Shareholders of MercadoLibre (NASDAQ:MELI) had high expectations going into its second-quarter financial report, as the stock has soared more than 100% so far in 2019. They were not disappointed, bidding the e-commerce platform's stock up nearly 12% on Thursday in the wake of the previous day's earnings report.
MercadoLibre reported net revenue of $545 million, up 63% year over year. That's an acceleration from the 48% growth in Q1, which marked its fastest growth rate in more than two years. Even more incredibly, growth soared more than 102% in local currencies, which was also a sequential increase from 93%. Revenue easily topped analysts' consensus estimate of $504.8 million.
Net income grew to $16.2 million, far better than the $11.2 million loss MercadoLibre generated in the prior-year quarter. This resulted in earnings per share of $0.31, up from a loss of $0.25 in the year-ago quarter, and topping expectations of $0.25.
Payments drive this train
Mercado Pago, the company's payment processing segment, has become so important to its growth that it now gets top billing in the earnings presentation. Total payment volume (TPV) -- the total dollar amount of payments processed using Mercado Pago -- surpassed $6.52 billion, up 47% in U.S. dollars and growing 90% year over year in local currencies. The number of payment transactions climbed to 181.6 million, up 113% versus the prior-year quarter.
As Mercado Pago has become one of the most popular online payment methods in Latin America, it has also become increasingly popular with off-platform brick-and-mortar merchants and digital businesses. The total amount of off-platform payments increased to nearly $3.2 billion and 120 million transactions -- marking the first time in the company's history that off-platform TPV surpassed payments processed on MercadoLibre's e-commerce platform.
The company continues along the financial technology path it began more than a decade ago. Mercado Pago's mobile point-of-sale (mPOS) business is now up and running in Brazil, Argentina, and Mexico. The number of active devices has more than doubled since this time last year, and mPOS total payment volume grew by triple-digit amounts in both dollars and local currencies, with more than 3 million devices processing transactions over the preceding 12 months.
Another area of growth is merchant and consumer credit, dubbed Mercado Credito. MercadoLibre uses its records -- which in some cases go back more than two decades -- and cutting-edge artificial intelligence algorithms to help identify the best candidates for personal and business loans. During the quarter, the company's loan portfolio climbed 75% year over year, and 44% quarter over quarter in dollars.
E-commerce platform growth soars
While payments may have become the headliner, MercadoLibre is still the leading e-commerce platform in the region and is growing rapidly. The company's enhanced marketplace -- which includes its platform, software as a service, shipping, advertising, and other merchant services -- increased its revenue by 85% year over year in dollars and 123% in local currencies. At the same time, non-marketplace revenue increased 43% in dollars versus the prior-year quarter and 73% in local currencies.
Gross merchandise volume, which measures the total dollar value of products sold during the quarter, grew to $3.4 billion, up 8.4% in dollars and 33% in local currencies. The number of items sold crept higher, to 88.7 million, up 4% year over year, versus 39% in the prior-year quarter. This growth deceleration was expected, as the company is moving away from listing low-cost items and instituted a flat-rate listing fee in both Brazil and Argentina, its two largest markets.
Overall results were driven by impressive operating metrics, which strip out the impact of currency exchange fluctuations. Confirmed registered users grew to 293 million, up 25% year over year, while the number of unique buyers grew to 20.4 million, up 21%. The number of successful items shipped topped 70 million, up 33% year over year.
It's worth remembering that going back more than a decade, MercadoLibre was called the eBay of Latin America. The company has since moved into payments, logistics, fulfillment, shipping, and merchant and consumer credit. These decisions have paid off, since all of these businesses have expanded the company's addressable market and made it more dominant in the region.
With this many areas driving growth, expect MercadoLibre to thrive for years to come.