the fourth consecutive quarter. Operating margins expanded, driven by disciplined cost control and SG&A dilution.
  • Commerce Segment: Gross Merchandise Volume (GMV) and items sold growth accelerated in Brazil, Mexico, and Argentina. Fulfillment penetration reached 48% while buyer count hit a record 50 million.
  • Fintech Performance: Mercado Pago showed TPV acceleration in all geographies. Credit issuance hit a record, surpassing $1 billion with more than 1 million credit cards issued in Q3 2023. Asset management and remunerated accounts also expanded in Brazil and Argentina.
  • Profit Margins: EBITDA margin improved to 18% in Q3 versus 16% in Q2 2023. Brazil contributed 12 percentage points YoY improvement in profitability, and Mexico added 6 percentage points.
  • MELI Mas Launch: New loyalty program MELI Mas launched in August, offering cheaper shipping thresholds (free shipping above R$29), premium video/audio content (Disney+, Star+, Deezer), and a customer-centric delivery day option.

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Martin de los Santos: Hello, everyone. I am Martin de los Santos, MercadoLibre's CFO. For those of you who haven't met me, I have been at MELI since 2007. First as a Board member and since 2012 as a public management team. For the past seven years, I have led the credit business and the last August when I took the position of CFO. I look forward to meeting as many of you as possible in due course. I am pleased to report a strong set of results in my first quarter of CFO with a strong successful third quarter across geographies, 2023 continues to show an attractive combination of growth and profitability with a record in income from operations, with strong momentum across geographies in both commerce and fintech MELI’s revenues growth accelerated. Mexico was particularly strong with revenues growing above 60% year-on-year, while Brazil also posted a greater performance with around 40% growth. These two countries have again increased their contribution to our total revenues. This strong business growth combined with cost discipline led to OpEx and SG&A dilution as the business continues to scale. Income from operations more than doubled year-on-year for the fourth consecutive quarter with margins expanding once again. Brazil was the largest contributor to our profit growth, representing a significant portion of it. During Q3, in the commerce business, we saw acceleration in GMV and items sold growth in the three main geographies where we operate with higher items provider. This

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