For a long time, MercadoLibre (NASDAQ:MELI) seemed to have complete command of the e-commerce market in Latin America. By using its online marketplace as a starting point, MercadoLibre put together a complete suite of related services to get entry into fast-growing areas like payment processing, customer financing, and delivery and logistics services. Yet recently, investors in MercadoLibre have had to deal with new pressures to the company's bottom-line performance.

Coming into Thursday's third-quarter financial report, MercadoLibre investors were prepared for break-even results in net income, but they wanted to see reasonable sales performance. Top-line growth was better than many had expected, but another quarter of net losses showed that MercadoLibre has further to go before it can claim victory over tough conditions.

Mobile device showing MercadoLibre logo and facts about business.

Image source: MercadoLibre.

How MercadoLibre fared

MercadoLibre's third-quarter numbers continued to reflect the cross-currents the company is facing. Revenue rose 16.5% to $355.3 million, which was slightly better than the roughly $349 million in revenue that most of those following the stock were expecting to see. However, net loss came in at $10.1 million, and that worked out to negative earnings of $0.23 per share, far worse than the consensus forecast for zero net income.

Many of the numbers that MercadoLibre reported included dramatic impacts from currency movements. For instance, in local currency terms, sales for the quarter soared 58% from year-earlier figures.

From a fundamental perspective, though, MercadoLibre saw many of its key metrics stay strong. Gross merchandise volume was down almost 3% to $2.995 billion, but gains showed up in nearly every other measure of performance. For instance, registered user counts jumped by 47.7 million over the past 12 months to 248.9 million, including 14 million new users during the most recent three-month period. MercadoLibre sold 12.5% more items and shipped 30% more via the MercadoEnvios service than it did in the previous year's period. Unique buyer counts jumped 10%, although unique sellers sank by 300,000 to 4.3 million.

MercadoPago continued to behave well. Payment volume was higher by 24% to $4.55 billion, including a 5% rise in payments on the MercadoLibre marketplace. The number of total payment transactions soared above the 100 million mark, rising by two-thirds from year-ago levels. The company also launched its asset management service in Argentina, making that country the first to have a full suite of fintech services that includes mobile point-of-sale devices, QR codes for in-store payment, mobile wallet, and asset management.

What's next for MercadoLibre?

CFO Pedro Arnt put things simply: "I am pleased to report another quarter of solid performance in our business," Arnt said, "across our key business units." The CFO noted how various expansion efforts are putting MercadoLibre in position to accelerate its growth into the future.

Yet the Argentine currency crisis continues to weigh on MercadoLibre's results, and it's unclear when those negative impacts could come to an end. In key markets like Brazil and Mexico, the e-commerce giant has either held its own or seen year-over-year revenue growth accelerate in U.S. dollar terms, with Mexico in particular standing out for its greater than 15% rise this quarter compared to the third quarter of 2017. However, Argentina's growth in dollar terms has gone from plus-30% to minus-8%, even though local-currency results remain favorable.

One interesting move that MercadoLibre made involves trying to encourage sales of higher-ticket items. The company imposed a flat $1.35 fee in Brazil on items selling for less than about $32, and it eliminated listings for items priced at less than $1.60. That move likely led to the slower growth in item sales counts, but it should help to promote overall merchandise volume in the long run.

MercadoLibre investors weren't entirely pleased with the results, and the stock fell 3% in after-hours trading following the announcement. Until the e-commerce giant starts making money consistently, some shareholders will worry that MercadoLibre could have difficulty living up to its full potential.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.