When a company has multiple drivers of growth, investors often benefit. Latin American e-commerce giant MercadoLibre (MELI 0.68%) has seen a lot go right for its business, with its core marketplace getting greater traffic and ancillary services like its Mercado Pago payment network starting to shine in their own right.
Coming into Wednesday's second-quarter financial report, MercadoLibre investors expected that the company's strong growth would continue. In fact, its growth was faster than many had foreseen, and it looks like things are all still going right as 2019 progresses.
More spectacular results for MercadoLibre
Second-quarter numbers were impressive. Revenue was higher by 63% to $545.2 million, accelerating from its growth in the first quarter of 2019 and easily topping the 50% growth rate that most of those following the stock were expecting. Net income came in at $16.2 million, reversing a year-earlier loss, and the resulting earnings of $0.31 per share topped the consensus forecast among investors for $0.25.
As we've seen recently, MercadoLibre would've had even faster growth on a local-currency basis. Revenue adjusted for foreign exchange impacts more than doubled from year-ago levels.
Image source: MercadoLibre.
Mercado Pago continued to get a lot of attention from the company. Total payment volume jumped 47% to $6.52 billion, as the service handled more than twice the traffic it did in the year-ago period. Transaction counts for the quarter totaled 181.6 million. Even more impressively, Mercado Pago got about half its payment volume from off-platform payments, and more than 120 million such transactions meant that the service is getting about two-thirds of its traffic from outside the MercadoLibre ecosystem. The unit's point-of-service offering is seeing strong growth in payment volume, and the company's mobile wallet hit 4.5 million active users.
MercadoLibre's core marketplace also did well. Marketplace revenues jumped 85% year over year in dollar terms, with gross merchandise volume rising a more modest 8% to about $3.4 billion. Items sold were up about 4% to 88.7 million, and unique buyer counts jumped more than 20% year over year. Live listings topped 200 million for the second time ever, jumping by half over the past year. MercadoLibre has done a good job of reaching mobile shoppers, and shipments via Mercado Envios were up by a third to 70.2 million.
Can MercadoLibre keep growing?
CFO Pedro Arnt was succinct: "We are pleased and optimistic about how 2019 is playing out for us. We delivered another very strong quarter as we continue to grow and scale our leading e-commerce and fintech ecosystems across Latin America."
It's interesting to see where MercadoLibre is getting the bulk of its business. Overall net revenue almost quadrupled in the Mexican market, while Brazil was another big contributor, seeing dollar-based revenue jump 74% year over year. That compares quite favorably with what happened in Argentina, where dollar growth was limited to 14%. Even so, that was the first quarter since this time last year that MercadoLibre saw dollar revenue rise in Argentina, and that's good news for the long run if the trend stays intact.
MercadoLibre investors didn't have a strong immediate reaction to the news, and the stock sank less than 1% in after-hours trading following the announcement. Shareholders have already gotten excited about all the favorable prospects that it has to grow various parts of its operations. That could limit immediate gains, but it still points to sustained growth for the underlying fundamental business well into the future.
